Fiona Parry, a partner at Halliwells, on the continuing credit crunch
WE have all continued to watch with alarm as the economic doom continues to swirl around us and credit continues to be in short supply.
Jitters ran even higher last Monday as the stock market had its worst day since 9/11, when the Index fell a whopping 5.5% in just one day – wiping off an estimated £77b in value.
Luckily the markets appear to have regained some stability and appear to have bounced back. However, the swell of commentary seems to be increasingly speaking with one voice and that a prolonged downturn is very likely.
Hopefully the doom mongers will be proved wrong and businesses will be able to continue to focus on making money. Often, when downturns occur, businesses are more likely to litigate when contracts have been breached, competitors have over stepped the mark or disputes have arisen.
In good times, FD's and senior managers have preferred to avoid the dent in budget that serious litigation can make and have taken advantage of easy and cheap borrowing and takeovers and acquisitions to keep growth and momentum.
With the continued downturn business and managers will gradually increase their appetite for a fight. Warranties, covenants, contracts, credit terms and advice will now be subject to greater scrutiny and, as money gets tighter, litigation will flourish. Claimants will want to progress claims quickly and defendants will try to drag cases out.