Some worrying signs on the class action front and it's going to get a whole lot worse.

Class actions are on the increase and the median settlement figure has Spiked, according to the latest release from Cornerstone Research. According to these findings, the number of securities class action cases settled rose 21 per cent, from 92 in 2006 to 111 in 2007.

And don't be fooled by the total value of these settlements plummeting 60 percent from the all-time high of $17.2 billion reported in 2006 to $7 billion in 2007. Look at the numbers carefully and you will see it's a statistical glitch. The 2006 figure was skewed by the largest settlement in history, the $7.2 billion Enron case settlement. Look at the middle range settlements -those of $10-20 million. In 2006 such settlements accounted for just over 10 percent of the total; in 2007 they accounted for nearly 25 percent. And as a result, the the median settlement spiked to $9 million.

The other interesting part is that institutions are now playing a bigger role in class actions. Institutions served as lead plaintiffs in almost 60 per cent of settlements and they were associated with significantly higher settlements. With the money power of institutions bankrolling litigation, we can expect the number of class actions to increase.

The question is what impact the subprime fallout will have on these figures. It will make it worse. As Kevin LaCroix points out in D&O Diary blog, the subprime and credit crisis will continue to drive this trend but the more important question is whether credit crisis litigation will spread beyond the financial sector.