Over the last two years, court filings in Australia have increased
The Federal Circuit and Family Court of Australia (Division 2) reported a 25.5% increase across all areas of general federal law in its 2024-25 Annual Report, compared to the previous year.
Driving these increases in litigation is a combination of law reform and regulator enforcement priorities. Over the last few years there has been significant reform across privacy, cyber security and data, particularly with the Privacy and Other Legislation Amendment Bill 2024. Reform has occurred across competition law, financial and regulatory processes, arbitration and digital asset regulation. These legal reforms combined with the enforcement priorities of key regulators (including ASIC, ACCC, ATO, AUSTRAC and the OAIC) indicate a broad-scope, enforcement-driven disputes outlook for 2026.
AI lowering barriers to litigation
Artificial intelligence (AI) is also having an impact. State and Federal Court in Australia have issued practice notes and guidance regarding the use of generative AI.
With more court documents prepared using generative AI tools, courts across the country are finding an increase in errors, bias, hallucinated references and more. For example, in Victoria, a report by the Victorian Law Reform Commission found that over a third of lawyers were using AI in their legal practice. And in the UK, an AI law firm has had its first win against a solicitor-and-barrister team.
Garfield AI delivers legal services through an AI powered platform. In a recent UK case, Garfield AI prepared much of the claim documentation, while a human barrister represented the claimant at trial. The claimant successfully recovered unpaid freelance fees, demonstrating how AI-assisted legal services can improve access to justice for small businesses.
Fair Work Commission reports 70% increase in matters
In Australia, our existing framework requires a human to hold the practising certificate, so this isn’t possible – yet. Despite this protection, there has been a marked increase in submissions to the Fair Work Commission around unfair dismissal and general protection disputes.
The Fair Work Commission has reported an almost doubling of matters they hear, from approximately 30,000 in 2022-23 to a projected 55,000 matters in 2025-26. In a presentation earlier this year, the Fair Work Commissioner President placed the cause of this increase on the use of AI tools by potential litigants.
While acknowledging the benefits of AI tools for self-represented litigants and access to justice, the lack of accuracy of the tools has meant the Commission will undertake reform. The reform is likely to include a modification on forms to indicate if generative AI has been used, as well as more ’rigorous articulation(s) of the applicant’s case that the general protections provisions have been contravened.’
Individuals increasingly being named
The increase in disputes means businesses are more likely to be sued or investigated and indicate that Directors and Officers are more likely to be named in the proceedings. And it’s not just directors and officers. A recent litigation case in the Federal Circuit and Family Court of Australia saw the applicant name several senior employees in the organisation, as part of their petition.
In Mitri vs Fire Rescue Victoria the then Director of Human Resources, Commander, Assistant Chief Fire Officer, and Commissioner of Fire Rescue Victoria were specifically named, as part of allegations of individuals failing to respond to complaints. The Court gave the applicant leave to refile, so that the matter can be heard.
Impacts on insurance
At the national inquiry into small business insurance, the Insurance Council of Australia (ICA) notes outdated liability laws and increasing legal costs are among the contributing factors that drive up small business insurance premiums.
Reinsurers now view Australia as the most litigious market in the world, noted the ICA. Reinsurers are an important part of the risk transfer process, providing insurance options to insurance companies so they can expand coverage. As the risk of litigation increases, insurance premiums are increasing too.
While the ICA called for caps on legal costs and a national review of the civil liability settings as one mechanism to drive down insurance costs for small business, lawyer industry groups have raised concerns this could limit civil entitlements.
Litigation is alive and well
Whether driven by regulatory enforcement, employment disputes, class actions, cyber incidents or emerging AI-assisted claims, litigation risk for Australian businesses is increasing.
Recent cases demonstrate that exposure is not limited to boards and executives. Senior managers, HR leaders and other employees may also find themselves personally named in proceedings.
For businesses of all sizes, now is an appropriate time to review Management Liability and Directors & Officers insurance arrangements to ensure cover remains aligned with the organisation’s risk profile, legal obligations and potential defence costs.
Contact your Account Manager to discuss whether your cover remains appropriate for your organisation’s evolving risk profile.
