International law firm Stephenson Harwood LLP and Legal Business magazine have undertaken a joint research project into post-recession banking litigation trends. The survey findings drew on 100 senior decision makers across 35 national or international banks and asset management firms, and looked at current disputes as well as future concerns.
Fifty nine per cent of respondents said they were involved in more litigation from 2008 to 2012, with over 84 per cent saying that they had increased their litigation funding over the last five years. Similarly, 77 per cent said they had budgeted for a similar level of spend over the next 12 months, demonstrating that the number of banking disputes are unlikely to fall as the economy picks up.
Looking to the future, responses showed that banks felt impending cases would focus in two areas - mis-selling and regulatory investigations, particularly with the growing international coordination of regulators and tougher laws – such as those proposed by the Financial Services Banking Reform Bill and Dodd-Frank. In addition, increasing fines and public and political pressure for banks to answer for issues such as LIBOR, mean banks are preparing for a potential future characterised by regulator-led, investor-focused and customer-driven litigation.
Edward Davis, banking litigation partner at Stephenson Harwood said: "Survey responses resonate with our experience. The banks are under extraordinary pressure from regulators, which is feeding into the looming spectre of large volume and potentially large value claims."
Alex Novarese, editor-in-chief at Legal Business added: "Our survey shows that banks remain in the crosshairs of regulators and claimants. The volume and sources of litigation have varied enormously over the past five years and the shift continues to be profound. Our thanks go to Stephenson Harwood for their support in preparing this survey and to the 100 senior banking in-house counsel that shared their views."
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