The litigation landscape post pandemic

Although the pandemic has had a devastating impact on the UK economy many businesses have continued to trade.  Even though for most output is still nowhere near pre-pandemic levels some businesses have been able to find new ways to adapt to the restrictions.  With the roll out of a vaccine and the ability of many businesses to continue operating as a result of IT investment and home working, many are trying to remain hopeful that much of normal life will return and the economy can recover more quickly than predicted.

For many of us, the workplace has been transformed drastically over the past 12 months, as well as what we do on a day-to-day basis.  Many job roles have changed as a result of businesses finding new ways to adapt to the restrictions and with the furlough scheme now being extended until September 2021 it’s still difficult for most of us to see how things might further evolve over the next 6 - 12 months.  Based on the changes we have seen to our client’s businesses and the issues they have been coming to us with over the past 12 months the areas where we expect to see increased activity levels are:

• Restrictive covenants and confidentiality - as everything goes online and the creation of more flexible working environments provide businesses with the opportunity to recruit people from farther afield so the risk increases of confidential information ending up in the hands of competitors and customers and staff being poached.
• SPA and warranty claims - despite the challenging conditions we saw acquisitions pick up towards the end of 2020. But sellers who are faced with reduced or no-earn out payments will start to ask whether this is a consequence of recent events or poor management by the buyers post-acquisition?  Buyers who find themselves thinking the company they have acquired is not worth what they paid will start to ask if the accounts showed a true and fair view of the state of affairs of the company and its profit or loss, or were they misled because the sellers failed to comply with the relevant accounting standards in recognising and making provision for the effects of the Covid-19 pandemic.
• Payment of bills and set off - business debt is predicted to be an even bigger problem as a result of the Covid-19 pandemic and suppliers may be less flexible on payment terms.  Debtors are more likely than ever to orchestrate reasons not to pay and claim they have a right of set off.  Taking legal action remains one of the most effective ways of obtaining payment.  
• Technology disputes and IT contracts - as many businesses have had to embrace technology to find new ways of continuing to operate this has increased the need for effective systems and reliable support.  As so many businesses move operations on-line, ineffective and unreliable systems become a huge risk that needs to be addressed as a priority. 
• Supply chain issues - businesses which supply or source goods in the UK and across the EU may face supply chain issues.  We also expect to see more disputes over whether the Covid-19 pandemic has frustrated a contract or triggered force majeure clauses. 

We shall be looking at each of these areas in turn and providing you with some practical guidance on what you should be looking out for and how we can help.