The number of commercial legal cases in Britain has fallen sharply because businesses are opting to resolve disputes behind closed doors instead, lawyers said.
Official data released yesterday showed that the number of cases in the Queen’s Bench and Chancery divisions of the High Court, which handle contract and other types of commercial disputes, fell by almost a third last year, to 47,884.
The dramatic slump in commercial cases, to the lowest level in six years, is in stark contrast to the aftermath of previous recessions, when litigation surged as companies sought to recover losses they had suffered as a result of the downturn.
Many lawyers predicted that the latest financial crisis would spark a litigation boom and numerous firms braced for a windfall in fees from disputes between big banks, hedge funds and wealthy investors. However, this has yet to be seen in the number of proceedings reaching court, according to the Ministry of Justice’s annual court statistics.
Litigation departments at the City’s leading firms have been growing steadily busier in the past three years — without reaching the heights many expected when the credit crunch began — but most of these disputes are being handled in private and are not reflected in court statistics, lawyers said.
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Geraldine Elliott, a commercial disputes partner at law firm Reynolds Porter Chamberlain, said: “The effects of the international financial meltdown and recession are still being felt in widespread, high-value disputes between businesses.”
However, she added: “Many of the claims we are dealing with involve disputes between financial institutions that have ongoing commercial relationships. The public scrutiny of a High Court case could put that relationship under strain, so litigants often prefer the privacy of a commercial settlement or arbitation.”