A new study has revealed that around two-thirds of businesses expect litigation claims to remain at a high level or to increase this year, with 56 per cent having faced accusations of unlawful behaviour in the last five years.
Businesses in the IT and construction sectors were the most likely to face lawsuits, according to the research carried out by risk management and insurance brokerage, Gallagher.
A sizeable proportion of the claims faced by businesses were employment-related and the researchers suggest that this could increase further as the Coronavirus Job Retention Scheme – the furlough scheme – comes to an end in September.
Meanwhile, around six in 10 businesses either took or threatened legal action because of outstanding debts, alleged contractual breaches or alleged infringement of intellectual property rights.
The researchers also noted the potential for increased litigation in the coming months over business interruption insurance and whether insurers are required to pay out after businesses were required to close during the pandemic.
Gary Fletcher, South Managing Director at Gallagher, said: “Litigation is being fuelled, in part, by supply chains, COVID-19 and Brexit but in addition to this, economic downturns also usually produce a boom in disputes.”
Carla Jones, an Associate Solicitor with Palmers, who specialises in commercial litigation, said: “Disputes all too frequently arise in business and can become a major drain on management time and resources unless handled quickly and efficiently.
“Disputes can range from breach of contract and sale of goods disagreements to major issues involving construction, engineering and property.
“Many of the cases we deal with involve problems that are internal to an organisation, such as partnership and shareholder disputes.
Regardless of the reasons why disputes occur, it is important to take prompt action to ensure the matter is resolved without undue cost to both your profitability and commercial reputation.”
Palmers provides sensible, practical solutions and sound advice based on a wealth of dispute resolution experience.
We are leading advocates of mediation and other alternative dispute resolution (ADR) procedures. We also have a mediator accredited with the Chartered Institute of Arbitrators working within our team. To find out more, please contact us.