Construction businesses most likely to face litigation as claims soar

News Article

A new study has revealed that around two-thirds of businesses expect litigation claims to remain at a high level or to increase this year, with 56 per cent having faced accusations of unlawful behaviour in the last five years.

Businesses in the IT and construction sectors were the most likely to face lawsuits, according to the research carried out by risk management and insurance brokerage, Gallagher.

A sizeable proportion of the claims faced by businesses were employment-related and the researchers suggest that this could increase further as the Coronavirus Job Retention Scheme – the furlough scheme – comes to an end in September.

Meanwhile, around six in 10 businesses either took or threatened legal action because of outstanding debts, alleged contractual breaches or alleged infringement of intellectual property rights.

The researchers also noted the potential for increased litigation in the coming months over business interruption insurance and whether insurers are required to pay out after businesses were required to close during the pandemic.

Gary Fletcher, South Managing Director at Gallagher, said: “Litigation is being fuelled, in part, by supply chains, COVID-19 and Brexit but in addition to this, economic downturns also usually produce a boom in disputes.”

Adam Davis, a Director with Palmers, who specialises in construction disputes and litigation, said: “Disputes all too frequently arise in business and can escalate; becoming a major drain on management time and resources unless handled quickly and efficiently.

“Regardless of the reasons why a dispute has occurred, it is important to take prompt action to ensure the matter is resolved without undue cost to both your profitability and commercial reputation.

“Prevention is always better than cure which is why we recommend regularly reviewing your contracts and other agreements to prevent a dispute from arising in the first place.

“If, despite the best laid plans, a project does not run as planned and a dispute arises, our expert team can advise on resolving the issue, often without the need for litigation, through alternative dispute resolution and mediation.”

To find out more about our dispute resolution service, please contact us.