Riding the Wave: The anticipation of a new wave of pandemic-related claims

April 19, 2022

2 min read

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What's going on here?

Lawyers predict an increase in pandemic-related litigation claims over the next two years, a report finds.

What does this mean?

With Covid-19 no longer posing a threat to business transactions, 78% of lawyers questioned by the London Solicitors Litigation Association are expecting another wave of pandemic-related claims. Disruptions caused to supply chains, frequent business insolvency and issues with insurance policies are just a few of the many contractual disputes which have recently resurfaced. This has come following the return to normality and the aftermath of the pandemic. As a result, the legal sector may be under increased pressure to deal with the vast increase in workload in the upcoming years.

What's the big picture effect?

In an attempt to prevent future surges of Covid-19 related litigation claims, the 2020 Cabinet Office Report encouraged parties to avoid litigation where possible. The report proved useful in reducing the effects of the pandemic’s aftermath, with 44% of respondents revealing that they were more likely to use alternative dispute resolution (ADR) after the pandemic. The report also pushed over 60% of corporate respondents to take a more conciliatory approach to disagreements instead of pursuing costly litigation. Nevertheless, survival was reported as a top priority for businesses. It found that whether a business pursued a litigation claim depended on whether there was an ongoing need to prioritise the pandemic’s impact on the business.

It is unsurprising that lawyers believe another wave of Covid-related claims is looming over law firms in 2022. The pandemic created a lot of disruption to the global economy and the resulting losses left many companies under pressure to seek financial retribution. Issues like pandemic-fueled broken contractual promises and non-performance of contracts have resulted in seven out of 10 businesses already having claims registered against them. Recently, Stonegate (the UK’s largest pub) has been suing a trio of insurers for £845m losses suffered during Covid-19.

Many have also speculated that Brexit could have a bigger impact on litigation. Despite the uncertainty with Brexit’s consequences, 57% believe there will be an increase in Brexit-related claims. Areas most likely affected may include employment and regulatory issues.

With everything in mind, there may be a big strain on the legal sector to juggle the potentially large amount of claims coming their way. Law firms have already begun establishing mental health initiatives for employees suffering from stress due to increasing workloads in areas such as M&A. This potential rise in pandemic-related claims, on top of the already long list of pandemic-related issues, could pose another hurdle for law firms. It will be interesting to see how the legal sector will respond.

Report written by Dominika Gaber

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