The true financial impact of the Covid-19 pandemic has yet to be seen, but many sources agree that its impact on the Scottish economy will be significant. Both the UK Office for Budget Responsibility and the Scottish Government have predicted that GDP could fall by a third.
As Scottish businesses look to begin financial recovery, they may face an additional challenge with litigation and disputes on the rise in an economic downturn. For businesses already feeling the hit from lockdown, or for others which may not have budgeted for an unforeseen increase in litigation, this could seem like a make-or-break moment. But it doesn’t have to be, with the right support and a fresh approach.
The right support: New regulations came into force in Scotland at the end of April 2020 which allow law firms to offer more flexible approaches to fees including deferring payment until there is a successful outcome in return for a percentage of the amount recovered. When combined with the availability of disputes funding through large firms like Clyde & Co, this offers a risk-free path for litigation if required, with the business paying fees only if their litigation is successful. After all, a law firm should be willing to consider sharing the risk, with their client, of their advice being both unsuccessful and successful.
A fresh approach: While many firms provide excellent legal services to their clients, some firms may not be in a position to offer dispute resolution services if their clients need them. Where a smaller firm lacks its own litigation or dispute resolution offering, global firms like Clyde & Co can support using services like our dispute resolution agency offering, while maintaining the original client relationships.
While a dispute can be an unwelcome distraction for any business, and a litigated dispute even more so, there is always time to reflect on what is right for the business. In addition to the funding model one question to ask is which law firm offers the service best suited to the business and the dispute. This may be the law firm that has always acted for the business; or it might be a specialist dispute resolution firm. The answer might not be clear. The answer can become clear by, as happens elsewhere, inviting law firms to set out why they are the best firm to help you and your business with this particular dispute. Just some of the questions that might be asked include: what fee options are available; is there funding available; who would work on this dispute; what experience do they have; how is what you provide different from other law firms and right for this dispute?
The core message is this: litigation doesn’t have to be an economic liability. In the face of economic strife, some companies will make rash decisions which may require seeking damages through the courts or arbitration for legal wrongs. By breaking old habits, businesses can enforce their rights without diverting financial resource. Litigation could be an asset that businesses can exploit by procuring legal services as they procure anything else: shop around to choose the law firm that offers you the best holistic approach to the dispute including how the risk is shared.
Anne Kentish is a Partner, Clyde & Co