Going into 2026, UK tech businesses have plenty to be concerned about.
From economic headwinds to geopolitical meltdowns and the uncertainty brought about by rapidly developing technology, it was clear by the start of January that the coming year would offer no shortage of hurdles.
But to best understand the challenges at the top of tech firms’ priorities, it is worth looking at their legal teams, courtesy of the third annual litigation report from law firm Shoosmiths, which offers an insight into the biggest concerns of corporate counsels.
Legal disputes to rise dramatically
A concerning if not entirely surprising finding of Shoosmiths’ survey of British businesses is an aggressive expansion of litigation resources expected this year.
In England and Wales, legal disputes among businesses are expected to increase by an alarming 75%, with similar rises expected in North America and the European Union.
Therefore, firms are expected to significantly ramp up their legal resources to support in-house teams in managing disputes. As much as three-quarters of firms intend to increase legal headcount, while 71% plan to increase spending on dispute resolution.
These rising costs are not expected to be a “flash in the pan” either, according to Alex Bishop, partner and head of litigation, regulatory and compliance at Shoosmiths.
“We are living in a time of unprecedented geopolitical and economic uncertainty, which drives up litigation risk,” Bishop told UKTN.
“Litigation also takes time to run its course. While a proportion of disputes arising from this new wave of risks will be resolved or disposed of at an early stage, those that become longer term ‘runners’ will continue to demand legal resources/spend and management time, potentially for several years in some cases.”
This year is set to be a busy one for in-house counsels, but what specifically is expected to drive such a dramatic increase in disputes?
AI disputes
According to the data, AI-related litigation is the number one concern among corporate legal teams, with 55% of respondents expecting disputes related to the technology to increase, outpacing intellectual property, breach of contract and group litigation.
As concerned as firms are, there remains clear intention among the majority of UK tech businesses to increase spending on AI, as evidenced in KPMG’s recent Global Tech Report 2026.
Shoosmiths has found that businesses view AI as both a “gateway to efficiency savings and a litigation minefield”.
The largest legal concern related to the technology is the risk of employment disputes resulting from the impact of AI on jobs, a concern shared by more than 80% of respondents.
This trend was identified by Bishop as one of the most significant found in the report.
“As the outlook on that front continues to evolve, we may see parts of the job market in the sector (as in others) become quite volatile and unpredictable, with periods of little to no movement punctuated by flurries of large-scale activity,” she said.
“The use of AI in recruitment practices is also a hot topic and definitely merits careful handling.”
There is also significant anxiety over potential discrimination claims resulting from AI-powered decision-making.
As well as these there are fears over contractual disputes over AI services, privacy and data protection claims resulting from AI processing and IP infringement claims following the use of generative AI.
State-sponsored cyber-attacks
Cybersecurity and cyber-attacks are understandably at the front of businesses minds following one of the worst years on record for hacking and breaches.
Interestingly, cybersecurity as a concern has become strongly linked to geopolitical turmoil, with some 73% of firms believing that state-sponsored cyber-attacks will increase litigation risks and over a quarter sating those risks have already increased significantly.
Reassessing supply chains
As a result of the wider concern of geopolitical volatility, the majority (85%) of firms are also expected to radically rethink international supply chains to avoid increased litigation risks.
This will likely lead to a shift towards localisation, shorter supply chains or a focus on establishing links with predictable and ‘friendly’ international partners.
Though this is expected to be a key feature of business in 2026, the data shows it has already been a major concern, with more than half of respondents already having reviewed or restructured their supply chain matrices in the past year.
What can businesses do?
As Bishop points out, there is no “one size fits all approach” to the evolving nature of litigation risk, however, she notes that “it all starts with awareness”.
Bishop said: “Prevention is better than cure, so as a general principle businesses could benefit from investing the time in identifying the issues that may pose the greatest material risks to any part(s) of the business and developing strategies to mitigate those risks.”
