The Decade of Disputes: Litigation is on the Boardroom Agenda for the Year Ahead
As we approach the mid-way point of what has been described in previous reports as “The Decade of Disputes”, FTI Consulting has undertaken research with over 250 leaders of large businesses, representing aggregate annual turnover in excess of $1tn and over 6 million employees, to understand how litigation has shaped decision-making in their respective organisations.
- We are seeing a steady increase in litigation as a boardroom agenda item.
- Boards and Executive Committees are more concerned about litigation risk than others in senior management roles.
- The risk of business disruption is best mitigated with a broad cross-functional team.
Litigation is on the rise .
5 years ago, FTI undertook the first edition of this research series, finding that business leaders were anticipating an increase in litigation in the years ahead. This trend has been born out over the years by our research.
Approximately 6 in 10 (59%) of business leaders surveyed in 2024 have seen an increase in litigation compared to a year ago, and over half (52%) are concerned by the risk of litigation in the next 12 months (this includes current and prospective litigation).
The most common types of disputes relate to:
1. Employment (45%)
2. Contractual/commercial disputes (28%)
3. Fraud (24%)
4. Tax (24%)
Additionally, the research has found that over 1 in 3 large companies (35%) are currently engaged in material litigation. Of those surveyed, the average size of largest claim facing the company was found to be $425m. Over 8% of respondents have been engaged in litigation in the last 12 months for a claim in excess of $1bn.
One factor that may be contributing to the impact of material disputes is the rise in class actions seen by businesses. It is noteworthy that over half (53%) of companies surveyed reported that class actions or mass claims are becoming more costly for their company
to manage.
In terms of impact, the largest companies in terms of revenue found that material claims have the greatest disruptive impact to the organisation’s overall reputation. Meanwhile, the largest companies in terms of number of employees found that the opposite was true. It suggests that material claims, by nature of their large value, matter from a financial and investor perspective but become business-as-usual for large organisations whose employees may be concerned with a range of other issues on a day-to-day basis. This trend should not be overstated though, with more than two-thirds of businesses employing over 10,000 people still finding such claims to be reputationally disruptive.
Reputation is the Highest Priority for Many Business Leaders
When determining their legal strategy, large UK organisations prioritise the following considerations in the order set out below. It is noteworthy that businesses place a greater emphasis on protecting the company’s overall reputation and relationships with corporate stakeholders than achieving a successful outcome at judgment or through negotiated settlement.
This is reflective of a Boardroom perception of the disruptive impact of litigation, with 69% of respondents saying such cases gave serious concern for damaging reputation, 63% stating that it risked increasing future regulatory scrutiny and 60% stating that it damaged investor confidence. According to respondents at Board level, 13% reported that their company was facing one or more cases that could have an existential impact on the future of the business and more than one in four (29%) of material cases were found to meet this description.
Nonetheless, when looking at claims in excess of $250m, we start to see a difference in priorities among business leaders. For these large claims, financial factors take precedence – both from a revenue and investment perspective – with the company’s customers, commercial partners and shareholders becoming the most important stakeholders to manage.
Litigation is Firmly on the Boardroom Agenda
Mitigating Against the Risk of Disruption Requires Broad Engagement Across C-Suite Functions
