2024 Litigation Outlook: GC Survey Finds Certain Heightened Risks Top Of Mind

According to Norton Rose Fulbright’s Annual Litigation Trends Survey, organizations reported a number of notable trends in 2023 that impact their outlook for 2024: With record levels of cyberattacks and continued regulatory uncertainty, cybersecurity exposure and risks grew more than any other area in 2023. Tied to cybersecurity and IP exposure, AI posed both risks and possibilities. Regulatory proceedings, class actions in certain areas, and ESG litigation also saw significant uptick in 2023.

Now in its 19th year, Norton Rose Fulbright’s Annual Litigation Trends Survey is the longest-running survey of in-house counsel focused on litigation issues and trends. Last fall, the firm engaged with more than 400 general counsel and in-house litigation leaders from the US and Canada, in key industries such as financial services, energy, healthcare and technology. Those leaders shared their experiences and thoughts on disputes-related issues impacting their organizations, allowing the firm to track and report on overall trends.

Several trends warrant a deeper dive and attention from corporate leaders and counsel, as they navigate litigation risks in 2024.

Cybersecurity disputes not only persist but have grown and are evolving. Forty percent of those surveyed reported an increase in 2023 in their exposure to cybersecurity and data protection disputes. That is more than any other dispute category. Cybersecurity-related exposure is particularly heightened for industries that involve the management of sensitive information and large volumes of client data, like financial services, healthcare and retail. Cybersecurity and data protection also topped the forward-looking list of top 2024 litigation concerns. Those concerns exist amid the continued challenges posed by the evolving regulatory landscapes and newer, mounting challenges posed by data management and artificial intelligence (AI).

AI has not only contributed to cybersecurity exposure but also to IP vulnerabilities, including questions surrounding AI’s role in patent inventorship, copyright ownership and fair use cases. Nearly half of those surveyed anticipate that the increased use of AI will heighten their cybersecurity and IP risks in 2024. The AI story is not one-sided, however. More than a third of corporate counsel support the use of generative AI by their outside counsel, compared to less than half that amount opposing its use.

Other areas of increased litigation in 2023, and concerns going into 2024, include regulatory proceedings, class actions, and environmental, social and governance (ESG) litigation.

More companies were involved in regulatory proceedings in 2023 than in the previous year.  Sixty-one percent of survey respondents reported being involved in at least one regulatory proceeding in 2023, up from 50% in 2022.  The average number of proceedings also grew to 3.9, again up from past years.  As the Securities and Exchange Commission (SEC), Department of Justice (DOJ), Federal Trade Commission (FTC) and other regulatory agencies continue to crack down on enforcement as they implement new rules and policies, companies anticipate further uptick in regulatory proceedings in 2024.

Class actions in particular areas also saw notable uptick in 2023.  Bank and financial fraud class actions more than doubled in the wake of 2023’s banking crisis.  The number of companies experiencing a securities class action also nearly doubled from 2022 to 2023.  Nearly one-third of respondents report concerns about securities class actions in 2024.  In addition to cybersecurity-related class actions, workforce disputes also represent the area of highest exposure and concern in the class context.  Among the 25% of respondents who were concerned about class actions in 2024, nearly half cited concerns about employment and labor-related class actions.  Other areas of heightened concern include consumer protection and product liability class actions.

As the firm’s survey from last year anticipated, ESG-related litigation also grew in 2023, with one in ten respondents reporting involvement in such litigation in 2023 compared to one in fifty in 2022.  Additionally, nearly one-quarter of respondents reported an increase in ESG dispute exposure in 2023.  The 2024 outlook continues these trends.  More than one-third of respondents with class action concerns for 2024 report concerns specifically about ESG, as issues from greenwashing to diversity policies to regulatory compliance undergo increased scrutiny in a divisive political environment.  Counsel in the energy, real estate and construction, and technology sectors are especially concerned about ESG exposure going into 2024.

The reported increases in certain areas of litigation not only signal areas of ongoing organization concern in 2024.  They also parallel organizational decisions to grow their legal in-house teams.  More than half of companies surveyed report that they expect to increase their in-house teams in 2024, compared to only one-third in 2023.

In sum, offering overall predictions for the coming year, organizations and their corporate and outside counsel are gearing up for increased cyber, regulatory, class action, and ESG exposure and litigation, among other areas, in 2024.