From Am Law - Is Credit Default Swap Litigation the Next Big Thing?"A credit default swap is a credit derivative contract in which the buyer makes regular payments to the seller in exchange for the right to a payoff if there is a default or "credit event." Basically, these are insurance contracts, which were widely sold as a hedge against declines in the markets for complex securities."
What does that mean? If the litigation takes off, big Wall Street law firms may not be able to particiapte due to conflicts. Banks don't generally like to sue other banks. And they particularly don't like the law firms that get in the middle of such disputes. Therefore, firms outside of New York that don't ordinarily represent the big banks will have real entrée here, just as they have in signing up the hedge fund clients that are already active plaintiffs against banks.
What is at stake? A piece of the $43 trillion market in these unregulated instruments.
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