Calls treble as firms struggle in recession

Legal expenses insurers say calls for advice on redundancies have trebled this year as firms struggle in the economic downturn.

Abbey Legal Protection says it has received over 190% more calls from mid-corporate businesses for the first quarter of 2009, compared with the first quarter of last year.

Calls from SMEs also rocketed from 1,982 to 5,697 – an increase of 187%.

Abbey operates in commercial lines, offering before and after-the-event legal expenses cover.

Abbey Legal Services director Murray Fairclough said: “What these figures reflect is both the state of the employment market and that we are being approached for sound advice so businesses can avoid claims being bought against them and being taken to a tribunal.

“Businesses are desperate at the moment to make sure that they do not get taken to a tribunal.”

He said making staff redundant could also be tricky. Employers had a “significant obligation to consult and not to pre-judge” and he warned that dismissing employees for “attitude” was “subjective” and frequently open to dispute.

Employers also had to consider suitable alternative employment for their staff.

He believed it was an opportunity for legal expenses insurers to prove their worth. “We do not anticipate numbers going down any time soon. In previous recessions, we have found that the redundancies continue long after the first green shoots of recovery. As I’ve said to my teams, we should anticipate this going on for another year,” said Fairclough.

First Assist Legal Protection managing director Graham Hollebon said his company was also handling additional advisory calls.

“We take these numbers pretty seriously. The key is to make sure the advice is clear so that it does not get to a claim. If it gets to a claim, nobody is happy,” he said.