FINANCIAL SERVICES DISPUTES
CD: What are some of the major trends and developments driving disputes within the financial services sector? In what ways have these shaped the industry over the last 12 months or so?
Kotler: In terms of trends, first and most fundamentally, a new administration in the US means we will have policy and regulatory changes that will impact disputes. We do not yet know what those changes will be, but they will be coming. Second, we are finally at the end of the wave of disputes coming out of the housing and financial crisis. For years there was a large amount of litigation tied to products involving mortgages after the 2008 crisis, and now we are seeing a reemergence of disputes based on regular market movement and conduct. Third, we are continuing to see the globalisation of disputes involving global financial institutions. Litigation often is not in just one location, but is instead connected to multiple jurisdictions – and that requires global coordination. Financial services firms need dispute counsel that can handle related, connected disputes around the world.
Wass: Claims involving the sale of interest rate swaps by banks are on the wane but other forms of financial litigation are increasing, particularly in the forex sector. Banks appear to have learned something from their past mistakes. The rise of litigation funders has definitely helped claimants with the more persuasive complaints but the difficulties faced by impecunious potential claimants in raising seed finance, just to get advice on whether the case is meritorious, remain. The prospect of paying significant costs incurred by banks if claimants lose at trial, and the price of obtaining After The Event (ATE) insurance, continues to dissuade potential claimants from pursuing actions.
Jul-Sep 2017 issue
Cahill Gordon & Reindel LLP
Cleary Gottlieb Steen & Hamilton LLP
Duff and Phelps