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Legal disputes predicted to rise in 2022
Legal action will reach “record levels across the board” as businesses seek to recoup losses following the global pandemic, according to Commercial & Legal.
Lauren Croft
As we enter a post-COVID era and the country starts opening up, lawyers are experiencing the beginnings of an upsurge in contractual disputes from the construction industry and small businesses in particular, as property investment and development reaches new highs and recent indicators reflecting low levels of small business collapses.
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Commercial & Legal partner Nick Graham said that legal action would only increase moving into 2022 as businesses endeavour to recover from damages, losses and inconvenience flowing from the pandemic.
“We have been playing a critical role in helping business weather the storm posed by an increase in disputes. These last 18 months were particularly disruptive, with the pandemic wreaking untold economic and social havoc, causing businesses to contend with occupancy, staffing and general operational issues arising from lockdowns and cancelled contracts; all while trying to navigate increased regulation and obligations across a wide variety of areas,” he said.
“Essentially, COVID-related economic uncertainty, and the increase in litigation that comes hand-in-hand with it, will continue to feature heavily for the foreseeable future as impacted businesses look to rebuild and claw back losses.”
Mr Graham said that there were a number of industries hit harder by the pandemic than others, including the tourism and hospitality sectors as well as the property and construction industries.
“The effect that the COVID-19 pandemic has had, and continues to have, on those sectors increases the risk of disputes and litigation. With the benefits of flexible working arrangements proving attractive to many, I have a real concern that the tourism and hospitality sectors will be hard hit if government support is limited in future and business owners are left to face the consequence of significantly limited trading opportunities,” he said.
“Another area worth mentioning is the property and construction industries. With the price of real estate increasing, vendors are often having seller’s remorse, particularly for contracts with extended settlement dates.
“We are finding more and more clients seeking to terminate land contracts at the first sign of trouble, leaving the parties to argue whether the termination is lawful. Moreover, with the price of construction materials surging in Australia, the builder’s margin is shrinking, leaving the potential risk of insolvency for smaller building companies,” Mr Graham added.
As the world moves into the new normal, businesses need to consider their workplace policies and strategies to reflect this – which may cause increased workplace disruption.
“Workplace disputes are expected to increase as restrictions ease and we adapt to living with COVID-19 in the community. With vaccine mandates coming into effect in many industries, there is also the potential for disputes with employers who do not mandate the vaccine and, as a consequence, have staff who contract COVID-19,” Mr Graham said.
“There may be significant disruption in many workplaces, with concerns about staff shortages and the privacy of a staff member’s vaccination status, where the vaccination has been mandated, which is a tough issue for employers and staff alike.”
Mr Graham suggested that when confronting a dispute, the options available to businesses would depend on the facts of the matter, records, quantum of loss and most importantly, the desired outcome. Furthermore, he said it was essential that “lawyers and their clients work together to take the time to understand the business’ objectives and its commercial operations so that a lawyer can properly advise on strategies to minimise risk and best support their clients”.
“With the financial pressures of snap-lockdowns and restrictions being implemented with less than 24 hours’ notice, the last thing that a client needs is the uncertainty and stress of protracted litigation. Lawyers serve their client’s interests by acting commercially, advising holistically and with a strong emphasis on working to informally resolve disputes. This is arguably the greatest support a lawyer can provide their clients,” he said.
“Additionally, as the world begins to move towards flexible working arrangements, lawyers should also consider how they can best make themselves available to their clients. The reality is that no one has time to resort to traditional means of communicating and face to face meetings, so lawyers should look to embrace the power of technology to ensure they are available to their clients in their time of need.”
