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Legal disputes on the rise for UK businesses

Allianz - Mike Wildy

Mike Wildy, Allianz Legal Protection

By Legal Futures Associate Allianz Legal Protection [1]

Although no business wants them, legal disputes are extremely common for organisations in the UK. Threats and complaints more than doubled in the last two years, with the five year picture even more damning. Over this period, more than half (56%) of all businesses [2] have faced an accusation, claim or allegation of unlawful behaviour.

Within this blog post, I explore why legal disputes are on the rise, what businesses can expect in the future and ways to mitigate the risks.

Disputes come from all angles. However, according to research by risk management and insurance brokerage Gallagher, issues arising from employee-related incidents account for the vast majority of disputes [2] (44%), with wrongful dismissal, discrimination, harassment in the workplace and constructive dismissal the most common. This could be a direct result of individuals becoming more aware of their employment rights and the protection they are offered under the Equality Act 2010.

Clients and customers make up a further 45%. Coronavirus has highlighted this, with the pandemic leading to six in 10 businesses [2] threatening or taking legal action against another business over the last year. This was either as a result of an alleged contractual breach or because money was owed.

Themes of legal queries over the last 6 months?

As UK businesses navigate into a post-covid world, themes are becoming evident in the type of legal queries businesses have.

Employment law is a hot topic: The furlough scheme has been effective in keeping people in employment through a challenging 15 months, although in some cases it could be seen as delaying the inevitable. With the scheme set to end in September, businesses will need to make decisions which could ultimately lead to redundancies.

However, an added dimension to an already complex situation is that those who have been ‘on furlough’ for over a year could now have amassed two years’ service having worked very little and will now be better able to access the Employment Tribunal Service. Therefore, when Furlough ends in September, there is the potential for a large uptick in employment litigation.

The future – with Covid and Brexit

The continued effects of Brexit and Covid-19 could see litigation soar. Gallagher claim “the situation has created a perfect storm with 64% of organisations [2] expecting business litigation to either remain at the same volume or increase this year.”

Cyber claims have been on a continuous uptrend for the last 5 years, but the coming year could see unrivalled growth. The pandemic has forced increased levels of remote working and a reliance on technology which is here to stay. But with that comes heightened cyber risks.

will also be situations which are the first of their kind and have no precedent. One of many examples Allianz’s legal advice helpline, Lawphone has highlighted is the calls from employers who have individuals refusing to wear masks in the workplace, therefore seeking advice on whether this is enforceable.

Ways in which businesses can mitigate legal risks

Given the landscape, it is essential that businesses do what they can to mitigate legal risks.  There are many ways in which they could do this:

If something does arise?