Litigation risk is the chance that a lawsuit could be brought against your business. This could take any number of forms, from alleged employment disputes, infringements, liability cases, or data breaches. Any business is potentially at risk, regardless of its size, turnover or how long it has been established.
Actively managing risks before litigation occurs is good practice and can prevent cases escalating, lessening the impact on your business, cash flow and reputation.
The type of business you own and the challenges within your sector will dictate the risks you face, but below are some general points to consider to help you safeguard your business.
Are your contracts up to scratch or don’t they exist at all?
Getting everything in writing is crucial for businesses. It can be difficult to rely on verbal agreements in court, even if discussions were held with someone you deemed trustworthy and reliable.
Disputes often arise when contracts fail to clearly state the obligations of each party and what will happen if either fails to deliver what is set out.
However tempting it may be to save time and money by tweaking online example contracts to fit your needs, we always advise seeking legal advice when it comes to contracts to protect your business interests. We can also advise you on where contracts can include limiting liability and indemnity clauses to help reduce risk.
Do you understand employment law and are you following it?
In the UK, staff are protected by laws that employers must adhere to in order to minimise the risk of an employment tribunal. Tribunals are regularly held for matters such as unfair dismissal, discrimination and redundancies.
We recommend that you ensure your employment contracts and workplace policies are legally binding and up to date by seeking advice from an experienced legal professional.
Are you holding and using data correctly?
Any business which collects and processes the data of employees, customers, suppliers and others must comply with UK GDPR and data protection laws.
Not adhering to preferences around consent or being subject to data breaches due to your failing to secure data sufficiently can result in fines or further legal action. Not only is this costly and harmful to business continuity, but it can also destroy trust and ruin your business’s reputation.
Are you using something which is protected by Intellectual Property (IP)?
Intellectual property disputes occur when another business or person, knowingly or unknowingly, uses a name, idea, logo or similar asset which is protected by intellectual property.
Someone has IP over an asset if:
- They have copyrighted works such as books, music and films
- They have trademarked brand names, logos, and other identifiers used to distinguish goods or services
- They have patented a new invention
- They have design rights over the visual appearance of a product
Do you know your consumer and commercial laws?
There’s a vast amount of legislation designed to protect staff, clients, customers and other people involved in your business, such as suppliers. Any failure to adhere to these laws can result in fines and court cases.
Understanding your responsibilities and having clear policies and contracts are key.
Consider your business structure
The type of business you own can dictate the level of liability you’d face in a dispute. Setting up as a limited company, for example, can reduce your liability compared to other business types.
Take out the right insurance at the right level
Make sure you have adequate insurance cover in place. As a minimum, most businesses need professional indemnity, public liability and product liability insurance.
Insurance may cover legal costs and any payouts if someone claims successively against you.
Examples of businesses being sued
As we mentioned earlier, any business is at risk, although it is usually the big stories, such as the Co-op data breach or the infamous Marks and Spencer vs Aldi caterpillar cake case, that make the news.
Here are some recent examples involving smaller companies:
- 23andMe, a DNA testing firm, was sued in June 2025 by a UK watchdog over a 2023 data breach that affected thousands of people. The company was found to have failed to put adequate measures in place to secure sensitive data. It has since filed for bankruptcy
- The owner of a driveway cleaning business, EasyJetWash, agreed to pay ‘significant damages’ and legal costs to EasyGroup, whose portfolio includes airline EasyJet, despite trademarking the name. EasyGroup Chairman, Sir Stelios Haji-Ioannou, said in a statement that it was felt that EasyJetWash’s owner had deliberately set out to profit from the reputation of EasyJet
- A former chip shop worker, who lives with autism, was awarded £8,000 for a disability discrimination case, after his employer failed to inform him of his dismissal. Instead, in January 2023, they told him that it was a quiet time for the shop and said he might be given more hours later in March. The following week, he received a text message asking him to pick up his final pay cheque and return his uniform
How AGR Law can help you
We can’t express strongly enough the need to get legal advice to help you sufficiently protect you and your business. Please contact our experienced team at hello@agrlaw.co.uk or 0116 340 0094 if you’d like advice.