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Financial Impact COVID-19 will have in the legal field

On Behalf of | Apr 16, 2020 | Bankruptcy, Business Law, Contracts

During these unprecedented times as the bustling world around us comes to a screeching halt what does this mean for the legal system? In response to the spread of the novel coronavirus (“COVID-19”), California Governor Issues a Stay at Home Order to California’s nearly 40 million residents, which remains in effect until further notice.  This order of course affects the courthouses throughout California.

The measures currently being taken are unparalleled for California’s legal community. There have been a few instances of court closures in California, such as during the 1994 Northridge earthquake; however, that resulted in only a limited closure unlike for example the current San Diego Superior Court’s March 17, 2020 – April 3, 2020 reduction of non-emergency services. Gauging how this will impact the future of San Diego’s Court system is difficult as these types of closures have not happened before but one way to look at what the future may hold is to compare it to the past.

The 2008 financial collapse in the US disrupted every aspect of the US economy, like our current situation, following California’s Stay at Home order which has effectively closed several industries.

As a result of the financial collapse in 2008, there were unprecedented budged cuts which impacted California’s Judicial Branch and reduced services statewide.[1] Most courts reduced self-help services and no longer provided court reporters. However, as the court’s budget was being cut there was an increase in recession related suits such as contract disputes, foreclosures, evictions and family related filings such as changes in alimony and child support orders.

One of the court systems noticeably impacted was the Bankruptcy Courts. According to data from U.S. courts, there were 774,940 bankruptcy cases filed in 2019 alone in U.S. District Courts. By comparison, if we look at the numbers two years after the 2008 recession there were nearly 1.6 million bankruptcy cases filed.

At this point in time we are still in limbo as to how long the Stay at Home Order will remain in effect so it may be too soon to tell what ramifications this will cause the legal field. However, similarly to after the 2008 financial collapse it is safe to assume that there will likely be an influx of recession related suits, such as bankruptcies, contract disputes, debt collection and modifications for alimony/child support.   This will likely mean longer waiting for litigants to have their day in court due to the high volume of cases.

What is yet to be determined is how the court system will handle the increase all while attempting to limit foot-traffic in the court to limit exposure during the pandemic. COVID-19 will likely change the legal landscape in San Diego and our daily lives. Given these uncertainties, it is important that if you are facing an legal issues, that you find a local San Diego attorney who can walk you through the steps, lay out a strategy based on these changes and try to reach an optimal result sooner rather than later.  Some of these options may include formal or informal mediation or perhaps arbitration in order to speed up the process.  Knowing your options is crucial during these times.

By Esq., Attorney at Contreras Law Firm

[1] https://www.courts.ca.gov/partners/1494.htm

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