New research published recently by insurance broker and risk managers Gallagher suggests that incidents of legal threats, claims and formal complaints against UK companies is likely to continue to increase over the next few years. With the volume of such actions having over doubled since 2018 and having increased by an incredible 300% since 2016, it is vital that UK businesses take positive steps to mitigate against such eventualities.

The Gallagher data, based on surveying more than 3,000 UK businesses across multiple sectors, found that in the past five years, over half (56%) of all businesses have faced an accusation, claim or allegation of unlawful behaviour. Sectors facing the most litigation include IT (72%) and construction (60%), and amongst these the proportion is even higher.
Employees make up the bulk of the accusations (44%), followed by customers (23%), clients (22%) and suppliers (8%), while public sector bodies make up the remaining 3 per cent. Wrongful dismissal (17%), discrimination (17%), harassment in the workplace (13%) and constructive dismissal (10%) are the most common disputes, with injury, illness or stress as a result of work also on the rise since 2016. While the economic environment means that disputes of all kinds are being generated, employment litigation is expected to surge later this year after the furlough scheme ends. Many organisations are likely to face a high volume of redundancy-related claims – as employers make decisions that the furloughing scheme enabled them to defer.

The COVID-19 pandemic has had a significant impact on companies’ abilities to meet their contractual obligations with many supply chains issues. Six in 10 (59%) businesses took legal action or threatened to take legal action against another business last year as a result of an alleged contractual breach (29%) or because money was owed (23%). Meanwhile, intellectual property infringement (22%) was another factor driving disputes.

Claims Against Businesses

In the past five years, customers were most likely to make a claim as a result of buying faulty products and services (24%), injuring themselves or damaging their property on business premises (23%), having their data breached (18%), alleged professional negligence (18%) and services not provided on time (18%).
Claims relating to data issues have also increased the most over the last five years, and Gallagher is warning organisations to prepare for an increase in claims this year. This is due to heightened cyber risks because of increased levels of remote working, reliance on technology and automation, plus a surge in group claims such as high profile cases involving BA and Virgin Media– where customers with a similar complaint group together.

The data also shows that the majority of claims are settled by businesses directly (17%), settled by insurance prior to going to court (15%), or via mediation or alternative dispute resolution (8%). For close to one in 20 (4%) businesses all it took was an apology – and around one in every 10 (10%) claims are withdrawn. Four in 10 claims (45%) make it to the courts of which 69% rule in favour of the complainant.

Commercial Litigation Funding

If you are thinking about taking legal action against another individual or company but are worried about the costs involved, Advantage Litigation Services have the skills and expertise to help you find a way of funding commercial litigation without risking your personal finances or those of your business. Click here to contact us today or call 0800 160 1298 to see how we can help.