With COVID-19 and Brexit bringing a range of issues to businesses across the UK, this article looks at what the knock-on effects are with regards to business disputes that could be faced in 2022.
They say that the path of true love never runs smoothly; the same can be said for business. A company is made up of many moving parts and often involves relationships with suppliers, clients, collaborators, and partners.
While these relationships are extremely beneficial, they can also bring bumps in the road in the form of disputes.
In the last couple of years, we’ve seen some major global changes which have had a knock-on effect on commercial litigation in the UK. Keep reading and we’ll take a look at five business dispute trends to look out for this year…
Cybersecurity addressed in court
Cyber-attacks and hacking increased by 11% in 2021. Fueled by the pandemic and the fact that more people than ever were working from home, cyber criminals had a field day in 2020 and 2021.
Alarmingly, during the pandemic, there was also an increase in cybercrimes being committed to company employees. Although, at present, only about 0.3% of cybercrimes are actually prosecuted.
However, the growing focus on ESG (Environmental, Social and Governance) factors means that more and more cybercrime cases are now making their way to court in the UK.
Employment issues caused by COVID-19
The COVID-19 pandemic has impacted on almost every single aspect of our lives, and business are no exception. As businesses were forced to close their doors and furlough their staff, an inevitable knock-on effect was that deadlines were missed, meaning terms of commercial agreements were broken.
Although the pandemic was, of course, out of the hands of the businesses involved, there has been an increased number of cases brought by clients looking to recoup the losses that they experienced due to non fulfilment of contracts.
While many companies have managed to find solutions to these problems through a commercial litigation solicitor, many more will still find themselves in court in 2022. On top of this, many businesses are finding themselves having to deal with the quagmire which is staffing issues which may end in a dispute.
One example of this is that some businesses either furloughed staff during the pandemic, or paid them out of pocket, only to find that those staff are handing in their notice once they are instructed to return to the workplace. Understandably, a lot of employers have been angered by this and have sought to make a claim against those employees.
Commercial property rent
In the UK, a significant number of businesses were forced to move to remote working for up to 18 months to slow the spread of COVID-19 and protect their staff. Subsequently, lots of businesses found that they were working at a limited capacity which, although unavoidable, led to specific problems with rent and mortgage payments on commercial property.
In many cases, businesses simply did not have the funds to keep paying their commercial rent or mortgage and found themselves slipping into arrears. This has led to an increase in claims by landlords and mortgage companies looking to get hold of the cash that they’re owed.
Insurance is an essential part of any business, and many companies spend a significant amount of money on their business interruption insurance. This protects them against factors out of their control which may mean that they have to cease trading for a period of time.
Of course, one important factor was the pandemic, and many businesses were relying on their business interruption insurance to dig them out of a considerable financial hole.
Unfortunately, as with other kinds of insurance, many insurers have worked hard to find loopholes when it comes to COVID-19. This has forced a lot of companies to resort to legal action in order to claim what they believe they are owed.
The insurance sector was increasingly under fire during the pandemic as many companies such as wedding insurers refused to pay out on claims, stating that COVID-19 was not covered in the contract.
Changes to auditing
The Accounts and Audit regulation changes of 2021, relating to the 2020/2021 and 2021/2022 financial years, mean that we’re likely to see an increase in claims against directors and unfair prejudice.
A company’s shareholders tend to take a deep interest in the way that a company is being run. The shareholders usually won’t hesitate to take legal action if they feel that their investment has been prejudiced in some way.
For company directors who may be caught out by the new rules, this could be disastrous. Particularly as a growth in litigation funding for third parties will make claims easier to pursue than ever before.
A challenging year ahead for businesses
As we navigate our way out of Brexit wrangling and the COVID-19 pandemic, a huge number of businesses are still struggling to recover from what has been a devastating couple of years, with many more which have since gone under.
For most of these surviving businesses, the prospect of a legal dispute is disheartening to say the least. Any business facing legal action of any kind should always kit themselves out with a great commercial litigation solicitor as soon as possible.