Group actions and emerging liabilities are making the timing of insurance discussions more important
A customer complaint or operational problem can escalate into multiple claims before a business has considered how to fund its defence, according to Rory Wilson, director of business development at Amberis, an independent after-the-event (ATE) insurance broker based in Manchester.
Wilson said litigation exposure now extends well beyond the contract disputes and negligence claims businesses have traditionally associated with legal risk.
“Litigation risk has certainly become broader,” he said. “Now there are a number of issues that can come out of regulatory change, consumer protection, data breaches, financial products, social media, and the rise of AI.”
When one problem becomes multiple claims
That broadening has been amplified by the growth of litigation funding, which can turn individually low-value claims into coordinated, high-volume actions against a single business.
“There’s group and high-volume litigation which is on the rise, supported by ATE insurance but also third-party litigation funding,” Wilson said.
Businesses can misjudge both the scale of that exposure and its consequences. Reputational risk, he said, is “just as important as legal liability”, with the scrutiny and cost of proceedings potentially affecting a business long after a case concludes.
“You could underestimate how a simple operational issue can become a legal issue, and on what scale,” Wilson said.
A single customer complaint or regulatory investigation, he said, can escalate into “multiple claims or a coordinated group action”. Businesses outside the legal sector are often unaware of how quickly that landscape can shift “until suddenly a lot of claims land at their door.”
Economic pressure is changing the calculation too, with businesses weighing the cost of defending a claim against the commercial outcome.
“It’s no longer perhaps, can we successfully defend this claim,” Wilson said. “It’s perhaps now, what’s the best commercial outcome, what’s going to cost us the least.”
Legal reforms that have reduced recoverable costs in some areas have encouraged innovation in funding, before-the-event and after-the-event insurance, and dispute resolution, he said, as businesses seek greater certainty over litigation costs.
The wider funding landscape remains under scrutiny. Following the Civil Justice Council’s review of third-party litigation funding, the government committed in December 2025 to legislating for proportionate regulation, saying legislation would be introduced when parliamentary time allowed.
The case for considering cover earlier
The distinction between cover for pursuing a claim and cover for defending one is central to Wilson’s warning. Businesses should consider before-the-event cover ahead of any dispute, he said, rather than assume insurance will be available once proceedings are underway.
“Businesses may believe that there is a litigation insurance that they could purchase after proceedings have started,” he said. “That can be extremely difficult.”
ATE is generally used by claimants to pursue litigation. For businesses defending claims, brokers can work with specialist defendant litigation insurers on arrangements that help them plan financially for those costs.
Wilson said litigation insurance should form part of a firm’s wider risk management strategy, helping protect capital and control potential legal costs. Treating it as “a necessary evil” can obscure its role in longer-term commercial planning.
“The access, education and tools for claimants to pursue claims has never been higher,” he said.
AI adds another litigation unknown
Wilson expects intellectual property disputes involving AI to become an increasingly important source of commercial litigation.
The issue is already being tested in the courts, including the UK High Court’s November 2025 ruling in Getty Images v Stability AI, which examined how existing intellectual property law applies to generative AI.
The question extends beyond developers. Businesses buying and using AI tools may also have to consider what liability they could face if outputs infringe third-party rights.
Reflecting on his own firm’s use of AI, Wilson said it was unclear how businesses could establish whether outputs drew improperly on other people’s work. Responsibility was also uncertain, he said, when a business paid significant sums to use an AI platform and its output subsequently became the subject of an infringement claim.
His broader concern was that businesses could use material without recognising its origins or having much control over the output.
As these exposures develop, the timing of insurance discussions becomes more consequential. Brokers do not need to predict the next claim to help clients assess the legal costs they could carry themselves. Waiting until a dispute emerges may leave businesses with fewer options for transferring that risk.
