Press Release

Credit Crisis Litigation Doubles in 2008, Navigant Consulting Study Finds

March 11, 2009 at 12:01 PM EDT
576 New Federal Matters in 2008 Driven by Securities Cases, Lehman Bankruptcy;Experience from Savings & Loan Crisis Suggests Resolution Still Years Away

CHICAGO--(BUSINESS WIRE)--Mar. 11, 2009-- In a new report, Navigant Consulting, Inc. (NYSE:NCI), a global consulting firm providing dispute, investigative, operational, risk management and financial advisory solutions, found that beyond the billions in writedowns, the credit crisis produced a jaw-dropping 576 new litigation matters filed in U.S. federal courts in 2008.

According to the Navigant report, titled “2008: Seeking Relief,” the 576 subprime-related cases filed in federal courts in 2008 were twice the number filed in 2007 and by themselves exceed the 559 savings-and-loan cases handled by the Resolution Trust Corporation over its entire six-year existence. Since January 1, 2007, a total of 866 cases have been filed in federal courts – and the litigation wave has shown few signs of abating. Almost 70 percent of those cases remained active at year-end 2008.

“Whether you’re talking about the economic collapse or the related litigation, the year 2008 was by any measure historic,” said Jeff Nielsen, a Managing Director who leads Navigant Consulting’s Financial Services Disputes & Investigations group and is lead author of the report. “The credit crisis continues to find new ways to inflict damage, and each time a new wellspring of litigation seems to emerge.”

The number of subprime-related filings on a quarterly basis peaked at 179 in the first quarter of 2008; however, new cases continued to be filed at a rate of more than 100 per quarter throughout the year and even trended up slightly following the Lehman bankruptcy filing in September 2008. Securities cases drove much of the litigation in 2008 (38 percent), followed by borrower class actions (24 percent), and contract disputes (17 percent). Other categories tracked by Navigant included employment and bankruptcy litigation.

The report also found an expansion in the scope of litigation tied to the financial crisis. For example, the 2008 figures included more than 50 cases tied to auction-rate securities, a category that did not exist in 2007.

Geographically, New York and California account for approximately half of all cases filed in 2008.

For 2009, Nielsen noted that more than two new cases continue to be filed for every one that is disposed, meaning that the backlog continues to grow. The Navigant report also presents an analysis of savings-and-loan era litigation and concludes that certain types of government-driven litigation, which are yet to be filed, could run on for years. “One thing you can bank on,” said Nielsen, “is that however long it takes for credit market conditions to improve, it will take considerably longer to work through the related litigation.”

For an interview and copy of the full report, Subprime Mortgage and Related Litigation 2008: Seeking Relief, contact Shannon Prown of Navigant at 215-832-4436 (SPrown@navigantconsulting.com) or Derede McAlpin of Levick at 202-973-1314 (DMcAlpin@levick.com).

About Navigant Consulting

Navigant Consulting, Inc. (NYSE:NCI) is a specialized independent consulting firm providing dispute, financial, investigative, regulatory and operations consulting services to government agencies, legal counsel and large companies facing the challenges of uncertainty, risk, distress and significant change. The Company focuses on industries undergoing substantial regulatory and structural change and on the issues driving these transformations. “Navigant” is a service mark of Navigant International, Inc.Navigant Consulting, Inc. (NCI) is not affiliated, associated, or in any way connected with Navigant International, Inc. and NCI’s use of “Navigant” is made under license from Navigant International, Inc. More information about Navigant Consulting can be found at www.navigantconsulting.com.

Source: Navigant Consulting, Inc.

Navigant Consulting, Inc.
Shannon Prown
215.832.4436
or
Levick Strategic Communications
Derede McAlpin
202.973.1314

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