UK businesses face potential disputes, according to a survey conducted by Clyde & Co.
In a rapidly evolving business landscape, the strategic deployment of legal tools and litigation tactics, known as "lawfare," is reshaping corporate risk management. A recent report published by global law firm Clyde & Co explores this phenomenon and its implications for businesses and their boards.
The report, titled "Climate change: a burning issue for businesses and boardrooms," discusses the heightened risk environment and how most companies are addressing it. One of the key findings is the increasing use of lawfare in business disputes, which is changing the nature of corporate risk management.
Lawfare extends the concept of lawfare—originally associated with using legal means as a weapon in geopolitical or military contexts—into the corporate arena. Companies are proactively using legal proceedings to gain competitive advantage or shape market conditions. This development is forcing organizations to prepare for a broader and more complex spectrum of risks, including operational, geopolitical, and reputational threats that manifest through intensified legal battles.
According to Clyde & Co's 2025 Corporate Risk Radar report, nearly half (48%) of surveyed business leaders anticipate a surge in disputes driven by tough economic conditions and a complex risk environment. Key ways lawfare affects corporate risk management include:
- Anticipation of Prolonged and Strategic Litigation: Businesses now expect legal battles to be used as prolonged strategies that can impose substantial costs and reputational damage beyond typical contract or fraud disputes.
- Integration with Broader Risk Scenarios: Lawfare links closely with operational disruptions, geopolitical instability, and regulatory challenges, requiring sophisticated legal and compliance frameworks that anticipate multi-dimensional conflict scenarios.
- Shift from Reactive to Proactive Approaches: Companies invest more in legal intelligence, early dispute resolution mechanisms, and strategic countermeasures, recognizing that legal battles are not isolated events but elements of competitive conflict.
- Involvement of Diverse Stakeholders: The use of litigation as a strategic tool increasingly involves third parties such as activist groups or state actors influencing corporate behavior or market conditions through courts, making risk management more complex and politicized.
The impact of lawfare is evident in various sectors. For instance, economic pressures are triggering disputes in sectors like professional services, construction, and technology. In the energy sector, the case related to the Norwegian energy company Noreco's claim that its all-risk insurance policy should pay USD $470m for damage to the Siri oil field is a notable example.
Moreover, companies are experiencing regionalisation due to geopolitical tensions and supply chain issues. Companies are reconsidering or changing where they operate in future due to these geopolitical risks, as evidenced by 46% of businesses surveyed.
In response to these challenges, businesses are preparing for an increase in disputes due to tough economic conditions and complex risk landscape. Companies are investing more in legal intelligence, early dispute resolution mechanisms, and strategic countermeasures to manage this multifaceted threat environment.
However, the ongoing challenge of regulatory compliance is delaying investment, with 64% of businesses saying that obligations are materially impacting their growth plans for 2025. Regulatory compliance expansion has occurred in areas such as property transactions, asset holding, and failure-to-prevent laws.
Business leaders are also actively preparing for investor actions as scrutiny on their operations increases. Climate change is a second order concern for organizations until it has a significant, sustained, and material impact on their operations, with 36% of respondents viewing it as such.
In conclusion, lawfare in business disputes transforms corporate risk management from simply preventing losses to managing a multifaceted threat environment where legal strategy is key to preserving competitive position and operational stability. Organizations must now build capabilities for identifying, anticipating, and mitigating legal conflicts as part of their core risk frameworks.
- In the ever-changing business world, companies are increasingly employing strategic legal methods, known as lawfare, to shape market conditions and gain competitive advantage.
- The report by Clyde & Co, titled "Climate change: a burning issue for businesses and boardrooms," reveals that business leaders anticipate a surge in disputes due to tough economic conditions and complex risk environments.
- As lawfare affects corporate risk management, businesses are shifting from reactive to proactive approaches, investing more in legal intelligence, early dispute resolution mechanisms, and strategic countermeasures.
- Today's risk management landscape is more intricate than ever, encompassing operational, geopolitical, and reputational threats that manifest through intensified legal battles, demanding organizations to develop advanced legal and compliance frameworks.
- Companies in various sectors, including professional services, construction, technology, and energy, are experiencing high levels of disputes due to economic pressures and geopolitical tensions, necessitating preparedness for a multifaceted threat environment in personal-finance, wealth-management, and other finance-related industries.
