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‘The Cost of Living Crisis’: Impact on Litigation and the Average Consumer

09 December 2022

While viewing the recent media coverage of the aptly titled ‘Cost of Living Crisis’ this author has inevitability been drawn to considerations of how this may impact his particular area of work, litigation. 

With energy prices on the rise, inflation continuing to follow and a general apprehension towards the UK’s economic progress post-brexit we must inherently reason that litigation rates will inevitably rise in response to the growing number of consumers unable to maintain credit commitments and payments for services. 

While this can be seen as an uptrend in work for lawyers and as such a positive for legal businesses trying to recover from the pandemic downturn in work, there is inevitably a human cost to each case that may be litigated on in consumer related sectors. 

In this short article we aim to highlight both the impact of the present crisis on the current state of litigation within consumer related sectors and what can be done to address these issues going forward in line with the projected pattern of the crisis period we face. 

When taking to litigation representing large clients in consumer markets, we tend to find major disparities between the resources available to both parties when litigation becomes necessary. More often than not, consumers face an already uphill struggle when attempting to face up to the representation of said companies without even considering the impact of an economic crisis. 

The stark reality of these trying times is that when ordinary consumers are facing the abhorrent choice of heating their homes or paying for groceries the last thing they would consider or could even afford would be legal representation. 

The impact of litigation on the ordinary consumer isn’t just a financial burden. We must consider the impact court proceedings have on the general welfare of consumers, their mental well-being, the effects it may have on their family welfare, and many more.

A recent article published by the Law Society discussed the Ministry of Justice’s proposed reforms to Legal Aid, one of the key institutions which upholds the citizen’s right to legal representation. It was that article’s opinion that though the reforms were welcome it was evident that the Ministry of Justice had clearly not recognised the severe impact of the current economic climate on low-income families through its failure to update the cost of living considerations in its proposals which are already three years out of date. 

This issue will only become more apparent when the toll of this crisis begins to impact not just low-income households but further middle-income households who though may once have stood on a more firm financial footing may soon find that their predicament is as equitable to those in lower-income households. If the Ministry does not take steps to ensure that Legal Aid considerations reflect the rate of inflation and the current economic welfare of citizens, today we will face a massive erosion of both access and faith in our justice system, both in Civil and Criminal Sphere’s. 

We must therefore discuss solutions to the issues of the day to ensure not only the security of fundamental principles within our justice system but also the moral fibre of our own practice. In the modern era when Corporate Social Responsibility continues to find its way to the fore of considerations by businesses, we cannot disregard our ability as lawyers to impact the decisions our clients make during this period of intense pressure for the country and scrutiny of businesses and their actions. 

As already mentioned, we can advocate for the Ministry of Justice to revise its proposals to better reflect the current state of affairs but it could be argued that this would merely be plastering over what is fast becoming a nasty wound. We as lawyers particularly at the senior level have not only to consider clients legal issues but also overall issues to their enterprises. This could be seen during the pandemic when litigation rates fell and at times were held back due to the lack of access to the courts but also the impact that litigating could have on clients overall standing to consumers. We can certainly exercise that same influence now and start to discuss with our clients more amicable methods of recovery where possible and attempting to understand consumer issues as they evolve with the current crisis. We can be certain that the FCA will also likely issue guidance to companies in how they tackle the crisis and that guidance will indeed be crucial to how business approach recovery and their considerations before taking to litigation.

The current crisis is no less severe than the pandemic was and will impact on the consumer just as hard. The difference will be the disparity of the impact between consumers and businesses.

Though it is true that business will inevitably decline as the plight of the consumer worsens, the livelihood and general welfare of the consumer cannot be equated to the fiscal issues of the businesses. It should be noted that trying times for business can certainly have a knock-on effect particularly to employees. However, considering recent revelations regarding the profitability of large businesses in particular sectors and growing calls for a windfall tax to be placed on profits to raise the standard in favour of protecting profit margins may appear to be tone deaf to the concerns of the average individual struggling to live day to day. 

We as Lawyers and Law Businesses are in a privileged position where we experience both sides of the coin. We rely upon client business to maintain our own and litigation can be an exceptional fee generator for us but we also know that many people; our friends, families and colleagues are struggling in the current climate. 

If we keep our considerations balanced and aligned with our clients we can be positive that we will be able to tackle the ‘Cost of Living Crisis’ in a way that is both business sensible and morally considerate.

Written by Luke Rennie

Reference: https://www.lawsociety.org.uk/contact-or-visit-us/press-office/press-releases/cost-of-living-crisis-could-drive-a-wedge-into-justice-gap

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