AI in Dispute Resolution: the SME wake-up call

The cost of fighting disputes is changing fast

Litigation costs have always been driven overwhelmingly by the volume of:

• Documents to be reviewed
• Correspondence to be analysed
• Administrative work and diverted management time required to keep proceedings on track.

There is also the cost of hiring external legal expertise and the length of time litigation often takes.

For businesses, the implications are significant, and AI is upending the equation. Document-heavy disclosure, typically the single largest cost driver in complex commercial proceedings, can now be handled more efficiently and rapidly through AI and purpose-built legal tools. That does not mean disputes will become inexpensive overnight, but it does mean that the cost of pursuing or defending a claim is shifting and the time involved may be curtailed. Cases that were previously uneconomic to run are becoming viable, and business that once relied on the sheer cost of litigation as a tactical deterrent to scare off an opponent may lose that advantage.

AI is also a liability

AI itself is not just a tool, it is also a source of risk, generating a new category of litigation exposure. Businesses that use AI for drafting documents, handling customer communications, and producing internal reports need to be vigilant. If you upload personal or sensitive data into external AI tools without safeguards or accept AI-generated content at face value without appropriate human oversight and verification, a business will be increasing its risk.

The courts have already made their position clear as demonstrated by the recent “public admonishment” of Pinsent Masons in the case of Cork & Anor v Smith. The High Court has dealt with cases involving unreliable AI-generated materials, and its message is blunt: AI output must be checked by humans and, in complex areas, proper human legal input is non-negotiable. For SMEs running lean teams with limited compliance infrastructure, this is a particular vulnerability that demands attention.

Expect more claims, brought more quickly

AI is lowering the barrier to conducting litigation. Claims are now easier to assemble, cheaper to run, and quicker to file. Every business needs to understand what this means in its own sector.

The impact of all of this is that your business may face a greater number of claims, brought more quickly and, often, largely generated by AI. Costs are increasing and, if you are on the receiving end of a claim, or the defendant is a litigant in person armed with AI, as is now very often the case, the commercial question becomes stark: that is, is this a claim worth pursuing or defending in the long run? Whilst the possibility of settlement – or even abandonment – has always been an important factor to consider in disputes, its significance in this new landscape matters more than ever before.

What SMEs should do now

AI is already reshaping the cost, volume, and strategic dynamics of commercial disputes. The businesses that will come out ahead are not necessarily those with the largest budgets; they will be those that plan ahead and prepare.

• Firstly, businesses should review their contracts and, in particular, check dispute resolution clauses and arbitration agreements now, ensuring these are fit for purpose in an AI-influenced world.
• Secondly, set clear internal policies on the use of AI-assisted work, covering everything from document drafting to client communications. If your team is using AI without guardrails, you are exposed.
• Thirdly, ask the tough questions now, not after you have received a claim. If your business does not have an AI use policy, dispute resolution clauses, or a plan for managing and handling the rising tide of AI-driven claims, this is a boardroom issue and now is the time to act.

If you need help or would like further information, get in touch with our commercial disputes team to discuss how we can help you prepare and get ahead of the curve.