Jonathan Ames: Litigation Watch

England’s cadre of top litigators is set to have a busy remainder of 2014, with a raft of big money and high-profile claims queuing up on the London High Court listings.

A taster of big forthcoming commercial trials indicates the variety of cases headed for the English courts, which this blog will study in more detail over future months. Here is a preview of a few of the bare-knuckle fights on the horizon.

One of the first notable trials of the early summer will have a special piquancy for the legal profession as it involves the London office of Wall Street law firm Weil Gotshal & Manges. Vienna-based private equity house Bancroft is suing the lawyers in London’s high court in a professional negligence claim valued at £10 million.

The claimants allege that Weil’s partners and a Slovakian lawyer co-defendant failed to explain to Bancroft that it would not have voting control of a company despite having coughed up £6.6m for a 94 per cent stake.

Litigation watchers will have to wait until October for the kick-off of a high profile case involving Iranian property tycoons, the Tchenguiz brothers. Robert and Vincent are massively irritated – and that’s putting it lightly – with the UK’s Serious Fraud Office, following a botched investigation that led to a judge ruling their 2011 arrest was unlawful.

The brothers’ claim is reported to be valued around the £300 million mark, with the disclosure process already understood to have set the SFO back to the tune of £1.2 million.

Later that month, the Commercial Court listings feature what is billed as perhaps the biggest claim of the year – a $1 billion bonanza featuring Bahraini investment bank, Bank Alkhair, and its client Dar Al Arkan Real Estate Development Company.

The claimants maintain the defendant — a former bank senior executive, who was sacked following alleged money laundering in 2010 – launched a campaign of rumour and defamatory statements against them in a bid to destroy their businesses.

So on the face of it, litigation is thriving in England. But there are looming developments and issues that give specialist lawyers pause for thought and some concern.

Arguably, the most radical and potentially game-changing development is the rise of third-party litigation funders. Born in Australia, this new breed has begun to make a serious impact in the heartlands of big-time commercial litigation – New York and London.

Not, however, without creating waves. Some in corporate America have qualms, suggesting the funding method encourages unmeritorious cases. There are also concerns that the financing of litigation by businesses with no direct interest in a dispute creates potential conflicts of interest.

However, proponents argue that third-party funding provides access to justice that many litigants wouldn’t be able to afford themselves. They also maintain that corporate America and UK Plc shouldn’t be so antagonistic, pointing out that their funding services are not just pitched at angry consumers, but also at business itself. Or at least those businesses that want to shift the cost of litigation off their bottom lines. Funders argue they offer the ideal outsourcing of litigation worries – hand us your disputes on a purely commercial basis, they coax general counsel, and say hello to something approaching cost certainty.

Dealing with the conflicts point, most UK third-party funders have been operating under a self-regulated code of conduct since 2011. That regime won establishment approval from Lord Justice Jackson, the latest senior bench figure to be tasked with sorting out what the British government and public view as the run-away costs of civil justice.

A recent move into the market bolstered arguments that third-party funding is coming of age. Listed Australian funder Bentham IMF launched a bid in March to crack the UK market, having agreed a joint venture with US hedge funds. According to Bentham, the London-based operation will fund cases across Europe, especially targeting Britain and Holland.

Bentham is viewed as a respected player that will provide some stability to a nascent market.

A potentially more profound problem for English litigators is the advent of shiny new alternative dispute resolution facilities in foreign jurisdictions to the potential competitive detriment of the London Commercial Court.

A recent survey of English court users – namely the client litigants themselves – produced some worrying results. Not least a fear that English law firms engage in ‘churning’. For the uninitiated, that practice involves throwing everything a law firm has at a piece of litigation.

To be more precise, that means allocating to a case every associate solicitor and trainee that hasn’t managed to escape from the office before 8 o’clock in the evening, and billing accordingly. There are suggestions that top-flight City law firms take a feel-the-width over an assess-the-quality approach to litigation, with junior solicitors and other law firm fodder assigned to big cases purely to drive up profits.

That is undoubtedly not as accurate as the fear expressed, but the point is the perception exists. And if English litigation specialist law firms — and the barristers’ chambers that feed off them — are to maintain their status (and lifestyles), countering that perception is one of the biggest challenges they face.