More companies suing during the recession

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Tough times are encouraging more businesses to sue for breach of contract, according to a leading Sheffield commercial litigation lawyer.

Steve Beahan, a partner in Irwin Mitchell’s city office, says the number of contract claims reaching the High Court have almost doubled in the past 12 months.

“Businesses which are launching claims are issuing more because the need to get funds in is getting all the more pressing due to the financial pressures they are facing,” says Mr Beahan.

“In addition, it may be viewed that litigation in the past couple of years has been a discretionary spend, but many companies may have reached the point where all other opportunities to avoid such action have been exhausted.

“Quite simply, as people get desperate maintaining commercial relationships becomes less important.

“Further to that, defendant companies are likely to have less funds to pay up, so may be on the receiving end of action more often.”

Latest figures from the Chancery Division show that 982 claims were issued in 2011, with both breach of contract and debt being cited as the main reasons behind the action.

The figure was 44 per cent up on 2010, when 683 cases were believed to have been launched.