The legal lessons every SME should learn from the Post Office scandal
The Post Office Horizon scandal stands as one of the most harrowing examples of systemic failure in the UK. Hundreds of sub-postmasters were falsely accused of theft and fraud due to errors in a flawed IT system, leading to financial ruin, imprisonment, and in some cases, loss of life. This was not just a failure of technology, it was a catastrophic miscarriage of justice and a devastating reminder of what happens when governance, accountability, and empathy are absent.
While the scale of this scandal might feel far removed from the day-to-day challenges SMEs face, the lessons it offers are invaluable. For any business relying on technology, handling disputes, or managing risk, there are practical steps to take to ensure such failures never take root in your organization.
Start with governance: Protect people and systems
One of the most troubling aspects of the Horizon scandal was the Post Office’s refusal to listen to those who raised concerns. Instead of investigating the system’s flaws, they doubled down, ignoring red flags from sub-postmasters and disregarding their cries for help.
For SMEs, this provides a clear warning. If your systems are failing, your people are often the first to notice. Building robust governance processes isn’t just about protecting your business, it’s about protecting the people who work for you or rely on the technology you supply.
An essential part of this is creating acceptable and anonymous whistleblowing channels. Employees and even customers must feel safe to report issues without fear of retaliation. Equally important is what happens after concerns are raised. Businesses must:
Record issues flagged: Use systems to log and track employee and customer complaints, particularly when they relate to software or operational processes.
Identify patterns: Regularly review flagged issues to identify recurring themes or epidemic problems.
Act decisively: If a pattern emerges, investigate immediately and openly to prevent small problems from becoming catastrophic.
Technology risks: Know and mitigate the risks inherent in the technology you are relying on
The Horizon system was introduced as a cutting-edge solution to streamline operations, but instead, it became a source of untold harm. Sub-postmasters were held liable for discrepancies caused by the very system they were told to trust.
For SMEs, this underscores the need to take technology risks seriously, especially when operating live environments or relying on third-party systems.
Every contract with a supplier should address these risks, making responsibilities and mitigation steps clear such as:
Who is responsible for maintaining and fixing systems.
What happens when the system fails, including measurable service levels and remedies.
Processes for reporting issues or vulnerabilities in the systems.
How disputes will be handled if errors or discrepancies occur.
Where responsibility and liability for issues that occur.
Don’t assume everything will work perfectly. Test your systems, review your contracts, and always have a backup plan in place.
Disputes: Handle them swiftly and fairly
One of the most heart-breaking elements of the Horizon scandal was how long it took for sub-postmasters to get justice. For years, their lives were in limbo, with many losing homes, families, and livelihoods. Justice delayed is justice denied.
For SMEs, this serves as a stark reminder to address disputes promptly and fairly. Whether it’s a customer complaint, a supplier issue, or an internal problem, the quicker you respond, the more likely you are to resolve things without long-term damage.
Reputation is fragile
The Horizon scandal didn’t just harm individuals, it also destroyed trust in the Post Office as an institution. While your business may not operate on the same scale, reputation is still one of your most valuable assets.
Building and protecting trust requires transparency, fairness, and accountability. When mistakes happen, own them. Communicate openly with stakeholders, explain what went wrong, and focus on fixing the issue. Trying to cover up problems or shift blame will only make things worse.
A call to action: Lessons for SMEs
The Post Office Horizon scandal was a tragedy, but it doesn’t have to be repeated. SMEs can take steps today to protect themselves, their employees, and their customers by:
Implementing strong governance practices and anonymous whistleblowing systems.
Recording and reviewing flagged issues to identify and address patterns early.
Ensuring contracts clearly define responsibilities, remedies, and liability limits for technology risks.
Handling disputes swiftly, fairly, and transparently.
If this feels overwhelming, you don’t have to navigate it alone. At Adaptable Legal Counsel, I help SMEs put these safeguards in place, from drafting robust contracts to reviewing governance processes and putting in applicable policies. We can work together to make sure your business is protected from risks and ready to thrive.
About Adaptable Legal Counsel
Adaptable Legal Counsel offers flexible legal services designed to meet the unique needs of small and medium-sized businesses. We specialise in helping businesses with drafting contracts, negotiating partnerships with larger clients, and tackling specific legal challenges, and much more. Whether you’re looking for legal counsel as a service, fractional legal support, or assistance with day-to-day commercial legal work, we’re here to help.
For more information about how Adaptable Legal Counsel can support your business, visit our website. To book a free, no-obligation initial chat, click here.
About Amy
Amy is a commercial solicitor with a strong background in commercial contracting. During her time at Panasonic and Reed Exhibitions (RX Global), part of the RELX Group, Amy gained invaluable experience advising on contractual matters. She now offers fractional legal support, helping SMEs navigate complex legal landscapes with confidence and efficiency. She now offers flexible legal services, including flexible retainers and fractional legal counsel as a service packages through Adaptable Legal Counsel.
Disclaimer: This blog is for informational purposes only and should not be considered legal advice. The content provided here is intended to offer general insights into key contract clauses for small businesses. For specific legal advice tailored to your circumstances, please consult a qualified legal professional. Adaptable Legal Counsel disclaims any liability for actions taken or not taken based on the information in this blog.
