Following on from Freedom Day and the easing or removal of many of the restrictions businesses have had to deal with throughout 2020 and 2021, Paul Currie, Partner and Head of Litigation at DFA Law, shares his views on the impact this will have in the field of dispute resolution.
Paul, how did you feel about Freedom Day?
Depending on which side of the political divide people sit on, there has been much said about whether the extent of the formal removal of restrictions in England is good or bad. However, I know there are many business owners out there that are breathing a collective sigh of relief. Many of them will have been worried about having to permanently close their doors, but now they have an opportunity to avoid that. There will be many issues for them to navigate over the next few years, but at least they have the opportunity to face that fight without their hands tied behind their backs.
From a litigation perspective, what are those challenges likely to be?
For many businesses, the coming months will be about recovery, rebuilding and dealing with a very different commercial and societal landscape. The recovery element may include pursuing unpaid debts, and potentially trying to deal with liabilities they have accumulated caused by the restrictions on trading. The rebuilding element may be more about how to ensure that the business is in the best position to avoid disputes, and protect essential cash flow in the future. Many suppliers and/or customers could well be facing financial issues of their own, and I would always advise clients that it is important to ensure that this does not have a detrimental effect on their businesses.
What have been, and may continue to be, the biggest issues in relation to dealing with those commercial disputes.
Since the first lockdown, the difficult times encountered by businesses have meant rising debts, as well as an increased number of disputes over payment and performance. At the same time, the means of resolving those disputes, and recovering payment, have been delayed or prevented.
The civil courts did everything they possibly could to continue progressing claims, whether remotely or otherwise, but the restrictions caused by social distancing created delays for many litigants, and it is taking time for the courts to catch up now they are operating more freely.
In addition to the above, the government firstly, placed restrictions on certain insolvency processes, including the issuing of winding up proceedings (which will continue until at least September 30, 2021) and; secondly, sought to assist businesses by limiting what landlords could do to recover unpaid rent and take back occupation of leased property (which will continue until at least March 26, 2022)
The above measures may have saved many businesses for closure or liquidation, but unless agreements can be reached to repay the debts or rent on terms agreeable to those owed the monies, they will inevitably result in a substantial amount of litigation.
Does that mean that you are expecting to get very busy when the restrictions are lifted?
I hope not. I hope that now trading is starting to return to normal, business will be seeking to agree terms for the repayment of debts that have accumulated.
I am helping a number of clients do exactly that and would encourage all business to try to take that commercial approach now rather than wait for the inevitable.
It is interesting that you also mention protecting businesses from future risk of disputes. Are you trying to do yourself out of a job?
I would always prefer to work with clients to avoid disputes long before they arise, whether that is through the review of terms and conditions, providing training on issues such as sales procedures and effective debt control, or simply helping them find ways of addressing specific issues at an early stage. Preventing a dispute has to be a better for clients than resolving one.
Finally, and on a lighter note, what are you really looking forward to with the lifting of restrictions?
Like many parents with young children, I am extremely conscious that lockdown has limited my daughter’s ability to do many things that we would otherwise take for granted. She wanted to have a birthday party last year and invite all her friends over, and it broke my heart telling her it was not possible. I really look forward to making that up to her.