New regulation and stricter enforcement of it has high-stakes litigation constantly in the news. Just this Thursday, the SEC, passed a new set of guidelines, opening the litigious gates to potential floods of lawsuits against companies that fail to disclose to investors their cybersecurity risks and vulnerabilities.
In reverse, individuals, companies, and even U.S States are drumming up new lawsuits everyday. In fact, quite a few state governments are challenging the Affordable Care Act among other new federal reforms laws.
Today, the SEC suit against Citigroup is reaching a tipping point. Citigroup Inc. has agreed to pay the Securities and Exchange Commission between $200 million and $300 million, according to people familiar with the matter, as reported by the WSJ’s Jean Eaglesham and Suzanne Kapner.
If the settlement is accepted, it will be one of the highest payments made by a firm to the SEC to settle charges, according to the WSJ.
The SEC will vote this morning on a proposed agreement with Citigroup in regards to civil fraud charges related to Citigroup’s sale of a $1 billion mortgage-bond deal called Class V Funding III, created by Citigroup in 2007 and alleged misleading of investors.
The overwhelming number of regulation litigation is one of the major reasons why one-quarter of respondents to a 2011 Fulbright Litigation Trends Survey expect next year to bring increased litigation and regulation as companies attempt to grow in today’s volitile economy.
In the survey, one-third of corporate counsel reported an increase in external regulatory inquiries directed at their companies. Not a surprising statistic after you evaluate the plethora of news headlines on the matter.
For attorneys, this is good news. More lawsuits means more business.
In fact, ninety-two percent of U.S. corporate counsel in the survey predicted a rise or, at least, even level of litigation to occur over the next twelve months.
“Our survey respondents have a front-row seat to the increased scrutiny brought on by stricter regulatory enforcement,” Stephen C. Dillard, the head of Fulbright’s global disputes practice, said to Fulbright & Jaworski LLP News.
“This year, our survey confirmed a heightened level of governmental investigations focused on the energy and insurance industries, with the health care, manufacturing and engineering sectors not far behind.”
So, as stricter regulation and company growth continues to drive an increase in litigation, how will your firm accommodate this trend?
It’s important, as well as your ethical responsibility, to keep your clients apprised of regulatory developments that may affect their business. In your firm’s blog or client newsletter, explain what preventative measures can be taken to decrease the risk of future litigation and accommodate new legislation.
At the same time, take advantage of this time for open dialogue to explain to your clients what practice areas at your firm could be of service to them.
Whistleblowers remain a growing concern for businesses this year, according to Fulbright’s survey. Thus, for your clients at risk, prepare contingency plans for possible internal investigations or audits. Oversee their employee contracts and create policies regarding disclosure of confidential information.
Now is the time to take advantage of a growing market for litigation. So, convene a meeting with managing partners or law firm administrators to create a plan to harness this trend.
Implement a strategy that (1) informs current clients of new regulations; (2) demonstrates the breadth legal expertise and capabilities of your firm to both current and new clients; and (3) increases targeted advertising to attract new clients and companies victim to and at risk of unwanted government attention.