Business pressures forcing lawyers to become advice jugglers
British businesses are facing several pressures across the board; each sector is feeling the impact of tax hikes, an unstable economy and multiple geopolitical issues simultaneously.
Amidst all this, the UK has become a hub of litigious activity, with civil claims and even class actions surging across the country. Over 2024, the High Court saw over 1.7m civil court claims, with nearly 50,000 going to trial, according to government data.
The prospect of being named in a lawsuit or even a class action tops some board members’ primary anxieties. As a result, businesses are turning to their lawyers, not just for the typical legal advice, but also for a shoulder to lean on.
The role of a lawyer, especially those working in top City firms, continues to broaden.
Already, a lawyer is juggling the skills of lawyering and knowing the ins and outs of the law they practice with business development to sustain their practice. If they are made partner, they are expected to make business decisions on behalf of their firm.
However, for clients, lawyers are now being asked to provide a full range of advice.
Michael Roberts, head of the London disputes team at Hogan Lovells, told City PM: “Providing formal legal advice is actually a very narrow aspect of what lawyers do in practice.”
“What we’re really doing is helping clients to manage risk, and to formulate and execute strategy. Whilst there will generally be a legal or regulatory context, it’s the practical and strategic guidance that is valuable – not some dry legal analysis,” he added.
Keeping an eye on client reputation
Lawyers must keep their clients’ reputations at the forefront of their minds.
Businesses are looking for “guidance on communications and stakeholder management”, says Mark Hastings, partner at Quillon Law.
He pointed out that an “effective collaboration between legal teams, boards and PR and communications advisers is becoming crucial in navigating complex and business-critical disputes, protecting reputations, and maintaining stability when stakes are high.”
This is especially true when pre-action letters regarding lawsuits come through the business’s front door.
At times, I have found myself to be the first to notify a business’s internal communications team about a claim against that company after I found it on the High Court’s system.
Now, unless there are special instances of time bars, the top level of the business is already aware of any claim it faces before it is uploaded to C-Efile by the Judiciary.
Harry Eccles-Williams, partner at Mishcon de Reya, noted, “in a fragmented, often polarised media landscape often the narrative outside the courtroom can be at least as important as the proceedings themselves.”
He pointed out that “controlling the narrative can lead to a successful resolution of the dispute”.
The Court of Public Opinion
There have been numerous high-profile legal cases that have made headlines over the last year, resulting in significant headaches for businesses. A notable example is Close Brothers, whose share price initially declined after the Court of Appeal ruled in favour of the consumer in a motor finance case.
The legal judgment last year, which caught many in the industry off guard, has resulted in an estimated £30bn compensation bill on the line if the Supreme Court rules against the lenders this month.
Dominic Holden, disputes director at Lawrence Stephens, observes: “Complex and high-stakes litigation often involves serious allegations being made which are then reported on by the press long before any judgment is handed down.”
“Winning in court is important, but so too is managing the court of public opinion,” he noted.
When legal action hits the courts, especially against big, well-known businesses, news headlines will light up. Just this week, the global press jumped on reporting that Standard Chartered was hit with a $2.7bn lawsuit over its alleged role in the 1MDB scandal.
Additionally, consumer and class actions in the UK have increased significantly. Last year, competition-related claims were being launched at the Competition Appeal Tribunal (CAT) almost every other day, particularly against the Big Tech firms.
The numbers don’t lie. A report by CMS revealed that new claims filed by the end of 2023 encompassed over 540 million members, eight times the population of the UK.
Matthew Felwick, Consumer and ESG Class Actions Partner at Hogan Lovells, explained: “In consumer class actions, the courtroom is only half the battle; the real pressure often comes from the court of public opinion.”
“Claimant firms are highly media-savvy and quick to frame companies as corporate villains, especially when household-name retailers are involved,” he continued.
He noted, “A clear, proactive communications strategy is essential from day one.”
“The goal is simple: your commercial partners should hear from you first on your terms, not from a journalist calling for comment on a breaking story,” Felwick added.
The importance of a good strategy for comms is even more critical, as Kate Cross, solicitor at Brett Wilson, added, “the speed with which misinformation now spreads underlines the need for a nuanced, carefully calibrated response which is couched just as much in PR as it is in law.”
The Court of Public Opinion can be more damaging as it can affect brand reputation, share price and even client relationships. With so much on the line for businesses, it is no wonder they are increasingly turning to their lawyers for even advice far beyond mere legal opinions.
Eyes on the Law is a weekly column by Maria Ward-Brennan focused on the legal sector.