Litigation Risk in 2024 – Shoosmiths’ Insight

Article by Samuel Page

Introduction

A recent report by Shoosmiths has revealed insight into expected disputes in 2024 directly from leading companies. The information was gathered from over 360 respondents working as either general counsel (GCs) or senior in-house counsel across a variety of industries, including tech, financial services, telecoms and the automotive industry. All companies surveyed were based in the UK and have revenues in excess of £100 million. Top up your commercial awareness with this rundown of what they had to say.

Key points

• Though the volume of cases has decreased over the past year the average claim value has grown.
• Litigation is on the rise, as a large proportion of respondents anticipate more disputes over the next three years.
• An increase in the cost of litigation is to be expected.

Location – good news for the jurisdiction

Most of those surveyed have dealt with disputes in England and Wales during the past year. The second and third busiest jurisdictions were non-EU Europe (52%) and Asia Pacific (38%). Over the next three years, the majority expect to deal with fewer disputes across the board, though the busiest three jurisdictions remain the three mentioned above. Lawyers in this jurisdiction should be reassured by the data, which suggests that the courts of England and Wales remain a favourable option to resolve legal disputes in times of geopolitical uncertainty.

Types of litigation – boon for employment lawyers

Considering the expected outlook for disputes by theme, Employment led the way with 55% of those surveyed anticipating an increase in disputes in the next three years, followed by Group Litigation (51%) then Environmental and Supply Chain Logistics tied in third (47%).

Shoosmiths are unsurprised by the increase in employment litigation. Huge changes occurring in the workplace such as the pandemic, technological advances enabling remote working, significant pressure on wages as a result of inflation and recessionary threats are all to blame.

The rise of group litigation was also expected due to The EU’S Representative Actions Directive’s impact on the European market. The Directive aims to ensure consumers can protect their collective interest in the EU via representative actions to stop trader’s unlawful practices and access redress measures. Member States were expected to have appropriate systems in place by June 2023. The UK, of course, is no longer bound by EU Directives, and currently does not have an overarching mass actions regime in place. It remains to be seen whether there will be voluntary alignment on this basis or whether Group Litigation Orders and the Competition Appeal Tribunal are deemed adequate mechanisms going forward.

Fraud remains a notable concern, with 65% of sector specific respondents in the financial services industry expecting an increase in the near future, second only to employment claims at 72%. With fraudulent techniques becoming increasingly advanced, and the Supreme Court pulling in the reigns on the Quincecare duty last year (Phillipp v Barclays Bank PLC [2023] UKSC 25) the onus is increasingly on individuals to be wary and not rely on the courts for remedy, and one wonders whether the recorded 50% success rate in civil fraud claims is set to drop.

Industry response – more lawyers, more money, more problems?

The expected increase in litigation has senior counsel anticipating two major changes to the industry over the next three years.

First, an increase in headcount and spending. In response to the expected increase in disputes and concurrent economic deterioration, over three-quarters of surveyed lawyers expect an increase to their in-house litigation teams. Regarding litigation budgets, over 80% of respondents are expecting an increase in resources to combat disputes. The data could make attractive reading for those considering employed legal work.

Second, an increase in cost. Invariably, as the economy suffers, the price of litigation goes up. Of those surveyed, the main trends in response are to pursue different methods of resolution, invest in in-house resources, pursue fewer disputes, and to handle more in-house. Interestingly,31% surveyed would consider turning to third-party litigation funding, though appetite varied across the sectors, with technology GCs twice as likely to consider it as an option compared to those in financial services. Shoosmiths proffers one possible reason for this: that financial institutions are less likely to be in the position of claimant. This will certainly be one to watch, especially in light of the Supreme Court’s ruling in R (on the application of PACCAR Inc) v Competition Appeal Tribunal [2023] UKSC 28 seemingly putting a dampener on many current funding arrangements, and recent collapses of notable funders.

Conclusion

The report offers a thorough evaluation of what to expect from litigation over the next three years, and this brief summary should provide you with some bankable commercial awareness points for upcoming interviews. Though outside the scope of this article, the report also offers interesting comments on how companies can anticipate and mitigate exposure, which are well worth a read. 

The report can be found here Litigation risk 2024 report (shoosmiths.com).

Sources: 

50% Success Rate in Civil Fraud Claims: Data from Stewarts LLP August 2023 report using the High Court analytical tool, Solomonic.

Litigation funder went under owing £43m to its backer, administrator reveals | News | Law Gazette; Legal businesses including barristers chambers and medical agencies stand to lose millions from SSB Group collapse | Law Gazette

Litigation risk 2024 report (shoosmiths.com).