The Decade of Disputes: Class actions, financial disputes and fraud dominate the litigation landscape facing media scrutiny in 2022
Download a PDF of this articleLitigation is once again in the media spotlight and the next chapter of the “Decade of Disputes” may see an increase in financial fraud cases brought before the courts and reported in the press. FTI Consulting’s January 2022 Resilience Barometer® incorporates the views of over 3,000 senior decision-makers in large companies across the G20. Research found that the majority (51%) of litigation experienced at the companies surveyed has been reported externally in the press, and this is higher in cases of fraud or financial crime.
Looking to the year ahead, 24% of companies surveyed expect media scrutiny around cases of financial fraud, a trend also seen in commercial litigation. Last year, FTI Consulting identified that third-party litigation funding is driving an increase in high-profile claims with 89% of institutional investors expecting at least one company in their portfolio to face legal proceedings with claimants backed by litigation funding. In this year’s research, 17% of companies surveyed expect media scrutiny from class actions or group litigation – typically backed by third-party funding.
Acknowledging the nature of such class action cases – typically high-profile claims with a proposed class representative litigating on behalf of consumers – FTI Consulting’s research also sought to ascertain the business impact that the mere existence of a claim may have on a company, with the potential for customer relationships to be harmed. Approximately one third of companies facing class action cases reported a customer impact for their business expressed in lost turnover, with the average business impact equating to 2.35% of revenue.
It is therefore unsurprising that the vast majority of companies (81%) are taking steps to prepare for such cases, including the potential reputational damage they can entail, and on the whole managing these risks on a proactive rather than reactive basis.
The views expressed in this article are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.
©2022 FTI Consulting, Inc. All rights reserved. www.fticonsulting.com |