Delivering the keynote speech at the Legal Week Litigation Forum in
“There is going to be litigation on a scale that we have not seen before,” he told the conference, predicting the emergence of “a new era” for litigation and dispute resolution.
The former leading commercial barrister, who has recently become a consultant at Gibson Dunn & Crutcher, said Lehman’s insolvency and the “inevitable” rash of smaller related bankruptcies would reverse the recent decline in big-ticket litigation going through the English courts.
And he cited Barings, BCCI and Maxwell as examples of the kind of cases that would spring from what he described as “the largest insolvency in the history of capitalism”.
Falconer said Lehman-related litigation would follow three stages. First, there would be a series of disputes to determine the exact nature of the liabilities, then there would be a battle to determine how the bank’s remaining assets should be distributed and finally creditors would seek to identify institutions, advisors or regulatory bodies they could blame for their loss.
“Until now there has been very little credit crunch litigation as there has not been a great quantity of people trying to blame somebody for the mess the institutions have found themselves in,” he said.
Falconer went on to identity the emergence of third-party litigation as another factor that would help fuel litigation and revealed that hedge funds were starting to regard litigation as an asset class.
“Now we are going to see hedge funds whose only activity in practice is to fund litigation arising out of collapsed institutions,” he said. “It will become a much more significant factor than ever before.”
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