UK businesses were more likely to lay down their arms during Covid as conciliation replaced conflict a survey of 100 companies in the FTSE350 has found. According to Big Four firm EY, almost two-thirds (63%) reported adopting a conciliatory approach to business disputes since the start of the pandemic.

But the majority (59%) now expect claims to be higher than normal in 2021, with 14% fearing that extra litigation could affect their ability to continue trading.


EY survey found conciliation replaced conflict for UK businesses during Covid

Source: iStock

The research suggests that British businesses largely heeded official guidance, released by the Cabinet Office in May 2020, which called on corporates to avoid litigation.

Three-quarters of companies surveyed turned to alternative dispute resolution to resolve an issue during the pandemic, with 69% granting or receiving time extensions and 59% renegotiating other contract terms.

Mark Fritzsche, a UK claims and disputes partner at EY, said that the economic disruption and contractual performance issues that were so prevalent during the past year would ordinarily be accompanied by a rise in claims, but the exceptional circumstances of the pandemic had stopped the expected rise in litigation.

However there are signs that conciliation is a short-term trend. Fritzsche added: ‘While we think some of this is driven by a genuine desire to ‘do the right thing’ during the pandemic, a further and perhaps more important factor is that businesses with claims to bring have spent the last 12 months focused on simply navigating the operational impact of Covid-19.

‘Many businesses haven’t had the time or resources to bring potential claims. As vaccine rollouts continue, government support ends and attention turns to recovery, that balance is shifting, and a need to protect shareholder value will prompt businesses to become more active.’

Almost one-third of corporate respondents (32%) said that, during the pandemic, they had deferred or stopped investigations which they would have pursued beforehand.

But nearly half (47%) of corporate respondents have raised or expect to raise a claim as a result of Covid-19, while 31% have either received a claim or are expecting to. 

A parallel EY survey of over 100 commercial litigation and international arbitration lawyers found that 66% of respondents also expected Covid-19 to prompt an increase in claims.