Regulatory investigations were among the fastest-growing legal concerns among corporate lawyers last year, the global law firm Norton Rose Fulbright found.
The firm, which released the results of its 2021 Annual Litigation Trends Survey last month, reported that 33 percent of respondents named “regulatory/investigations” one of “the top three types of legal dispute which would be of most concern” to their company. Only 24 percent said the same in its 2020 survey and even less, 15 percent, said so two years ago. Nineteen percent said regulatory matters were their single greatest concern, up from 11 percent a year earlier.
Respondents working in “consumer markets,” however, named class actions their single-most concerning legal dispute. “Employment/labor” and “contracts/commercial” came out on top in terms of the most numerous disputes facing the industry. Legal professionals in consumer markets identified employment/labor and intellectual property as the “top trends” facing them in litigation.
Overall, 27 percent of respondents in Norton Rose Fulbright’s survey listed employment cases among their top concerns, up from 19 percent a year earlier. About half, 49 percent, said they were among their highest volume matters, up from 39 percent last year, but flat on a two-year stack. Among all respondents, 46 percent identified contracts and commercial litigation as among their most common types of litigation—down from 53 percent last year—and 26 percent said they were among the most concerning—down from 35 percent a year ago.
Class-action disputes, however, do appear to be on the rise. This year, 15 percent of Norton Rose Fulbright’s respondents said it was one of their most common types of litigation, more than double the 7 percent who said the same the last two years. Twenty-four percent said class actions were among the most concerning disputes, up from 17 percent and 16 percent last year and two years ago.
Though Norton Rose Fulbright called cybersecurity and data protection the “major” drivers of the increase in class actions, the firm also noted “a rising concern over [environmental, social and governance]-related class actions.”
“Environmental, social and governance (ESG) issues have taken center stage as various stakeholders challenge companies to improve their ESG performance,” Rachel Roosth, a partner at Norton Rose Fulbright, said in the report. “We are seeing many companies establish ESG goals and communicate their progress, but making public statements related to ESG can put companies at risk for litigation if the statements are perceived as false or misleading.”
Those who voiced concern over data protection regulations pointed to the consequences of non-compliance, reputational harm, financial loss and class actions. Twenty-four percent of respondents named cybersecurity as one of their top three most-concerning types of legal dispute, up from 19 percent a year earlier and 8 percent two years ago. Though just 3 percent identified cybersecurity as their most common dispute, 12 percent said it was their most concerning issue.
Two-thirds said they felt their business had become more exposed to cybersecurity/data protection disputes in the past 12 months, up from 44 percent a year earlier. Respondents cited the changing legal landscape, the adaptability and sophistication of attackers, storage of large amounts of client data, remote work and mistrust toward employees regarding unintentional and intentional malpractice, Norton Rose Fulbright said. Only 30 percent said they felt were equally exposed to cybersecurity disputes compared to a year ago and 4 percent said they were less exposed.
“It is not surprising that data privacy and cybersecurity continue to be among the most significant legal risks that businesses face, as it increasingly leads to data breach litigation and regulatory enforcement actions,” Andrea D’Ambra, Norton Rose Fulbright’s U.S. head of technology and eDiscovery, said in the report. “As technology advances, more and more jurisdictions are trying to address the looming threat of cybercrimes with new laws and regulations. For this reason, I anticipate cybersecurity issues will continue to drive litigation and regulatory investigations both in the United States and abroad.”