What are the litigation trends for 2024?

Members of our Disputes and Investigations team consider litigation trends for 2024 in the current market.

What is the litigation landscape?

2023 saw a number of significant developments in the disputes landscape including the introduction of mandatory ADR rules, important decisions on litigation funding and judicial guidance on the use of AI by the courts. All of which came against a backdrop of a difficult and at times unstable macro-economic and political climate which remains as we go into 2024. Whilst we have certainly seen a rise in disputes over the past year, the surge of claims predicted in fraud, ESG, climate change, consumer protection, data and environmental litigation has not yet emerged but we predict increased activity in these types of disputes in the coming year as well as a continued focus on AI in a litigation context.

In what areas will we see more dispute activity?

We have focussed on six areas of litigation trends for 2024:

ADR

The year of 2023 brought some important developments regarding the way future disputes will be resolved. Following the publication of the Civil Justice Council's report in 2021 in which it concluded that mandatory ADR is to be encouraged, the Court of Appeal gave judgment in the case of James Churchill v Merthyr Tydfil County Borough Council [2023] EWCA CN1416, ruling that the courts can stay proceedings to order parties in dispute to engage in ADR, including mediation. This is provided that the order made does not impair the very essence of the claimant's right to proceed to a judicial hearing and is proportionate to achieving the legitimate aim of setting the dispute fairly, quickly and at reasonable cost. The decision overturns what was thought to be an English law prohibition on courts compelling ADR (see our recent article). This is an important development and we can expect further consultation about changes to the CPR to reflect the impact of this judgment.

This was undoubtedly the hot topic of 2023 and came with much discussion about not only the uncertain legal framework of AI, but also the potential impact of AI on dispute resolution. The cautionary tales and significant limitations with using generative AI remain widely publicised and we can expect to see more instances of AI featuring in the dispute resolution process. Guidance has already been published to judges about their own use of AI positively identifying areas where it could be usefully deployed including summarising large bodies of text, writing presentations and carrying out some administration texts including composing emails. It is not recommended for the purposes of legal research or legal analysis so we are clearly a long way from AI generated judicial legal reasoning (see our article for further details). This is all against a backdrop of legal and regulatory uncertainty particularly with regard to the development, creation and use of AI in the UK as well as any applicable liability regime. The EU remains much further ahead with the texts of both the AI Act and amended Product Liability Directive agreed last year and we can expect to see both significant new laws coming into force as early as 2025.

So what does all this mean for AI and disputes? Currently we have not seen much evidence of harm caused by AI products which would give rise to claims. However, as the use of generative AI increases this will become much more likely. See our article on how the use of AI could increase the incidence of fraud in businesses. The introduction of regulation could also give rise to disputes about the meaning and application of the guidance by regulators. We see this as an area to watch.

Class actions

There are significantly more class actions/group litigation coming through the courts (in addition to those currently going through the collective proceedings regime in the Competition Appeal Tribunal). Three of the Lawyer's Top 20 cases include class actions involving almost 3 million claimants and covering a number of different types of disputes including environmental disasters, product liability, consumer protection and personal injury. In an entirely novel and innovative approach to active case management, Dame Victoria Sharp (President of the King's Bench Division) and three other High Court judges held in December that there should be a common and consolidated approach to case management of various claims which are being pursued against OEMs in the next wave of diesel emission claims. This is so as to simplify the management of the claims in order to reduce costs and delays and to ensure the efficient use of court resources. The group claims are being brought by 1.2 million UK vehicle owners against 16 car global manufacturing groups pursuant to various Group Litigation Orders. This shows how the court is prepared to pro-actively manage claims of this size and re-affirms the reputation of the English courts as a place which can handle disputes of this type, volume and scale.

ESG litigation

There have been some key themes in ESG litigation in 2023. Director's duties and derivative actions are not a new topic for climate litigation specialists but this had been largely untested until ClientEarth's derivative claim against the directors of Shell. Ultimately, ClientEarth did not succeed (subject to a successful application to appeal) but we expect ESG and fiduciary duties of directors to remain a hot topic for 2024. See our most recent article on the decision. We also expect to see more claims for redress from multinational companies for alleged ESG-related harm outside of the corporate group but within the corporate supply chain. This increases the pressure on companies to carry out due diligence on all their suppliers to check their ESG credentials widening the responsibility beyond the immediate corporate group.

Fraud

We are continuing to see a steady increase in civil fraud related claims, arising in a variety of circumstances, with relevant facts often coming to light as a result of strained economic circumstances. There has been an increase in alleged deceit / fraudulent misrepresentation-based claims in a business and investment context, and businesses are being targeted by increasingly sophisticated fraudsters, with authorised push payment fraud continuing to be a key theme. Tech and AI enabled fraud is also increasing, with deep-fake and voice spoofing technology improving at rapid pace and dark-web generative AI programmes giving rise to new challenges in distinguishing genuine and forged documents.

Fraud continues to be high on the legislative agenda, driven by the Government's Fraud Strategy which aims to reduce fraud by 10% on 2019 levels by December 2024. The Economic Crime and Corporate Transparency Act came into force in October 2023 and is a key part of that strategy. It makes significant changes to the UK's economic crime and fraud regime, including a new "failure to prevent fraud" offence for large organisations and a widening of corporate criminal liability for economic crimes committed by senior managers. The focus of these changes is to make it easier for businesses to be prosecuted and held liable for the acts of senior managers within their organisation, and appears to be driven by concerns that bad actors have used opaque corporate structures to avoid liability for fraud offences, and in turn it has been very difficult to prosecute the corporate entities themselves due to the legal test on attribution of liability. See our article for further comments.

Litigation funding

2023 has been a turbulent year for the litigation funding industry. In July, the Supreme Court held in R (PACCAR) v Competition Appeal Tribunal [2023] UKSC 28 that, contrary to accepted market practice, litigation funding agreements ("LFAs") providing for a funder to be paid by reference to a proportion of an amount ultimately recovered might be damages-based agreements ("DBAs"). This raised arguments as to whether existing LFAs might be unenforceable because they might not comply with the DBA regulations. As a consequence we have seen claimants seeking to revise existing agreements to ensure compliance. In November 2023, the UK government proposed an amendment to the Digital Markets, Competition and Consumers Bill to allow the use of LFA's providing for a funder to be paid by reference to a proportion of an amount ultimately recovered outside of the DBA regime. This is of limited application (currently only opt-out class actions before the CAT). The Government however indicated its intention to "reverse" PACCAR, and we expect to see further legal activity in 2024 regarding this issue, not least based on how the legislative response develops.

Should you require any further information on the topics and trends set out above, please contact one of our dispute resolution experts.