Review your practices for dealing with litigation

The findings reveal rising costs and escalating risks are key issues for these businesses and globally, they anticipate more disputes in 2025 and beyond. The report findings are significant for all involved in litigation practice, including in Scotland.

Notably, disputes are on the rise UK-wide. The proportion of respondents engaged in disputes increased in all jurisdictions by at least ten per cent compared to the previous report.

Group litigation proceedings were seen as a particular risk in some sectors by in-house counsel. Such proceedings have only been competent in Scotland since 2020. Few have arisen in Scottish courts, but Shoosmiths in Scotland is increasingly seeing threatened group litigations, particularly in the motor finance and automotive space. A number may yet come to fruition.

Significantly, the report anticipates disputes in some areas will continue to rise until at least 2027. For example, 50 per cent of respondents said their organisation was involved in at least one regulatory dispute last year, 14 per cent up on 2023. 42 per cent are engaged in competition disputes, up 18 per cent compared to the first report. Scottish courts are not immune from these increases, particularly in the regulatory space.

Shoosmiths’ Edinburgh team has noticed a marked increase in the need for advice on regulatory matters, notably in the FS sector. The report shows FS has also recorded a significant rise in fraud-related claims over the past 12 months.

Admittedly, a rise in disputes isn’t wholly unexpected. In the employment sphere, businesses must increasingly grapple with a rise in equal pay disputes and employee data breaches, while the ongoing rise in costs in the real estate sector is driving an upward trend in contract and property disputes and claims.

The research finds boards and their GCs are generally more aligned on litigation risk. However, responses also suggest GCs feel boards ought to show greater concern about employment, competition and environmental disputes.

With the report revealing £600,000 is the average cost of a major dispute, it’s understandable that businesses see costs and reputation as increasingly bigger considerations than the merits of a case when deciding whether to bring a claim.

Significantly, boards consider artificial intelligence (AI) to be the biggest area of emerging risk. Almost 90 per cent of senior legal counsel believe discrimination arising from AI-powered decision-making presents a high or moderate risk.

Furthermore, respondents predict the greatest litigation risk from AI is in employment disputes resulting from the impact of AI on jobs. 48 per cent of those surveyed described this as “high-risk”. Moreover, intellectual property risks arising from the use of generative AI will increase more in the next three years than any other area of dispute.

However, more UK corporates also see the value in adopting AI tools to better manage disputes. Over 30 per cent of respondents reported plans to adopt more such tools in 2025.

In summary, a key recommendation is businesses undertaking proactive litigation preparedness. GC feedback indicates a slight increase in the number undertaking litigation preparedness reviews, but there has been little change since the first report. Safeguarding reputation is vital too, embracing litigation management technology and managing costs through the opportunities afforded by AI.

Andrew Foyle is joint head of dispute resolution & litigation, Shoosmiths in Scotland