Commercial Legal Expenses insurance is more important than ever for businesses
Business owners are continually involved with legal agreements of all kinds, whether this is hiring and dismissing employees, drawing up and signing supplier contracts, or agreeing a lease on a property. There is wide scope for disagreements, and if an employee, company or individual wants to take legal action against a business, this can mean a costly lawsuit, time in court away from running the business and potentially expensive compensation claims. Alternatively, your company may lack the funds or access to specialist legal advice to pursue a claim in their interests.
Commercial legal expenses insurance supports companies by providing access to the legal advice and expertise they need to deal with legal issues. Commercial legal expenses insurance policies usually include legal helplines to provide advice and help resolve disputes. If litigation does ensue, legal expenses insurance enables businesses to pursue a claim or fund their defence if a claim is brought against them. The cover typically includes:
- Solicitors’ and barristers’ legal fees
- court fees
- expert witness costs
- the legal costs of the opposing side if you are unsuccessful
- some compensation costs if your case is lost.
The current difficult economic environment is making this cover more vital than ever:
Employment law
Commercial legal expenses provides cover for legal representation in disputes with employees, for example, allegations of discrimination or unfair dismissal, or claims of constructive dismissal due to changes to working practices.
The pandemic led to a revolution in the way people work – with hybrid and home working shifting from being a rarity to a necessity. As lockdown restrictions have receded, there has been a mismatch between businesses’ expectation of a return to the office and employees who may now expect to be able to work from home as the norm – leading to increased employment related litigation and claims.
Contract disputes and debt recovery
There are a number of economic headwinds which are putting stress on businesses: Brexit and the pandemic have driven supply chain difficulties. The current high level of inflation is squeezing profits for many businesses. High interest rates is putting pressure on the balance sheets of heavily geared businesses as the cost of their borrowing rises. All of these factors are driving an increase in contractual disputes.
Property related litigation
Home working has reduced demand for commercial office space, and empty properties can be vulnerable to trespass or damage. Legal expenses cover can provide the means to take legal action to address these problems.
Other valuable areas of cover include Tax disputes, and support with litigation or investigations relating to regulatory matters, for example, health and safety or food safety enforcement notices, defence in disputes in connection with the Data Protection Act and representation at a formal investigation or disciplinary hearing by a trade association.
Understanding your cover is important
Having bought legal expenses cover, it is important for business owners to take the time to understand the cover and its terms and conditions. Insurers need to be informed as soon as the policyholder becomes aware of a potential claim. This will allow the insurer to bring their expert advice to the table as soon as possible, which can help avoid potential claims from developing. If a legal dispute can’t be avoided, the insurer’s advice and support will ensure that the right steps are taken to put you in the best possible position to win your case. The legal expenses insurer will also ensure that a specialist lawyer with the right expertise is appointed. Policies may stipulate notification periods, or not provide cover if a legal action is undertaken before they are involved.
Check your business insurance policy as many insurance packages include legal expenses as a standard section. If no cover is in place consult with your insurance broker. There are a range of legal expenses policies on the market, so it is important to ensure you have the right policy for your business. For example, any business with employees faces a risk of an employment dispute and it’s important that the legal expenses policy includes this cover, whereas a sole trader wouldn’t need that type of cover.