The year 2026 has rapidly underscored the inherent unpredictability in the volume, nature, and cost of litigation facing corporations. As dispute volumes appear to plateau, the stakes in those cases that proceed to trial are escalating dramatically, demanding a strategic recalibration from CEOs and their legal teams. This evolving environment is characterized by a significant shift in regulatory enforcement, a surge in specific types of discrimination claims, and the emergence of novel liabilities stemming from the very technologies adopted for efficiency. Data from Norton Rose Fulbright’s annual Litigation Trends Survey paints a stark picture: only 29 percent of in-house legal leaders felt "very prepared" for the challenges of 2026, a significant drop from 46 percent the previous year. With a third of the year already elapsed, these concerns are proving well-founded, as the legal landscape continues to defy expectations.
The year commenced with a wave of new legislative frameworks impacting businesses nationwide. By January, Indiana, Kentucky, and Rhode Island had enacted their own state-level data privacy statutes, mirroring the growing complexity that companies must navigate in protecting consumer information. Simultaneously, California, Texas, and Illinois introduced statutes specifically addressing the burgeoning field of artificial intelligence, signaling a proactive governmental approach to regulating this transformative technology. These legislative actions were quickly followed by significant shifts in federal regulatory oversight. In late January, the Equal Employment Opportunity Commission (EEOC) rescinded its previous guidance on workplace harassment, effectively returning greater litigation oversight to the EEOC Chair. This move, according to public statements from the agency, prioritizes the investigation and prosecution of "unlawful DEI-motivated race and sex discrimination" and "anti-American national origin discrimination," among other key areas. This strategic pivot by the EEOC suggests a renewed focus on specific forms of alleged discrimination, potentially increasing the volume of related claims.
The escalating financial impact of litigation became acutely apparent in April, when a Texas jury delivered a staggering $1.6 billion verdict to the families of two men who perished in a workplace explosion. This monumental award serves as a potent reminder of the potentially devastating financial consequences of workplace incidents and the increasing willingness of juries to render substantial judgments. Compounding these traditional litigation risks is the emergence of new liabilities associated with the adoption of artificial intelligence. Numerous documented instances of AI tools "hallucinating" or fabricating case law in legal briefs have brought to the forefront the potential for professional misconduct and the inherent risks of relying on AI without rigorous oversight. These developments, collectively, confirm the anxieties voiced by corporate counsel regarding the unpredictable and intensifying legal challenges of 2026.
Cybersecurity and Data Privacy: The Convergence of Threats
A significant and growing area of legal exposure for corporations in 2026 is cybersecurity and data privacy. A striking 38 percent of companies surveyed in early 2026 reported an increase in their legal exposure in this domain over the preceding year. This surge is amplified by a marked shift in regulatory enforcement, with 82 percent of respondents indicating that state attorneys general are intensifying their efforts as federal agencies reduce their oversight. This dynamic creates a complex and often contradictory enforcement environment for businesses operating across multiple jurisdictions.
The litigation landscape in cybersecurity and data privacy is multifaceted. Companies are contending with a rise in vendor disputes related to data handling practices, as well as shareholder lawsuits stemming from cyber incidents. Whistleblower claims under the False Claims Act are also becoming more prevalent, particularly when sensitive government or health data is compromised. Furthermore, litigation surrounding tracking technologies, such as those used for online advertising and website analytics, continues to present a persistent threat.
A particularly concerning trend is the escalation of cyber and privacy class actions, which saw a notable increase in 2025, rising from 32 percent in 2024 to 40 percent. Adding to this complexity, 74 percent of companies reported that plaintiffs are increasingly employing "mass arbitration" – a strategy involving the filing of hundreds, if not thousands, of individual arbitration demands. This tactic aims to overwhelm companies with administrative burdens and significant filing fees, often exceeding the traditional defense costs associated with class action litigation. The proliferation of state-specific privacy laws, coupled with coordinated enforcement actions by state attorneys general, means companies are subject to a complex web of regulations and potential penalties. The sheer volume and cost of managing mass arbitration filings alone present a substantial financial and operational challenge.
Mitigating Cybersecurity and Data Privacy Risks:
- Proactive Data Governance: Implement robust data governance frameworks that clearly define data ownership, access controls, and retention policies. Conduct regular data audits to identify and remediate vulnerabilities.
