In practice, the prioritisation of these business fundamentals has already been in evidence throughout the pandemic in two areas.
Firstly, since the pandemic began, a third of Corporates (32%) and Lawyers (34%) alike say that they have deferred or stopped investigations into potential claims which they would have pursued in times unaffected by the COVID-19 pandemic. 79% of Corporate respondents attributed this to their pre-occupation with navigating the business impact of COVID-19.
Secondly, where disputes have arisen, three in five Corporates (63%) and around half of Lawyers (46%) say that the pervasive impact of the COVID-19 pandemic on organisations’ finances and operations has imposed greater pressure to settle disputes at an earlier stage than normal.
In the current environment it appears the pre-occupation of businesses with managing the initial impact of the pandemic has led to the deferral or early settlement of claims. However, many of our respondents also indicated that they expect to see a step change in the need to maximise the recovery of losses once the current package of government support for businesses and employees and the insolvency moratoriums end.
“The survey provides evidence for what we’ve seen in practice with our clients since the pandemic began. Companies focused first on adapting, finding ways to survive and, where possible, thrive. In many cases, that meant working with supply chains and other third parties to find solutions and, where mutually beneficial, adapt contractual arrangements. But companies are, as always, focused on protecting shareholder value and clients are increasingly asking us to apply scrutiny to their contractual arrangements, particularly where they see risk of value leakage or opportunities to recover losses.”
Matt Fritzsche, Partner, Claims & Disputes, Forensic & Integrity Services, Ernst & Young LLP