Pandemic-related disputes likely to increase this year, Norton Rose Fulbright survey shows
Almost a fifth of US in-house teams also likely to increase staff numbers amid expected rise in workload
Almost a third of US corporate legal departments have seen disputes rise directly as a result of the coronavirus pandemic, according to Norton Rose Fulbright’s (NRF) annual litigation survey.
Some 31% of the 183 general counsel and other senior in-house lawyers who responded to the survey reported an increase, compared to just 12% who said disputes had fallen as a result of Covid-19. By contrast, 45% of respondents believe Covid-related disputes will rise further this year, with only 7% expecting disputes to fall. Against that backdrop, almost 70% of corporate legal departments are expecting to see their workloads increase this year, with roughly a fifth of respondents saying they have a mandate to expand their in-house teams.
Judith Archer, a partner at NRF, said: “It is not surprising that larger organisations, and those in the financial services industry, are seeing an increase in disputes volume, given that the largest increases by subject matter are contracts, employment and commercial – which tend to be significant in such organisations even in an untroubled economy. The pandemic, and the resulting economic difficulties, would have a greater effect on those types of disputes due to higher unemployment, business interruption and overall disruption in lending, housing and spending.”
NRF said anecdotally some corporate counsel have been seeking to pursue early settlements, either because they recognise an opportunity for a more favourable outcome or they just want to resolve the matter without draining time and resources. For now those remain in the minority according to the survey, with 22% of defendants and 14% of plaintiffs reporting an increase in the use of early settlements.
Archer said: “Companies whose business is more susceptible to disruption from the pandemic are more likely to pursue early case resolution opportunities, where advisable – for example, for matters that are one-off or that will not greatly impact the company in terms of precedent. We are also seeing courts increasingly suggest mediation or other early settlement processes, which may impact client strategy as well.”
In addition to Covid-related issues, legal departments also predict a rise in insurance and regulatory disputes in 2021, though disputes around cyber security and data protection potentially carry the most risk relative to the volume of disputes. Some 44% of respondents said they feel more exposed to cyber issues than they did a year ago.
The survey was conducted by Acritas last December with GCs making up 32% of the respondents. Energy was the most represented sector, accounting for 27% of the respondents, followed by technology and innovation (20%) and financial institutions (19%).