Threat of legal action against firms increases

Businesses are facing more lawsuits than ever before and expect levels of litigation to remain constant or increase in the coming year, a global study has revealed.

Four out of five UK businesses (78%) said they faced court action over the past 12 months, according to a report by international law firm Fulbright & Jaworski.

This figure is up from 66% on last year, and the percentage of UK respondents who faced more than 50 court actions in the past year has trebled, from just 5% in 2005 to 15% in 2006.

Findings from the annual Fulbright Litigation Trends Survey, which interviewed 422 companies worldwide, revealed that companies believe they are operating in an increasingly litigious environment, and expect this situation to continue for the foreseeable future.

One in six UK businesses (17%) expects to see an increase in legal disputes over the next year.

Regulatory issues were cited by UK companies as a primary litigation concern, with almost 60% of UK respondents stating they had faced a regulatory proceeding over the past 12 months.

Labour and employment disputes also featured prominently, cited by 48% (up from 26% last year). More companies are facing class or group actions, which they see as an increasing risk.

Lista Cannon, head of European disputes at Fulbright & Jaworski, said: “All companies, regardless of their size, have to face up to the challenge of working in a complex regulatory environment.”

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