- Vendor Due Diligence: Thoroughly vet all third-party vendors who handle sensitive data, ensuring they adhere to stringent security and privacy standards. Include clear contractual provisions regarding data protection, breach notification, and liability.
- Incident Response Planning: Develop and regularly test comprehensive incident response plans for data breaches and cyberattacks. These plans should outline clear roles, responsibilities, communication protocols, and legal notification procedures.
- Employee Training: Conduct ongoing training for all employees on data security best practices, phishing awareness, and the importance of protecting sensitive information.
- Insurance Review: Ensure adequate cyber insurance coverage is in place to mitigate the financial impact of breaches and related litigation.
The Rise of "Nuclear" and "Thermonuclear" Verdicts
A significant trend reshaping litigation strategy and risk assessment in 2026 is the escalating frequency and magnitude of "nuclear verdicts" (exceeding $10 million) and "thermonuclear verdicts" (surpassing $100 million). The Norton Rose Fulbright survey revealed that 64 percent of respondents reported higher settlement demands directly attributable to this trend. Furthermore, 53 percent cited increased litigation costs, and a notable 45 percent indicated that plaintiffs are exhibiting a reduced willingness to settle cases.
This phenomenon has a tangible ripple effect throughout the legal system. Approximately half of the surveyed companies anticipate that both verdict amounts and settlement figures will continue to climb throughout 2026. This projection is leading to increased insurance premiums as carriers grapple with the heightened risk. Additionally, companies are reporting a greater reliance on jury consultants, underscoring the strategic importance of jury selection and persuasion in an environment where large verdicts are becoming more commonplace.
The underlying causes of these escalating verdicts are complex, often attributed to factors such as perceived corporate greed, a growing distrust of large institutions, and sophisticated plaintiff trial bar strategies. Cases involving personal injury, product liability, and catastrophic events are particularly susceptible to these mega-verdicts, where the emotional impact on juries can be profound.
Strategies to Reduce Nuclear Verdict Risk:
- Early Case Assessment and Resolution: Aggressively assess cases early in the litigation process to identify opportunities for prompt and favorable settlement. This requires a clear understanding of potential jury appeal and the financial exposure.
- Evidence Preservation and Management: Implement rigorous protocols for the preservation and management of evidence to prevent spoliation claims, which can severely damage a company’s defense.
- Jury Consulting and Trial Strategy: Engage experienced jury consultants to develop effective jury selection strategies and trial themes that resonate with potential jurors and mitigate bias against the corporate defendant.
- Public Relations and Reputation Management: For cases with significant public visibility, proactive public relations and reputation management strategies can help shape public perception and potentially influence jury sentiment.
- Focus on Defensible Conduct: Emphasize the company’s ethical conduct, safety protocols, and commitment to customer well-being throughout the litigation process.
The State Enforcement Surge Post-Chevron
The landscape of regulatory enforcement is undergoing a significant transformation in 2026, marked by a surge in state-level activity following the Supreme Court’s decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., which effectively curtailed the broad deference courts had previously given to federal agencies’ interpretations of statutes they administer. While 39 percent of respondents to the Norton Rose Fulbright survey anticipated an increase in federal regulatory investigations, the more pronounced trend is the amplified role of state attorneys general. An overwhelming 82 percent of companies reported increased enforcement activity at the state level, as these officials step in to fill perceived enforcement gaps left by federal agencies.
The overturning of "Chevron deference" has fundamentally altered the legal calculus for regulatory matters. A substantial 55 percent of companies reported an increase in lawsuits involving regulatory issues in 2025 as a direct result of this development. Moreover, 63 percent of companies believe that this shift provides a greater incentive for them to litigate against agency interpretations, rather than accepting them at face value. Consequently, 55 percent of businesses have adjusted their internal compliance processes to account for this new environment, recognizing the increased potential for challenges to agency actions and the corresponding rise in litigation.
This shift empowers state regulators to pursue enforcement actions with potentially greater independence, leading to a more fragmented and complex regulatory environment. Companies must now be acutely aware of the varying priorities and enforcement styles of attorneys general across different states, necessitating a more tailored and localized compliance strategy.
