What a difference a financial crisis makes! Back in July, I looked at data showing that the number of securities class actions in the US had fallen significantly to well below average. At the time, I quoted Stanford Law School professor Joseph Grundfest suggesting this might represent a "permanent shift".

I wasn't that sure he was right. I said at the time that the downturn might be a function of a strong stock market because if everyone's in the money, people are less likely to sue. And that would mean the lawsuits would start coming in again if there were to be a downturn.

Turns out that was absolutely right. According to to NERA Economic Consulting's semi-annual benchmark study, the 2007 federal filings are projected to increase by 58 per cent compared to the previous year. And the interesting part is that the subprime crisis has been driving some of that increase. As of December 15 2007, 38 subprime shareholder class actions had been filed. Most of them came in the second half of the year when the Subprime Meltdown started happening. That's a significant proportion of the 207 federal filings by year end, compared with 131 in 2006.

The other interesting part is that companies are now forking out more money to settle. The average settlement paid to resolve a shareholder class action case in 2007 was $33.2 million. That's up nearly 50 per cent from 2006. Similarly, there are more mega settlements of over $100 million. According to the data, 8.1 per cent of all settlements were more than $100 million in 2007, compared with one or two per cent seven years ago.