There is a good article in this week’s edition of the Investors Chronicle covering the various legal claims being pursued over the debacle of the Woodford Equity Income Fund. ShareSoc is backing a claim managed by solicitors Leigh Day but there are several other law firms competing to represent the 300,000 investors affected.
The article makes some good points and is certainly worth reading if you have suffered losses on any of the Woodford funds. But it suggests that the legal process could take as long as “two to three years” based on comments from the law firms. That’s presumably if the claim is successful.
In fact it might take a lot longer. For example, and coincidentally, my wife was a small claimant in the Royal Bank of Scotland Rights Issue case. That stems from 2008, and she has just received the second interim payment after the case was settled out of court. There may be more to come while the overall costs to be deducted are not yet clear but will obviously be substantial.
But twelve years to achieve a result is possibly a better estimate than two to three years. With many investors elderly, one wonders how many of them die before their claims in such actions are settled. It is a good example of the inability to obtain justice swiftly and at reasonable cost that is a major defect in the English legal system. Lawyers benefit greatly from the current system of course. In effect we have a Rolls-Royce legal system when we would be better served by a Ford version. Even the Rolls-Royce version does not necessarily provide justice as we have seen in other recent cases (e.g. the Lloyds/HBOS case).
Also coincidentally the Law Commission has just issued a call for ideas for the Law Commission’s 14th Programme of law reform” – see https://www.lawcom.gov.uk/14th-programme/ . Surely one idea worth suggesting is how to demolish the massively complex process of pursuing a commercial claim in the investment sphere. We need much simpler law, simpler processes and quicker judgements.
Meanwhile although I have no interest in the Woodford claims as I was never invested in any of his funds, I would not wish to discourage any participation in legal claims so long as you study carefully any contract which may be proposed. The outcome may be uncertain and the process lengthy but success might discourage other similar cases and encourage the FCA to tighten up the rules for fund managers.
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )
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