While it's still (relatively) early in 2026, we’re already seeing a number of clear trends emerging in the disputes crossing our desks which will influence the types and nature of risks that Australian companies will face this year, with implications for how Australian Boards ensure management is proactively handling them.
It’s the economy, stupid – more contract disputes and increasing buyers’ remorse
The first, and most significant, issue that is shaping the disputes landscape in 2026 is the increasingly constrained economic climate. Insolvency appointments are noticeably up. But the impacts are not limited to the extreme (and still, thankfully, relatively rare) nightmare of facing an insolvent counterparty.
As economic conditions tighten, contracts that were marginally profitable quickly become unprofitable, and counterparties are more likely to try to renegotiate those arrangements, or aggressively explore the contractual levers available to them. This includes an increased willingness to take more extreme and less reasonable positions on the interpretation of the contract, if it could deliver a commercial benefit.
Similarly, as conditions tighten and uncertainty grows, we’re seeing more buyers’ remorse. Earn out disputes, and warranty clams are on the rise as companies look more closely at trying to recoup value and improve the economics of a transaction. In extreme situations, buyers are more ready to back out of deals completely. The practical advice to boards in 2026 is that when you’re considering any transaction, you now need to proactively measure and plan for post-completion risks (and ensure they’re mitigated). A “it’ll be all right” approach has never been more wrong.
Fraud and misconduct on the rise
Sadly, as night follows day, when economic conditions deteriorate there is an increase in corporate fraud. This includes both employees exploiting their positions of trust, as well as suppliers wrongfully claiming payment for services not provided.
It is time for companies to review their fraud controls and detection processes. Unfortunately, as we see an increase in fraud, the already strained capacity of the police to investigate corporate crime will continue to decrease. This will leave companies more reliant on self-help remedies of taking court action against the employee or supplier for loss (rather than relying on criminal sanctions).
Mega litigation – class actions and other mass claims
Class action risk has been consistently elevated for Australian companies in the past 5 years. Recent new filings are only slightly increased, but remain at historic levels. Australia is second only to the United States in terms of class action exposure. This potentially has material costs for Australian businesses, with questionable benefits for ultimate consumers. Of course, it is highly lucrative for the class action industry. However, the prospect of any meaningful reform is increasingly remote.
As the traditional shareholder, financial services and (to a lesser extent) consumer claims have dropped off somewhat in recent times, plaintiff lawyers and funders have been forced to fill their books with more creative claims across a wider range of sectors.
One area of increased activity has been mass employment actions. Careful audits of employment entitlements (and the systems that underpin them) is a key step Boards can insist upon to mitigate their exposure. A “set and forget” approach to employee entitlements is incredibly dangerous. We also expect to see more union-led penalty actions following the Qantas decision last year, where the TWU was awarded the unprecedented amount of $50M (out of a $90M total penalty) for bringing the action. With such material financial incentives, unions will be looking closely at Australian businesses in 2026 (including as a means of off-setting declining membership revenue).
It’s a privilege – more scrutiny on legal privilege claims
A string of recent successful challenges to privilege claims in the courts has increased the volume of challenges to claims of legal professional privilege. Given this, this year in particular, we’re advising clients of the importance of "dotting the i's and crossing the t's" when creating privileged material.
Most of the successful challenges have involved findings that the material was never properly privileged in the first place (due to how it had been created); less common are successful arguments that — once properly created — privilege has been lost through waiver. In this environment, Boards need to continue to be careful about how they receive (and record discussions about) privileged advice in their materials.
