As the torrent of post-financial crisis litigation continues to slow, litigators are increasingly wondering: ‘What next?’ Certainly, 2018 has so far been quieter than 2017 from a disputes perspective, across big-ticket and mid-level matters.
Canvassing industry veterans on the trends to watch, however, shows plenty of areas of opportunity litigators spy on the horizon. Perhaps the most talked-up area right now is the prospect of litigation linked to this year’s implementation of GDPR, the EU-wide regime updating data protection and privacy law. The complexity of the legislation, and potential fines of up to 4% of global turnover for companies that breach the new rules, unsurprisingly means many lawyers forecast plenty of compliance and enforcement-related work.
Notes Stewarts head of commercial litigation Clive Zietman (pictured): ‘The fines are just unbelievable and compliance is so difficult.’ Simmons & Simmons senior partner Colin Passmore goes further, describing GDPR litigation as ‘a kraken that’s about to be woken up’. He also sees opportunities for advising claimants: ‘Some of the new GDPR legislation could lead to more class actions. You can certainly see people looking at damages cases by breach of GDPR.’
On a related note, Covington & Burling disputes partner Louise Freeman highlights the growing potential for litigation from the rise in cyber attacks impacting major companies. In the legal industry alone, DLA Piper and offshore firm Appleby suffered breaches during 2017. But for litigators it is the increasingly common sight of major plcs falling victim to such attacks that is the real interest.
Freeman observes: ‘The UK courts are increasingly adapting to deal with this kind of litigation,’ and points to the Clarkson v Person or Persons Unknown High Court case in March, where Mr Justice Warby granted injunctions against unknown defendants to protect confidential information.
Meanwhile, newly-installed Travers Smith disputes head Rob Fell stresses that there is still plenty of opportunity out there. ‘Most disputes teams across the City will tell you they are booming,’ he says, adding: ‘We just had our best year ever as a disputes practice and foresee further significant growth in the years ahead.’ Major upcoming mandates for Travers include representing Icelandic lawyer Jóhannes Jóhannsson in his case against property tycoon Robert Tchenguiz and Hewlett Packard in its £3.4bn claim against Autonomy.
As for key trends, Fell cites the Civil Procedure Rules Committee’s approval of disclosure reforms as significant. The reforms will run as a two-year pilot across the business and property courts, and aim to give judges more power to limit the documents parties can disclose.
‘The GDPR fines are just unbelievable and compliance is so difficult.’ Clive Zietman, Stewarts
‘There will be a lot of will within the judiciary and the legal community to make that pilot successful,’ he says. ‘The financial burdens of disclosure for clients are tougher than they should be.’ Passmore echoes these sentiments but notes that it may take a while for practitioners ‘to get their heads around it’.
If it was boom at Travers, it was harder yards at Stewarts, the UK’s largest litigation-driven outfit, which saw revenue plunge 20% over the last year due to a lack of cases closing. But Zietman is optimistic that Stewarts will benefit from a new wave of fraud-related work: ‘Fraud is emerging. Usually after a company collapses, stuff emerges that was hidden in the good times. You can see more of it in the retail sector.’
To benefit, Stewarts opened a financial crime unit in July, hiring Richard Kovalevsky QC from 2 Bedford Row to head the new department.
In the wider context, one of the most obvious growth areas for litigators is that fraud-related enforcement will continue to expand across sectors. RPC commercial disputes head Tom Hibbert notes: ‘We are looking to build out fraud. We don’t seem to have a single case that doesn’t involve some kind of fraud element.’
Litigators are as given to fretting about the impact of Brexit as any lawyers, of course. Though most expect the London courts to retain their lustre, Fell frets over whether our ‘courts are in the right shape to deal with a more competitive landscape’.
Sophie Lamb QC, co-head of Latham & Watkins’ arbitration practice, takes a more upbeat stance: ‘If anything, I’ve seen more selection of English courts and English expertise. It’s amazing how much respect there is around the world for our system.’
Also cited as a potential bellwether for the City disputes scene is the mammoth truck cartel claim in which thousands of claimants are pursuing damages over a price-rigging cartel. Truck manufacturers Volvo/Renault, Daimler, IVECO and DAF were fined €2.93bn by the European Commission in 2016, and the follow-on damages claims are thought to be worth billions of pounds. The claims are currently in the Competition Appeal Tribunal (CAT) to determine whether a class action can proceed. For Freeman, the case will be a benchmark: ‘How is the CAT going to handle that?’
Off the back of a mixed year for the disputes market, there remains a sense that litigators are repositioning their businesses now that the dynamics that drove such a lucrative ten years for contentious lawyers are shifting. In place of plentiful levels of financial and Russian disputes, litigators are increasingly betting on tougher compliance and enforcement to drive their business. Who can blame them? There hasn’t been a safer bet in high-end law for the last 25 years.