Credit Crisis Spurs Unprecedented Volume of Litigation, Navigant Study Shows
Subprime-Related Lawsuits Filed So Far in 2008 Already 50 Percent Beyond All of 2007
The number of subprime mortgage and related cases filed in federal court
during just the first nine months of 2008 already exceeds by more
than 50 percent the total for all of 2007 (448 to 294). Filing
volume in the
The Navigant report, titled Third Quarter 2008 Update: Breaking New Ground, also shows the subprime-related cases further outstripping the 559 U.S. savings-and-loan cases of the early 1990s, the previous high-water mark in terms of litigation fallout from a major financial crisis.
"The bottom line is that new cases continue to be filed much more
rapidly than existing cases are being disposed," said
Nielsen also emphasized that the disastrous market conditions of late
2008 mean that new cases will continue to roll off the assembly line
through year-end. For example, the Chapter 11 bankruptcy filing by
The report also notes that while the volume of new case filings continues unabated, the litigation is showing signs of maturing based on the breakdown of new cases filed. For example, borrower class action filings - which lead all categories over the seven quarters tracked by Navigant - fell precipitously in the third quarter, as the underlying loan transactions become more remote in time. Meanwhile, the number of securities lawsuits and contract disputes increased sharply, registering their highest quarterly totals to date.
"What we're seeing is a relative increase in the number of cases brought by investors and institutions," said Nielsen, "as affected parties take stock of their losses and the recriminations follow from there."
For an interview and copy of the full report, Third Quarter 2008
Update: Breaking New Ground, contact Shannon Prown of
Navigant Consulting, Inc.Shannon Prown 215.832.4436 or Levick Strategic Communications Amy Cantu202.973.1325 Source: Navigant Consulting, Inc.