Norton Rose Fulbright’s 19th Annual Litigation Trends Survey: heightened risk around cybersecurity and data protection amid AI boom

Global law firm Norton Rose Fulbright’s 19th Annual Litigation Trends Survey, released today, finds that risks and evolving regulation around technology and cybersecurity dominate corporate counsel concerns heading into 2024, as cyberattacks and a patchwork of data privacy laws deepen litigation exposure.

Forty percent of respondents said their exposure to cybersecurity and data protection disputes increased in 2023 – more than any other category – and those risks appear here to stay, with that area also topping the list of 2024 litigation concerns amid mounting challenges posed by data management and artificial intelligence (AI).

Questions surrounding AI’s role in patent inventorship, copyright ownership and fair use cases are also expected to fuel intellectual property dispute exposure in the year ahead. Nearly half of respondents expect that increased use of AI technology will deepen their vulnerability to such litigation in 2024.

Despite AI’s litigation risks, however, the report found that more than a third of corporate counsel support the use of generative AI by their law firms. This comes as litigation spending grows and in-house law departments feel less prepared to address lawsuits in the year ahead.

“2023 brought rapid-fire developments in artificial intelligence, and in-house counsel are eager both to respond to new uncertainties around generative AI and also take advantage of the efficiencies it promises,” said Steven Jansma, Norton Rose Fulbright’s US Head of Litigation and Disputes. “This tension informs many of the trends we highlight for 2024, including cyber risk, intellectual property and expectations for outside counsel.”

This year’s report is based on a survey of more than 400 general counsel and in-house litigation leaders based in the United States and Canada in industries such as financial services, technology, healthcare, energy, retail, real estate and construction, among others. The research also includes findings from in-depth interviews with corporate counsel to better explore emerging trends and the litigation challenges industry leaders face in 2024.

“The litigation environment is more complex when business relationships are less predictable, particularly in these volatile economic and political cycles,” said Richard Krumholz, Norton Rose Fulbright’s Global Head of Litigation and Disputes. “Litigation becomes more probable in these turbulent times, and seeking the views of outside litigation counsel to assess risks and to prepare strategies at the early stages becomes more important when in-house counsel identifies potential disputes that may lead to substantial risk.”

Other key areas of concern include regulatory proceedings, class actions and environmental, social and governance (ESG) litigation. Sixty-one percent of respondents were involved in at least one regulatory proceeding in 2023, compared to 50% in 2022.

The share of organizations involved in bank and financial fraud class actions more than doubled in the wake of last year’s banking crisis, and nearly one-third of respondents are concerned about securities class actions in 2024. Respondents are also increasingly concerned about ESG, as issues from greenwashing to diversity policies to regulatory compliance undergo increased scrutiny in a divisive political environment.

A comprehensive report detailing the survey’s findings is available at litigationtrends.com. Other highlights include:

• Forty percent of survey respondents experienced regulatory and investigations-related litigation over the last 12 months, on par with cybersecurity and data protection as the third most common type of litigation.
• Nearly half (48%) of those concerned with class actions in the year ahead identify employment and labor as the area of highest concern, signaling that workforce issues will remain a key focus area for in-house legal departments.
• Fifty-two percent of corporate counsel surveyed expect to increase the number of in-house litigators in response to increasing litigation and decreasing outside counsel engagement, up from 36% last year.
• Among the 28% of organizations surveyed which experienced class action litigation over the last 12 months, employment and labor along with cybersecurity and data privacy were the most common types, at 55% and 35%, respectively.
• Companies with US $1 billion or more in revenue spent an average of US $3.9 million on litigation in 2023 – six times higher than the litigation budget for those with revenue under US $100 million.
• Nearly one-quarter (24%) of respondents saw their ESG dispute exposure increase over the last year, with respondents in the energy, real estate and construction and technology sectors most concerned about ESG exposure in 2024.

Introduced in 2004, Norton Rose Fulbright’s Annual Litigation Trends Survey is the longest-running survey of corporate counsel on litigation issues and trends.