Boardrooms: Leaders concerned by rising litigation
The leaders of large UK companies care much more about protecting brands and reputations when deciding their legal strategies than success in court or a settlement, a report has found.
Researchers also said six out of 10 business leaders had seen an increase in litigation this year and more than a third were currently engaged in ‘material litigation’.
FTI Consulting gathered responses from more than 250 leaders of large UK businesses, with over 6m employees in total, for its report The Decade of Disputes: Litigation is on the Boardroom Agenda for the Year Ahead.
When asked to rank factors which determined their legal strategy, the top three were protecting the company’s brand and reputation, protecting its relationship with customers and commercial partners and protecting its “standing with regulators and policy-makers”.
This was followed by preventing “adverse reaction from top investors” or the market, protecting employees who were “witnesses or cited in company documents” and only then a “successful outcome at judgment or through negotiated settlement”.
Researchers said this was “reflective of a boardroom perception of the disruptive impact of litigation”, with 69% of leaders saying that litigation “gave serious concern” in terms of damaging reputation, 63% that it risked increasing future regulatory scrutiny and 60% that it damaged investor confidence.
A significant minority of those at board level, 13%, said their company was facing “one or more cases that could have an existential impact on the future of the business”.
Six in 10 respondents reported an increase in litigation in 2024 compared to a year ago, while 52% were concerned by the risk of litigation in the next 12 months. More than a third of companies were “currently engaged in material litigation”.
The average size of the largest claim facing each company was over £333m, and over 8% had been involved in litigation in the last 12 months where the claim was valued above $1bn (£785m).
FTI described it as “noteworthy” that 53% of companies reported that “class actions or mass claims” were becoming more costly for their company to manage.
The most common types of disputes related to employment (45%), followed by contractual/commercial (28%), and fraud and tax (both 24%).
Despite reputational damage being the biggest priority for business leaders when deciding their legal strategies, less than a quarter included their corporate affairs teams in their responses to ‘material litigation’.
“In order to successfully mitigate against reputational damage, corporate affairs should be included from the start so they can adequately implement reputation protection strategies.
“Additionally, when dealing with litigation, business leaders should look to their wider C-suite to advise on potential risks and response plans to enhance their risk mitigation planning.”
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