No sooner do we glimpse the light at the end of the Leveson tunnel than another express train of public opinion comes rushing up on the rails to blot it out. Lord Justin Leveson and 39 Essex Street’s Robert Jay QC are due to wrap up the phone-hacking hearing later this month.
The continuing fallout from the News of the World phone hacking scandal has created a legal market all of its own, with law firms and their partners – such as Taylor Hampton’s Mark Lewis and Mishcon de Reya’s Charlotte Harris – turning phone hacking legislation into a mini-industry.
The clamour for a public inquiry into the culture and ethics of bankers is growing. Some suggest it could be the next British courtroom reality TV show to capture the nation’s interest.
That unholy triumvirate of journalists, bankers and lawyers do make for great copy, if not good people.
The Leveson Inquiry into the culture and ethics of the media has been running parallel to a criminal investigation into phone hacking by the Metropolitan Police, a banking inquiry could be similarly shadowed by thousands of claims against banks being litigated through the courts.
According to the firms that are already instructed, this could be the next big litigation boom in the City, with a whole raft of firms rushing to take a slice of the 28,000 businesses affected by the interest rate product mis-selling scam.
However, it appears the FSA – and of course the big four banks, Barclays, HSBC, RBS and Lloyds TSB – which have already coughed to the deception – would prefer to keep the banking scandal out of the courts.
When the FSA gave an early insight into the redress scheme for the victims of mis-selling, it appeared on first glance that this would be a nicely packaged compensation scheme where SMEs could write a simple letter to their bank and get a payout. Think payment protection insurance (PPI).
The FSA even added a final note on its release saying there was no need for businesses to call those nasty claims management companies or greedy lawyers, stating: “Customers do not need to use a claims management company because the process is straightforward”.
This has outraged those firms already well down the road of staking claims against the banks on behalf of dozens of customers for anything between £100,000 and £100m.
Many are on the cusp of litigation and have raised concerns that the redress scheme is “cute” for the banks but is unclear for those seeking damages and may cause some claimants to lose out by missing limitation periods.
Those claimant firms include Collyer Bristow, Cooke Young & Keidan (CYK), Carter Ruck, Bracewell Law and Lexlaw – the latter two are even offering up no-win no-fee deals.
CYK partner Marc Keidan is wary of the redress scheme, he says it gives banks – which had previously refused to accept liability – a lot of “wriggle room”.
“If victims wait for the further details from the FSA, without protecting their position in the meantime, then they could find they are in for a nasty shock and that they are not covered by the scheme and then are caught by the limitation period [of six years].”
Some might think that a bit of talk about a redress scheme will be the least of the claimant’s worry because the banks are calling in the big guns.
Barclays itself has turned to Sullivan & Cromwell to sort out the Libor fiasco, while Simmons & Simmons and Matthew Arnold & Baldwin for advice on the redress scheme.
HSBC has turned to Freshfields Bruckhaus Deringer and Stephenson Harwood, while RBS – which has already spent in excess of £3m defending a major mis-selling claim from US hedge fund Highland Capital (13 January 2012) – has called in SNR Denton. Lloyds TSB, meanwhile, has called in Addleshaw Goddard with SNR Denton also thought to be involved.
Could this be the crisis which triggers a financial litigation tsunami? It is too soon to tell, but some litigators are rolling up their sleeves in anticipation.