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New analysis highlights growing risk of US-style litigation tradition to British enterprise SMEs

The American style for litigation is spreading past its borders, and it’s coming for British small companies subsequent – that is the important thing discovering of latest analysis by Honest Civil Justice.

Honest Civil Justice (FCJ) commissioned quantitative and qualitative analysis to raised perceive authorized actions in opposition to British SMEs and to tell suggestions that mitigate the danger of predatory claims.

Our analysis, derived from in-depth interviews spotlight how SME resolution makers expertise wide-ranging and sometimes very extreme impacts from authorized motion, typically completely disproportionate to the purported wrongdoing. Key findings embody:

  • In whole, 15% of UK SMEs have confronted authorized motion or the specter of it within the final 5 years – estimated to symbolize a complete of round 120,000 companies.
  • Against this, solely 8% of SMEs have had proceedings initiated in opposition to them through an ombudsman and solely 7% have had an alternate dispute decision (ADR) process introduced in opposition to them prior to now 5 years.
  • The overwhelming majority (90%) of SMEs who’ve been topic to authorized motion or the specter of it declare to have skilled a minimum of one influence – whereas 41% of SMEs who haven’t themselves been topic to authorized motion or the specter of it prior to now 5 years nonetheless declare to have been impacted indirectly.
  • A majority of SMEs (62%) have some type of grievance decision mechanism in place already.

There’s additionally a transparent sense that the authorized course of is weighted in opposition to SMEs defending a declare, main many to settle, and a scarcity of help and steering for SMEs going through authorized motion for the primary time.

Seema Kennedy, Govt Director of FCJ, stated: This well timed analysis exhibits how the litigation tradition creating within the UK is felt by SMEs and the non-public influence it has on entrepreneurs who’re a vital a part of our communities. Everybody who needs to see financial development ought to learn the findings and proposals and take motion to guard small companies from the results of speculative authorized motion.