Businesses falling into the justice gap

Authored by ARAG UK Managing Director Tony Buss

Widely seen as a personal problem, diminishing access to justice also severely impacts businesses. Tony Buss, Managing Director at ARAG explains how the justice gap has become a major issue for companies in the UK and what brokers can do to help.

What is the Justice Gap?

It’s easy to see worldwide that justice is not equally available to all.

Here in the UK, the justice gap may be harder to discern and has a second, subtly different meaning, referring also to the ever-growing gap between those few whose legal cases are still eligible for legal aid and those wealthy enough to fund legal action themselves.

What’s easier to see is that, however one defines it, the justice gap in the UK has grown steadily wider. The deep cuts to Ministry of Justice (MoJ) spending over the decade of austerity following the 2008 financial crisis had a huge impact, not just on Legal Aid.

The Rule of Law Index, published annually by the World Justice Project, has seen the UK drop from 10th place in 2016 to 15th overall. Among the 142 countries studied, the UK scores poorly in the Civil Justice category, in which our rank has dropped to 19th.

Far and away, the UK’s lowest specific score, and the only factor for which we rank below the global average, is the ‘accessibility and affordability’ of civil justice.

The problem for businesses

While successive cuts to legal aid, the closure of law centres, and the proliferation of ‘advice deserts’ have hit individuals hardest, other factors have sucked businesses into the justice gap.

Increased court fees, court and tribunal closures, and the huge case backlogs, exacerbated by the pandemic, have made our justice system equally difficult for businesses to access and afford.

Inevitably, this is most challenging for SMEs. While bigger organisations may have in-house legal expertise or a relationship with a law firm, smaller businesses will probably be starting from scratch.

The price of pursuing justice is often more difficult for SMEs, too. While smaller firms are typically more sensitive to the cash-flow challenges that legal problems create, they’re more likely to be put off litigation by the significant but uncertain costs involved.

Whether it’s a dispute over a contract with a key supplier, a big customer not settling invoices, or even an employee claiming unfair dismissal, the longer a legal dispute goes on, the more time and money a business will have tied up in it.

Justice delayed

If, as the adage goes, “the wheels of justice turn slowly”, the past decade has seen them all but grind to a halt in the civil courts.

Since 2013, the average time between issuing proceedings and a first hearing in ‘fast track’ and ‘multi-track’ cases has increased by a third to 76.4 weeks, according to MoJ data released in December.

That’s a year and a half businesses have to wait before the process of enforcing a judgment and actually recovering money can even begin. It’s also only an average. In some parts of the country, the delays are consistently much worse.

The small claims track is supposed to offer a swifter path to justice for cases valued below £10,000, but over the past decade the deterioration here has been even worse. The average time between issue of proceedings to a trial has almost doubled, from 30 weeks to more than a year.