January 26, 2021

If you and your firm plan the way GBQ does, you are in the midst of or finishing your 2021 goal setting. We always like to take this time to do some research about the outlook for litigation. We pulled together some observations from various studies and articles regarding the outlook for commercial and divorce litigation to share with you.

Commercial Litigation

In general, the outlook for commercial litigation is positive with a predicted increase in cases, but with some pressures from in-house counsel to be efficient with their budgets. Observations include:

  • Sentiments from In-House Counsel:[1]
    • Companies are facing their largest increase in caseloads in history, but at the same time, many of the companies surveyed are keeping their budgets flat and 15% of companies are actually planning to cut spending. Settlements are still considered the most effective tool to decreasing risk and legal spending (the BTI study says 57% want to settle matters in 2021). Legal decision-makers at companies are actively looking for new law firms to help which is good news for firms with the capacity to take on new work.
  • Litigation Growth Areas
    • Employment Litigation
      • This area is growing faster than all other areas due to changes in the workforce, because of work from home, shut-down orders and many other claims. Not to mention questions surrounding vaccines and related employment law.
    • Bankruptcy/Restructurings
      • Some businesses will fail and that will naturally lead to bankruptcy or workouts and ensuing litigation. Banks have extended grace to many customers during the pandemic resulting in some pent-up enforcement that likely will come to bear in 2021.
    • COVID-Related Lawsuits
      • Class action lawsuits by plaintiffs claiming they were subjected to health and safety risks during the pandemic.
      • Lawsuits by groups of plaintiffs against educational institutions claiming that schools promised to provide a service and failed to provide proper refunds.
      • Companies claiming they have been denied appropriate insurance coverage for losses caused by the pandemic.
      • Claims that healthcare organizations, assisted-living facilities and nursing homes failed to take steps to protect patients and staff.
      • New COVID pandemic related laws went into effect this year and companies who did not properly implement those may be at risk for litigation.
  • Financial Fraud a Focus by the Government
    • It is no surprise that the government is focused on financial fraud given the amount of government monies that have been injected into the private sector due to the pandemic. In 2021, we may see an uptick in enforcement actions related to fraudulent activities from pandemic-related spending.
    • In addition, in times of financial crisis, stock valuation and accounting frauds tend to increase. White-collar crime litigation and investigation may increase as some government authorities have signaled that prosecution of those white-collar criminals will be a priority.
  • Finally, Cybersecurity is an area of high risk for many companies, which may lead to litigation. Companies need to be considering not only their cybersecurity but also privacy issues, which could lead to litigation.

Divorce Litigation

The projections on divorce litigation are a mixed bag. A Bowling Green State University demographic study that looked at five states (Ohio was not one of them) reported that marriage and divorce rates were trending downward prior to the pandemic and continuing during the pandemic. Couples may not be able to divorce because of a lack of financial resources due to the pandemic.

Conversely, many believe that the pressures of being forced to spend so much time together will, and has, led to increased divorce rates. Anecdotally, we are seeing that most practices are very busy, not just with new divorces, but many post-decree matters as companies are underperforming or individuals have seen pay cuts or lost their jobs causing a return to the court for relief.

Finally, similar to 2008 and 2009, many business owners are projected to initiate divorce proceedings while it may be less expensive to do so due to pandemic-related decreases in some business values. Overall, most of the outlook is positive for those firms and lawyers with litigation practices.

Should you have questions or wish to discuss this information in more detail, GBQ’s Forensic & Dispute Advisory team is here to help.

 

Article written by:
Rebekah Smith, CPA, CFF, CVA, MAFF
Director of Forensic & Dispute Advisory Services

 

[1] Many of the above observations came from the BTI Consulting annual litigation outlook for 2021.

« Back