Actionable Steps to Lower Enforcement Risks:
- Robust Compliance Programs: Develop and maintain comprehensive compliance programs that are not only aligned with federal regulations but also anticipate and address the specific concerns and priorities of state regulators.
- Proactive Engagement with State Regulators: Foster open lines of communication with state attorneys general and relevant state agencies. Participate in public comment periods and industry dialogues to understand evolving regulatory expectations.
- Legal Preparedness for Agency Challenges: Ensure legal teams are well-versed in administrative law and prepared to challenge agency interpretations and actions where appropriate, particularly in light of the diminished deference to federal agencies.
- State-Specific Risk Assessments: Conduct regular risk assessments that identify potential regulatory vulnerabilities at the state level, considering the unique legal and political climates of each jurisdiction in which the company operates.
Employment Litigation: Navigating DEI Scrutiny and New Discrimination Claims
Employment and labor litigation remains a consistently high-risk area for corporations in 2026, ranking as the second most common category of disputes, affecting 34 percent of respondents. This area experienced a notable increase in exposure in 2025 (31 percent) and is expected to see further growth in 2026 (30 percent). Three primary drivers are reshaping this domain: heightened scrutiny of workplace Diversity, Equity, and Inclusion (DEI) programs; a significant rise in "reverse discrimination" claims; and an increasing number of disputes concerning disability accommodations and the complexities of leave laws.
The intensified scrutiny of DEI programs stems from a variety of factors, including legal challenges and evolving societal expectations. Concurrently, the growth in "reverse discrimination" claims—where employees allege they have been disadvantaged due to their race, gender, or other protected characteristics—has been particularly pronounced. This trend has been significantly influenced by the Supreme Court’s June 2025 Ames decision, which has been interpreted by some as broadening the scope for such claims.
Furthermore, disputes over disability accommodations are on the rise, reflecting a greater awareness of and demand for workplace accessibility. This is occurring alongside a sharp increase in litigation related to paid sick leave and family leave. In 2026, 36 percent of respondents cited these issues as a source of litigation, a substantial increase from 24 percent in 2025. This surge is largely attributable to the expanding "patchwork" of leave laws across states and municipalities, with numerous jurisdictions enacting or expanding new leave requirements throughout 2025. This creates a compliance labyrinth for multi-state employers, increasing the likelihood of unintentional violations.
Options to Lower Employment-Related Risks:
- DEI Program Review and Audits: Conduct thorough legal and operational reviews of all DEI initiatives to ensure compliance with anti-discrimination laws and to mitigate the risk of reverse discrimination claims. Document the legitimate, non-discriminatory business justifications for all DEI-related decisions.
- Accommodation Process Standardization: Implement clear, consistent, and well-documented processes for handling accommodation requests under the Americans with Disabilities Act (ADA) and similar state laws. Train managers on how to properly engage in the interactive process.
- Leave Law Compliance: Stay abreast of the complex and ever-changing landscape of state and local paid sick leave and family leave laws. Implement robust systems to track eligibility, manage requests, and ensure compliance across all applicable jurisdictions.
- Employee Handbook and Policy Updates: Regularly review and update employee handbooks and policies to reflect current legal requirements and best practices in employment law, particularly concerning DEI, accommodations, and leave.
- Manager Training: Provide comprehensive training to all managers on relevant employment laws, including anti-discrimination, anti-harassment, accommodation procedures, and leave management, to equip them to handle sensitive employee issues appropriately.
Artificial Intelligence: Navigating New Litigation Frontiers
The rapid adoption of artificial intelligence (AI) tools by corporations is introducing a novel and complex category of litigation risk in 2026. Over 60 percent of surveyed companies now utilize customized generative AI (tools that create content like text, images, or code) and agentic AI (autonomous AI systems capable of taking actions). However, this technological advancement is accompanied by significant challenges, with 59 percent of respondents reporting difficulties in managing the litigation risks associated with AI. The regulatory landscape governing AI is also in a state of flux, adding to the uncertainty.
