Litigation more likely as crunch begins to bite | 09 November 08

THE credit crisis is likely to lead to a rise in companies taking legal action to recover lost assets, a leading law firm has said.

Businesses and company executives are increasingly prepared to fight their corner when it comes to disputes with other companies or organisations, according to North law firm Ward Hadaway.

This has led to a rise in the number of commercial litigation cases, the firm reports, a trend which is likely to continue as the effects of the global financial crisis continue to be felt.

Paula Myers, partner in the commercial litigation team at Ward Hadaway, said: “As economic conditions continue to tighten, companies are having to keep a tighter rein on costs as well as ensuring that they are getting what they are owed.

“In these circumstances, clashes between businesses over a range of different matters are more likely to occur and, if these differences of opinion result in serious losses for one side or another, the chances of legal action being taken are inevitably higher.

“We have seen a rise in the number of cases which we are taking on, partly as a result of the current economic climate and partly because a package we have in place at Ward Hadaway cuts down on the potential cost of commercial litigation claims.”

The WH Protect package combines no-win, no-fee agreements with insurance against costs if a case is lost.

This means that if a claim is unsuccessful, legal fees are reduced either to a manageable level or are otherwise nil.

In addition, the insurance element means that unsuccessful claimants who have signed up to the scheme have their costs or liabilities to their opponent covered.

Paula Myers said: “WH Protect has meant that people and companies who would not previously have been able to afford to pursue commercial disputes can now do so.

“It also means companies who are finding it difficult to find cashflow to devote to such actions at the current moment in time can afford to.”

Under the system, each potential case goes through a risk assessment on its benefits.

Ward Hadaway is one of the only law firms in the country to have delegated authority from an insurance company, First Assist.

This means that once a potential claim has passed a risk assessment, the firm’s commercial litigation experts can write a costs insurance policy on First Assist’s behalf.

Paula Myers explained: “First Assist trust our judgement enough to give us this delegated authority which means that a client looking to take out a WH Protect policy can get a decision quickly once the risk assessment has been completed, rather than waiting for decisions from insurance under-writers.

“The sooner a policy is in place, the sooner costs are covered and the case can progress.”

Ward Hadaway has already had several successes in cases covered by the scheme, including a successful claim by an executive against an insurance company over a critical illness policy.

The firm has also successfully helped a company to bring an action over an employment law assistance package which failed to cover the costs of a tribunal.

Paula Myers said: “While no-one wants to see commercial disagreements occur, it is important that concerns about costs do not stop people from pursuing what they see as a rightful course of action.”

* For further information on WH Protect or any of our commercial litigation services, please click here.