The far-reaching impacts of COVID-19 continue to unfold. As the year draws to a close, we have not only seen the pandemic’s immediate effects on various sectors, but how these sectors will be changed even once the pandemic begins to subside.
We know that COVID-19 has left no industry untouched. We have written about how the pandemic has impacted REITs, sports franchise valuations, and M&A transactions, but this blog will focus on how COVID-19 has uprooted litigation activity and how the rebound time for the legal industry is projected to lag behind many other industries.
Cases Stalled Due to COVID-19
The most obvious impact of the global pandemic on the legal system is the government mandated shut down of non-essential business activity. Although the judicial system is largely considered essential, the only areas that truly remained open at full capacity were detention facilities.
Court records from available quarters in 2020 indicate no slow down or reduction of cases filed in local, state, and federal courts. While general filings remained at or near peak averages, the functionality of the Court was fairly stagnant in most areas. Some courts stubbornly refused to make concessions for legal professionals to prepare for litigation activity in light of social upheaval.
Litigation attempts continued to pour in, while administrative judges and court clerks had to reposition quickly to remain in control. Video conferences, written and recorded affidavits, and other virtual records have been admitted into evidence or Court record in an attempt to stay abreast of litigation activity during the pandemic.
Litigation Involving COVID-19
Another major impact of COVID-19 on litigation activity is the number of cases involving the virus itself. While most subcategories of litigation cases remained near par, the number of product liability nearly quadrupled in number.
While the large majority of these cases are still active, it is not too speculative to consider some causes of this drastic rise in litigation in the area of product liability. Personal protective equipment standards fluctuated greatly during the height of the pandemic. Frequent supply chain hiccups and government redirection of some items to healthcare facilities led to several product shortages.
Coupled with the lack of consistent and thorough oversight, these situations led to lawsuits in a number of different industries. Employees individually and en masse filed suit against employers for failing to provide required safety precautions in the workplace. Individuals and organizations across all fields filed suit against vendors, manufacturers, and even professional affiliations for various product violations.
Even civil suits increased as a result of COVID-19. As with any major health risk situation, the valid circumstances are largely contingent on personal perception. Individuals filed suit either for themselves, or on behalf of others, claiming to be carelessly and neglectfully placed at risk of exposure.
Not surprisingly, frivolous lawsuits are placing increased strain on the legal system. Most of these cases are speculative at best, but even moving forward to the point of dismissal requires a number of resources that are painfully thin in virtually every jurisdiction. Related wrongful death suits are already on the rise and will likely continue over the next several years.
What will 2021 bring with regard to litigation activity? Likely more of the same. Extended deadlines are now looming, but are in direct competition with newly filed cases. The number of active cases in some jurisdictions threatens to reach an all time high, with no viable relief in sight. However, one positive outcome could be the creation of at least contractual employment opportunities. There is almost certainly no reasonably effective way of clearing the current and mounting backlog utilizing only existing human and technological resources.
As litigation becomes more nuanced, it is important to work with experts who understand how to successfully navigate the sector as it is being transformed by the global pandemic. If you need litigation support in connection with a valuation dispute, contact our team at Appraisal Economics.