AI-related litigation risk has surpassed intellectual property, breach of contract and group litigation as the most threatening emerging risk over the next three years, according to a Shoosmiths report.
The firm’s Litigation Risk 2026 report – based on responses from 360 general counsel and senior in-house lawyers – found that more than half anticipated an increase in AI litigation.
Overall, 87% said that AI-related employment disputes and discrimination claims caused the most concern. These were followed by contractual disputes over AI services, and privacy or data protection claims resulting from AI data processing, as the most alarming issues.
Geopolitical shifts were also among the most worrying concerns, with 73% of firms surveyed for the report believing that state sponsored cyber-attacks have already increased litigation risks, with 27% saying that cyber-attack risks have considerably increased.
This has prompted 70% of firms to fortify their cyber security operations in the past year, with a further 26% arranging to do the same, which is also a response to notable cyber-attacks on high street names throughout last year.
Alex Bishop, partner and head of litigation, regulatory and compliance at Shoosmiths, said: “We’re in an era of global instability, and that is having a real impact across boardrooms.
“By analysing global trends and areas of concern for businesses, organisations can better anticipate potential disputes and implement targeted risk-mitigation measures to safeguard both their reputation and financial position.”
Most firms said they are now spending an average of £600,000 on high-value disputes, but while rising costs are a concern for in-house lawyers, the price of bringing a claim is no longer the principal consideration.
Respondents disclosed that they lend more weight to the legal merit of a case, the extent of potential reputational risk and the expected duration of a case in comparison to the cost of litigation.
As a corollary of the increased number of disputes in the UK, the EU and North America, three out of four firms canvassed for the report revealed that they intend to expand the headcount of their in-house legal teams, with 71% also planning to increase spending on dispute resolution.
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