As we begin 2024, we have taken the opportunity to look back at litigation trends in the professional services sector in 2023 and consider the possibilities for 2024.

According to data compiled by litigation analytics platform Solomonic, of over 7,500 claims issued in the majority of the courts within the King's Bench and Chancery Divisions of the High Court of England and Wales in 2023, 815 of these were commercial litigation claims in the professional services sector with businesses being the defendants in the vast majority of cases.

What types of claims were typically seen in the sector in 2023?

In summary:

  • Most common claims: the majority of claims arose out of commercial contracts with breach of contract, contractual interpretation and implied terms together being most frequently represented, closely followed by claims against businesses alleging negligence of some sort.
  • Most common remedies sought: unsurprisingly, claimants in 2023 typically sought financial recompense from the defendant businesses, primarily by way of damages. The next most common remedy sought was a declaration (which can be claimed alone, or together with another remedy).
  • Value of claims: of the claims for which value data is available, just over 47% of claims were for £1m+, demonstrating the financial significance of claims for businesses operating in the professional services sector.

How does this compare to previous years? 

Commercial litigation claims in the professional services sector were on the rise in 2023, following a peak in 2020, then a drop thereafter (1,031 in 2020; 987 in 2021 and 761 in 2022). Factors such as Brexit, the COVID pandemic, periods of lockdown, raw material shortages and the economic conditions undoubtedly contributed to these increases.

The nature of the claims remained fairly constant, as did the remedies sought, although there was a fall in the number of applications for emergency injunctive relief in 2023, compared to previous years.

In terms of the financial value, over the last five years the percentage of claims for £1m+ has remained fairly constant, save for a drop in 2021 (48% in 2019; 42% in 2020; 33% in 2021, 46% in 2022 and 47% in 2023).

Predictions for 2024

With the expectation that economic conditions will continue to be challenging throughout 2024, forcing businesses to be rigorous in their review of unprofitable contractual relationships and the financial necessity of cashflow management; ongoing scrutiny of the performance of professional services businesses on issues such as greenwashing; and the availability of litigation funding and creative fee arrangements being offered by the legal profession, we expect the level of disputes involving professional services businesses to continue to rise.

Our expertise

Through our highly regarded Professional Services and Partnerships and LLPs practices, we have expertise and many years’ experience of advising professional service businesses operating in the financial services, legal, accountancy, property and advertising sectors. For further information or for a discussion on topics raised in this article please contact Clive Greenwood.