Subprime Mortgage Litigation Reaches Record Levels in the First Quarter of 2008, According to Navigant Consulting Study
Credit Crunch Litigation has Global Impact with Non-U.S. Companies Being Named as Defendants
CHICAGO--(BUSINESS WIRE)--April 23, 2008--Navigant Consulting, Inc. (NYSE:NCI), a global consulting firm providing dispute, investigative, operational, risk management and financial advisory solutions, released a report today that shows the number of subprime-related cases filed in federal courts surged in the first quarter of 2008, dramatically outpacing 2007 filings. The total filings are close to surpassing the savings-and-loan (S&L) crisis litigation of the early 1990s.
According to the Navigant Consulting report, the number of subprime-related cases exploded in the first quarter of 2008, increasing 85 percent over the next busiest quarter. A staggering 170 cases were filed during the quarter, approaching the 181 filings over the final six months of 2007.
"Like the credit crunch itself, the litigation is unrelenting," said Jeff Nielsen, Managing Director of Navigant Consulting. "In this most recent quarter, we are looking at approximately two filings per day, including weekends. What we saw in 2007 was a mild breaking wave compared to the tsunami we are witnessing now."
Over a 15-month span ending March 31, 2008, the number of subprime-related cases filed totaled 448, up from 278 previously reported at year-end 2007. As of March 31, 2008, 86 percent of the 448 cases filed continued to be active. "The cases are piling up at a rather prodigious rate and, at this point, appear to be going nowhere fast," said Nielsen. "Like the S&L cases, this is a process that will likely take years to play out."
The first quarter cases were comprised of borrower class actions (46 percent), securities cases (26 percent), and commercial contract disputes (10 percent), among other case types. Class actions accounted for 76 percent of the 170 cases filed in the first quarter; however, there were also some atypical plaintiffs entering the subprime litigation scene, such as municipalities like Baltimore and Cleveland.
The report found that in 42 percent of the filed 448 cases, at least one Fortune Global 500 company was named as a defendant. Ten percent of the cases named at least one non-U.S. Global 500 company as a defendant, with U.K. firms accounting for approximately half of the non-U.S. total. Geographically, approximately half of the first quarter cases are still being filed in California and New York courts.
About Navigant Consulting
Navigant Consulting, Inc. (NYSE:NCI) is a specialized independent consulting firm providing litigation, financial services, health care, energy and operational 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.
For an interview and copy of the full report, First Quarter 2008 Update: Reaching New Heights, contact Shannon Prown of Navigant Consulting at 215-832-4436 or Derede McAlpin of Levick Strategic Communications at 202-973-1314.
CONTACT: Navigant Consulting, Inc. Shannon Prown 215.832.4436 or Levick Strategic Communications Derede McAlpin 202.973.1314
SOURCE: Navigant Consulting, Inc.