BUSINESSES are increasingly under threat from litigation because of a growing blame culture, a study has shown.

One in four UK employers say they have been involved in litigation, with fewer than half winning their case, the survey by AXA insurance found.

Forty-seven per cent of businesses - particularly small and medium-sized (SME) enterprises - believed the growing trend of legal action posed a major risk to their company.

About a third blamed the increase in no-win, no-fee cases for the rise in litigation and the increasing blame culture.

Doug Barnett, risk control strategy manager at AXA Insurance, said: "Despite the risk of litigation, almost a quarter of SMEs admit that they are not aware of the extent of their liabilities as an employer. Our research shows that too many companies are unnecessarily exposing themselves to the threat of being sued for compensation. The cost of bringing or defending a legal action can put serious financial pressure on a business, whether it eventually wins the case or not."

Businesses can potentially be sued by an employee, a customer, a supplier or a member of the public. In particular, businesses should ensure that they understand how employment legislation could affect their company.

During the past year, £6.2m has been awarded in employment tribunal payouts.

That sum, awarded in 368 cases throughout last year, was a 45 per cent increase on the previous year, when the total payout was £4.3m.

There was a leap in disability discrimination payouts last year, with awards up 89 per cent.

Disability cases also attracted the highest awards, with an average payout of £28,889 - a payout that could easily trigger the collapse of a small business.