Business disputes and litigation are set to rise in the next 12 months, driven by increasing external pressures facing organisations.
New research has found that nearly half of respondents (47%) expect legal action to increase for their business, with rapid development of technology and AI the main cause of potential disputes and litigation.
According to the survey of in-house lawyers, cost pressures on businesses, increased supply chain risks and a rise in cyber-attacks also pose legal challenges to businesses across a range of sectors, including hospitality and leisure, financial services, retail and technology.
The survey found that over the next three years, more than 60% of in-house lawyers surveyed believe there will be a greater risk of commercial and contract disputes, with a similar proportion concerned about an increase in employment disputes. Data, cyber and technology disputes make up the top three concerns, with regulatory and compliance disputes also rating highly.
The findings mirror litigation trends seen over the last 12 months by businesses, with approximately half of respondents admitting that they’ve been involved in significant contractual disputes during the last year. A quarter have been involved in employment and regulatory disputes.
With businesses on high alert, the decision whether to pursue litigation will be influenced by a series of important factors. The value of the claim and the financial impact of legal action top the list of considerations, with reputational damage and the demands on an organisation’s time and resource also playing a significant part in decision-making.
Martin Pennington, dispute resolution partner at Pannone Corporate, which conducted the in-house lawyers research, commented: “Businesses across a wide range of sectors are facing increasing challenges and greater uncertainty than ever before. Those pressures are creating a more litigious environment, with disputes covering a host of business functions, whether that’s commercial and contracts, employment, IP, real estate or M&A.”
He added: “As difficult trading conditions continue, businesses will need to remain attuned to the growing risks that they face, both internal and external. As always, navigating disputes successfully is a vital component of commercial success. Early intervention and proactivity are usually rewarded in the long run. The sooner that companies examine issues which arise, the more options are typically open to them. The disputes which become more difficult to resolve are those where parties have not confronted difficulties between them early enough in the relationship, creating a more intractable situation.”