Bishop: Average value of claims on the rise
Many in-house lawyers expect to see more disputes over the next three years, with employment litigation likely to grow faster than any other type.
More than three in four senior lawyers expect to increase headcount and 82% spending on dispute resolution in that time, according to research by national firm Shoosmiths.
After employment and group litigation, cited by 55% and 51% of in-house lawyers, the most likely types of litigation to grow over the next three years were environmental claims, supply chain logistics disputes, fraud, tech and regulatory claims.
Researchers commented: “It is perhaps unsurprising to see employment cases featuring so heavily, given the huge changes that have taken place in the world of work due to the pandemic and technological advances to enable remote working in the past few years.”
On class actions, they said: “The EU’s Representative Actions Directive has opened the possibility of more group litigation in Europe.
“Simultaneously, the availability of litigation funding, the fact that technology is enabling parties in group actions to better co-ordinate, and the concerns associated with climate change also look likely to increase activity in this space.”
There were “some areas of misalignment” when it came to the emerging risks that prioritised by company boards, as opposed to their lawyers.
The widest gap in opinions was over tech, where over 30% of in-house lawyers said boards should be concerned, compared to fewer than 15% of boards that they reported as being concerned.
Employment and regulatory risks were other areas where boards were less concerned than the lawyers.
Shoosmiths based Litigation Risk 2024 [1] on responses from 360 in-house lawyers working for UK companies with revenues exceeding £100m.
It found that organisations were looking to build in-house litigation capacity, with 77% intending to grow their teams over the next three years. This was most likely to happen in the technology sector, where 88% planned to recruit staff.
In response to the rising costs of litigation, general counsel said they would consider third-party litigation funding (31%), restrict their cross-jurisdictional reach (34%) and handle more disputes in-house (37%).
Litigation was regarded as the best method of dispute resolution in terms of successful outcomes, but the best way of achieving fast outcomes was expert determination, followed by arbitration and mediation.
When it came to mitigating risk, companies were most likely to have adopted document retention policies (62%), followed by recruiting in-house compliance specialists and providing internal training on specific risks.
Fewer than half had carried out a litigation/compliance preparedness review, just over a third had carried out a contract audit, and 28% had banned WhatsApp for company business.
The report said that in a “data and tech-driven age”, the biggest risks to businesses “often relate to the careless use of electronic communications where employees overlook the fact their chats may end up in court”.
This meant there was “a clear need to review and refresh document creation, retention and deletion policies”, to ensure companies could protect documents from automatic document destruction that could attract court sanctions.
“It is also important to educate staff about the use of social media at work, including the fact that communications via social media, text message and WhatsApp will be subject to disclosure orders in the event of a claim.
“The further that company communications are allowed to move away from formal communication styles, the more danger there is that a litigator reviewing the messages in court might misinterpret loose wording, leaving the business open to reputational damage.”
Alex Bishop, head of dispute resolution and litigation at Shoosmiths, said in her introduction to the report that the law firm’s analysis of High Court claims found that the volume of cases decreased over the past year, while the average claim value had risen.
The law firm believed in-house lawyers underestimated likely claims from environmental, social and governance disputes.
“Stakeholders, regulators and society have changing demands and expectations, and these may emerge as legal liabilities, reputational damage and investor action.”