The legal exposure arising from AI extends beyond its internal use within a company. Vendors may leverage a company’s proprietary data to train their AI models, potentially creating legal liabilities related to data usage, intellectual property infringement, or breach of confidentiality. Emerging product liability theories are being advanced against AI platforms, alleging defects in design, failure to warn users of inherent risks, or the perpetuation of biases embedded within the AI’s algorithms.
On the intellectual property front, AI is generating complex questions regarding ownership of AI-generated content and the definition of an "inventor" for patent purposes. Technology companies, in particular, report the highest exposure to IP-related risks (37 percent in 2025), with smaller tech firms expressing significant concern about AI product liability risks (47 percent). This indicates a broad and escalating concern across various sectors regarding the legal ramifications of AI deployment.
Strategies to Lower AI-Related Dispute Exposure:
- AI Governance Frameworks: Establish comprehensive AI governance frameworks that include clear policies on AI development, deployment, data usage, and risk mitigation. This framework should involve legal, compliance, IT, and business stakeholders.
- Vendor AI Risk Management: Implement stringent due diligence processes for AI vendors, ensuring contractual agreements clearly define responsibilities, data ownership, IP rights, and liability in the event of AI-related issues.
- Bias Detection and Mitigation: Actively work to identify and mitigate biases within AI systems, as discriminatory outcomes can lead to significant legal challenges. Employ diverse teams in AI development and testing.
- Intellectual Property Protection: Develop clear strategies for protecting AI-generated content and inventions, and for respecting the IP rights of others when using AI tools.
- Transparency and Explainability: Strive for transparency in AI decision-making processes where possible, and develop mechanisms for explaining AI outputs, especially in contexts where accuracy and fairness are critical.
- Legal Team Education: Ensure legal teams are educated on the evolving legal and ethical considerations surrounding AI, including emerging case law and regulatory guidance.
Operationalizing Risk Management with Limited Resources
The common thread weaving through these diverse litigation risks is the imperative for companies to achieve greater efficiency and effectiveness with potentially constrained resources. In an environment where preparedness is declining and in-house legal teams are often lean, a strategic and systematic approach to risk management is paramount.
1. Build Protocols and Eliminate Accountability Gaps:
The cornerstone of effective risk management in the current climate is the establishment of robust protocols. Companies must create clear case assessment and management protocols for all litigation matters. This involves developing, and regularly updating, comprehensive response playbooks for critical scenarios, including cyber incidents, accommodation requests, and regulatory inquiries. The effectiveness of these playbooks should be rigorously tested through simulated exercises, such as tabletop drills, to identify and address any accountability gaps or blind spots before a real crisis occurs. This proactive approach ensures that responses are coordinated, efficient, and legally sound.
2. Consolidate Work with Trusted Outside Counsel:
The financial burden of litigation is substantial, with companies spending an average of $2.4 million annually on legal disputes, and a significant 56 percent of this expenditure directed towards outside counsel. In response, a growing trend is the consolidation of legal work with a select group of trusted firms. The Norton Rose Fulbright survey indicates that 62 percent of organizations now engage with just one to five law firms for their litigation needs, an increase from 55 percent in 2024. Concentrating legal work with fewer, strategically aligned firms can lead to improved efficiency, deeper institutional knowledge of the company’s business, and ultimately, reduced costs. These preferred counsel can become true partners in risk mitigation and dispute resolution.
3. Prioritize Prevention:
The most effective and cost-efficient approach to litigation is prevention. Companies are increasingly recognizing the value of investing in preventative measures before disputes arise. The most common tools for litigation prevention include tightening contract language and providing comprehensive employee training. Companies should reassess the language within their contracts, paying particular attention to non-compete and non-solicitation agreements, and meticulously review indemnification provisions. Furthermore, evaluating the appropriateness and adequacy of insurance coverage is crucial. Investing in contract improvements and compliance tools that proactively reduce exposure is almost always more cost-effective than defending against litigation.
The current litigation environment rewards foresight and preparation. While the overall volume of disputes may be plateauing, the risk is increasingly concentrating in areas where the potential impact is severe and the legal landscape is undergoing rapid transformation. CEOs and in-house legal teams who cultivate systematic approaches to these five critical trends, supported by repeatable playbooks and disciplined resource allocation, will be significantly better positioned to navigate the inevitable litigation that arises—and, more importantly, to prevent it in the first place.
