Financial Services is the sector with the highest number of disputes, with regulatory activity being a particular theme, according to a report released by international law firm, Shoosmiths, entitled Litigation Risk 2024.

Boards of financial services firms overlook emerging risks in areas including tech disputes, group litigation and crypto and employment disputes. The report highlights that these are areas their General Counsel would like to see their boards more alive to risk.

The research follows interviews with over 360 general counsel and senior in-house lawyers within financial services, automotive and technology sectors.

The report assesses the litigation outlook for business. And it provides insights and perspectives on the dispute resolution environment, the challenges and the inherent risks that lie ahead.

Shoosmiths Litigation Risk 2024 key findings

Litigation is on the rise. A large proportion (82%) of respondents anticipate more disputes over the next three years. Group litigation, environmental disputes, supply chain disputes and employment issues are the most concerning.

The report reveals that boards are misaligned with general counsel on risk. There is a degree of alignment between boards and legal teams on the key areas of litigation risk. But there is room for improvement in all but 13% of the respondents’ businesses.

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Two in five (38%) respondents say data breach follow-on litigation is one of their board’s top concerns. However, GCs and legal teams see it as less of a worry.

Litigation spend and headcount set to increase

More than three in four senior lawyers expect to increase headcount. 82% expect to increase spending on dispute resolution over the next three years.

Companies are more confident in their ability to respond to disputes than they are in their ability to identify emerging areas of risk. Half are not horizon-scanning insights into legal changes and 64% do not undertake trend analysis on their sector.

GCs require strategic approaches to risk mitigation. Fewer than half of respondents provide internal training on specific litigation risks. Only 46% conduct litigation preparedness reviews and only 36% carry out contract audits.

The report also explores the impact of Covid-19, Brexit, the climate crisis and digital transformation.

It examines the changing attitudes and behaviours of litigants and the use of alternative dispute resolution methods. In addition, it discusses the role of litigation funding and insurance, and the future of litigation technology.

Alex Bishop, partner and head of dispute resolution and litigation at Shoosmiths, said: “We are delighted to share our report with our clients and the wider business community. We believe it offers valuable insights and recommendations on how to navigate the complex and dynamic litigation landscape.

“We have spoken to hundreds of senior lawyers across different sectors and jurisdictions. And analysed data from litigation analytics platform Solomonic, to identify the emerging areas of litigation risk, the impact of the economic and technological disruption, and the best practices for dispute resolution and mitigation.