A rise in the so-called ‘US style compensation culture’ in Europe is prompting increasing concern over litigation issues, a new report from Lloyds has shown.
The research shows that two thirds of business leaders expect to spend more time on litigated-related issues over the next three years. Furthermore, over a third expects this heightened expenditure to be passed on to the customer in price hikes on products on services.
Lloyd’s research shows that boards are feeling increasingly challenged by litigation and are spending more time and money addressing these issues. Product recalls are now a daily occurrence, having risen 50% in Europe in the past year.
Shareholder activism is also on the rise, operating environments are becoming ever more complex and new legislation such as the Corporate Manslaughter Act is increasing risk even further. As a result, not only are prices likely to soar, innovation and risk taking within business is likely to suffer says Lloyd’s.
“An increase in litigation and the fear of potential liability issues is impacting customers through a rise in the cost of products and services and also stifling risk taking amongst boards who are missing out on new opportunities,” said Lord Levene, Chairman of Lloyd’s.
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