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
“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
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.