In-house counsel brace for tide of ESG related litigation

In-house general counsel and others working for corporations in North America are bracing themselves for a wave of ESG-related litigation as exposures deepen, according to a survey carried out by international law firm Norton Rose Fullbright. The firm’s survey of more than 430 in-house corporate lawyers found many believe they face a growing number of regulatory disputes in 2022 compared to the previous year, as authorities step up enforcement on matters ranging from cybersecurity and white-collar crime to worker classification and compliance with evolving healthcare rules. Employment and labour disputes took centre stage, with nearly half of respondents reporting increased exposure in 2022. Respondents expect that trend to continue in 2023, with the majority predicting that disputes of all types – litigation, arbitrations and regulatory proceedings – will stay the same or increase. Now in its 18th year, Norton Rose Fullbright’s annual Litigation Trends Survey tracks changes across the litigation landscape by surveying legal professionals in key commercial sectors. In October and November 2022 it surveyed more than 430 general counsel and in-house litigation leaders based in the US and Canada, from industries such as financial services, energy, healthcare and technology. This year the survey explored class actions in greater depth, revealing fresh insights into an area that more than a third of respondents identified as a critical concern for their organisation in 2023. Employment and labour disputes continue to loom large, the survey found. “This was the most common area for litigation across all surveyed industries in 2022 – and it also ranked as the most common area of concern for organisations in the year ahead. The spotlight on workplace issues comes amid increased enforcement actions by federal employment and labour regulators, rising unionisation activity and a heightened focus on social justice and diversity, equity and inclusion (DEI),” said Norton Rose Fullbright. Cybersecurity, data protection and data privacy are also top of mind amid mounting cyberattacks and varied regulatory requirements, said the firm. “A third of respondents reported experiencing litigation in this area in 2022 — and it was the second-highest ranked area of future concern for class actions, as well the number two area in which respondents expect dispute exposure to increase over the next 12 months,” it explained. ESG concerns are growing in North America as they are in Europe. Only 2% of respondents reported ESG-related litigation in 2022, but more than a quarter of respondents (28%) said their exposure in this area had deepened and 24% expect increased exposure in the coming year. “Moreover, of those concerned with class actions in the coming year, more than one in three said ESG-related class actions stand among their greatest concerns,” said Norton Rose Fullbright. The law firm said that, based on its latest survey, compliance with evolving regulations and heightened regulatory scrutiny is driving concerns across dispute areas. Half of respondents were involved in at least one type of regulatory proceeding last year. This suggests that uncertainty over recent rules from the Securities and Exchange Commission (SEC) and other bodies is adding to litigation risk, said the firm. The survey found that more than a third of participants expect such proceedings to increase in 2023. The survey also found that more legal spending is moving in-house, and organisations feel largely prepared to address litigation in the year ahead. “Respondents attributed that confidence to several factors, including their organisation’s in-house litigation experience and confidence in external counsel. Also cited were internal risk management practices as well as in-house tools and capabilities such as eDiscovery platforms and data protection solutions,” said Norton Rose Fullbright.

In-house counsel brace for tide of ESG related litigation

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