Dispute resolution to soar, four reports agree

Dispute resolution to soar, four reports agreeDispute resolution is set to rise sharply, according to four independent reports published this week.

The reports highlight a variety of factors as being responsible for the rise, including the economic downturn and changes to the Companies Act.

One of the reports, published by the Law Society, claimed that commercial disputes are on the rise as businesses crack down on contract and partner fall-outs.

Law Society president Paul Marsh (pictured) said: “Businesses have a lot to contend with in terms of raising capital, chasing debts, paying rent and so on. Clearly they are struggling and pursuing every option to survive, including checking their contracts and seeking to enforce terms.”

Research compiled by law firm Reynolds Porter Chamberlain supports the Law Society’s claim, and found that the number of High Court commercial cases jumped by a quarter in 2006 to 61,691, after a six year decline. This is even before credit crunch-related litigations were filed.

This increase in court cases, according to a second survey conducted by legal publishers Sweet & Maxwell, is leading to a shortage of expert witnesses. More than a quarter (28 per cent) of law firms questioned said they are finding it difficult to instruct the most appropriate professional.

One forensic accountant interviewed said his team had “almost more work than we can handle”, while another said his team had to “consistently turn down work”.

Meanwhile in the third report published today, law firm McGrigors also warns that commercial disputes will increase, not only due to credit crunch litigations but also due to changes to the Companies Act on 1 October.

According to the firm, the changes to the act will become easier for companies to challenge parties who opportunistically register names in a bid to sell it back to the “rightful” owner.

McGrigors’ Technology & Commercial solicitor Helen Krushave said: “This loophole for company name registrations was used by people who recognised that ‘squatting’ on a company name was an easy way to turn a quick profit.”

The amended Act gives the “rightful” owner the ability to complain to the newly created Companies Name Adjudicator to handle any disputes, Krushave added.

In the fourth report on the topic, by International Financial Services London (IFSL), arbitrations and alternative dispute resolution (ADR) also had a busy 2007.

The IFSL’s first survey of seven of the UK’s biggest ADR providers found that more than 10,000 arbitrations and mediations took place during 2007. The report attributed the high number to the growth in world trade, foreign direct investment and international financial transactions. The organisation predicts that the numbers of arbitrations and mediations will rise in the next year as a result.