Year will see an increase in litigation

Jan 5 2010 by Neil Warwick, The Journal

HAPPY New Year – a time for resolutions but also one for predictions.

From a legal perspective the most obvious prediction for 2010 is an increase in litigation. As the valuations of businesses rise again, some lenders may be tempted to try to put businesses under to improve their own balance sheets. As a result, there tends to be more employment litigation as questions can be raised over redundancy consultations and unfair dismissal claims.

Debt recovery action also increases as cash flow becomes top priority. Equally, some new and innovative forms of litigation materialise during hard times to generate some contingency fee work. Concepts such as trip and slip claims and repetitive stress injury all appeared during economically difficult periods.

The prediction for this recession is that conflict of interest claims will increase, particularly in the public sector. For example, a solicitor should not act for both seller and buyer because if there is a dispute, the solicitor could be compromised.

One issue which will drive up conflict claims is the fact that people will look to lawyers, accountants, IFAs and banks and see that the mandatory professional indemnity insurance these professionals must have in order to practice might be a source of some opportunistic income.

There is an over reliance on public sector spending in the North East so cuts could harm the region disproportionately in 2010. Equally some sections of the public sector have had an over reliance on public procurement procedures as a form of a cure-all defence to justify any expenditure they have made.

Some of these procurements will have breached conflict rules. Faced with a possible loss of income from public spending cuts, some firms will look to ways of challenging procurements in the hope of a windfall compensation payment. The usual hope that firms don’t challenge procurements for fear of being blacklisted will not hold true if they think the public body may no longer exist by the end of the year.

If resolutions follow predictions, this year’s ought to be for the public and private sectors to carry out an audit of their procurements to try to eliminate areas of risk.

For information about how Dickinson Dees can help SMEs, contact Neil Warwick on 0191 279 9375 or email neil.warwick@dickinson-dees.com.