Year of the Rabbit or
Year of Litigation?

2023 is the Chinese Year of the Rabbit, but could also be one of unprecedented levels of SME prosecution, with organisations exposed to numerous pressures and challenges.

Background

Businesses are under enormous strain, whilst still suffering pandemic hangovers.

In 2022, businesses were under the microscope, with regard to business planning, viability and business continuity strategies.

Energy prices, supply chain woes and the Ukraine conflict have piled on the pressure. The cost of living crisis and other economic factors are making society increasingly litigious. Claims, contract disputes, regulatory investigations, class actions, and health and safety prosecutions are real threats.

This has created the perfect storm for management liability claims, as directors and senior managers struggle to make the right decisions for workers, clients and stakeholders, as well as trying to operate within a required compliance framework.

The regulatory landscape in the UK is extensive and includes rule-imposing local authorities. The Health & Safety Executive (HSE), police, HMRC, ICO and the Environment Agency are others to be aware of, as well as industry specific. and others that can affect workplace planning. This is why it is good practice to have expert advice in this area.

If a claim is brought, the buck typically stops with whomever is in charge. Regulators are increasingly prosecuting individuals, not entities. The problem is that many individuals believe that Limited Company status will protect them from prosecution. That is not always true, however, but if a director or senior manager is adjudged to have acted wrongly or without authority against the interests of a company, they may well have to personally pay compensation to the injured party and could also have a jail sentence imposed. Personal assets may have to be sold to pay fines and awards

Key takeaways

Prevention

With a plethora of things that can go wrong, it pays to be on the front foot, to prevent ‘management liability’ becoming the two words that become a “catch-all comfort blanket” that enables relaxation in process and thinking that insurance will cover all. Actively getting your house in order can prevent situations arising in the first place, and expert guidance and tools can also be real assets.

Accessing these may be costly, though, so securing a means to both tap into best practice advice and have legal experts on hand, ready to act the minute required, can be the best strategy.

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