It's a blame game
By now we are all used to hearing news of falling house prices, rising unemployment, and deepening recession. And although there have also been recent predictions of economic green shoots, many businesses have suffered as a result of the credit crunch.
But there are some industries that have profited from the market events of the past couple of years. Insolvency practitioners, low-end supermarkets and litigation lawyers are all examples of these.
During my legal career, there has never been a busier time for litigators. Lawyers specialising in real estate, corporate and finance law - in such high demand during the M&A boom - have been faced with the prospects of pay cuts and redundancy.
But departments that are counter-cyclical in nature are sought after in times of recession.
During the good times, businesses are happy to overlook minor disputes. But now no-one can afford not to pursue a debt or enforce a claim.
People are looking for someone to blame; disgruntled ex-employees are seeking a payout; regulation is in the spotlight and regulators are trying to prove their worth by carrying out more investigations and imposing higher penalties on regulated businesses.
Perhaps the most interesting development is the so-called "credit crunch litigation" which has emerged.
As well as lawsuits relating to deals that went wrong, this type of litigation concerns investors suing banks, hedge funds and other financial institutions for mis-selling, misrepresentation or negligence in connection with products that have gone belly-up and led to a loss. In order to succeed in court, investors must show that their losses were foreseeable, which may be a tough job in the context of such unprecedented market events.
So far, the judgments have tended to favour the defendant banks.
The courts have sought to prevent investors from claiming they did not understand the product or service they were signing up to when the contract they signed contained wording stating precisely that they did understand (or would seek independent assistance in order to understand it).
In this way, investors have not been allowed to muddle poor performance with mis-selling.
But the court decisions to date have dealt with situations in which the investors were considered by the court to be sophisticated parties (such as companies with experience of investing in complicated financial products). The courts are likely to be reluctant to apply the same principles to claims brought by high-street customers. It remains to be seen how this new and unique phenomenon will develop.
Emily Lew is a litigation associate at Herbert Smith LLP