COVID-19 has led to a build-up of cases, increase in securities class actions and contract disputes
A recent survey of U.S. in-house counsel showed that 31 percent of corporations reported an increase in litigation as a result of COVID-19, while another 45 percent of respondents predict a further increase in the number of pandemic-related disputes for the next year.
Canada is showing similar trends to those outlined in Norton Rose Fulbright’s 16th annual Litigation Trends Survey.
“Certainly we're seeing, and we expect that certain areas will see an uptick, [which] will likely include receivership and insolvency litigation,” says Linda Fuerst, a senior partner in Norton Rose Fulbright Canada LLP in Toronto.
Fuerst also anticipates a continued increase in securities class actions, and in contract disputes; “there are lots of types of circumstances that could give rise to those kinds of claims going forward, including … over terms of commercial leases.”
The survey also indicated a rise in workloads is likely to continue well into 2021, related to the increase in the number of pandemic-related disputes.
“The impact of COVID is continuing, and continuing to evolve,” she says. Fuerst’s practice includes a lot of securities-related litigation, and “I think it's well known there's been a great deal of market volatility, and that may give rise to certain types of claims against financial institutions and financial advisors, as an example. But [for] things like receiverships and insolvency applications, it’s likely that we will see more of that impact in 2021 as continued economic hardship continues for many businesses.”
Norton Rose Fulbright’s survey also found that one third of organizations now feel more exposed to disputes concerning discrimination and social justice – not surprising, given the increased awareness of social issues (and remedies) resulting from movements such as environmental, #MeToo and Black Lives Matter.
The result of that awareness is that claimants who may have been less inclined to bring legal proceedings arising out of complaints about differential treatment owing to their sex or race “may feel more empowered to come forward to the courts now … than they did before,” says Fuerst. Recently The Globe and Mail reported on “pay and power gaps” in Bay Street firms, indicating that women are often paid less than men and are underrepresented in the partnership ranks; “that's an example of the kind of article you might not have seen 10 years ago [but] may cause organizations to be more concerned about potential litigation.”
The survey also found that cybersecurity and data protection disputes had increased over the past few years, and in 2020, 44 percent of respondents reported feeling more exposed than they had 12 months prior. They reported that past attacks had disrupted operations, while others feared that their company’s size or industry made them targets.
In Canada, major cyberbreaches such as those at LifeLabs and Desjardins Group in 2019 have buttressed those fears.
“The lawyers in our firm in Canada who practise in this area have been extremely busy over the past year, and I expect that they will be for the coming years,” says Fuerst; “there have been class actions that have been brought in this area with increasing frequency,” which is not surprising given the extent to which businesses are relying on technology now, and even more because of COVID-19 pandemic restrictions that have required more businesses to conduct more if not most of their business online and remotely.
In Canada more than in the United States, Fuerst identifies third-party litigation funders as being one litigation trend worth watching. Companies that have large claims but that may be reluctant to spend a lot of money pursuing those actions, perhaps because of COVID-related restraints, may be able to turn to third-party funders as a source of litigation funding, which would “allow them to bring significant actions without impairing their own balance sheets.”
Looking forward over the next two or three years, 41 per cent of all survey respondents – about 200 in total -- saw new sources of disputes emerging because of COVID-19, environmental change, data privacy and emerging industries, including autonomous vehicles and cannabis.
For the last two, “it’s mostly that [these industries] are unknown,” says Saul Perloff, a partner at Norton Rose Fulbright US LLP based in San Antonio, Texas, and who has worked on the annual survey since its second incarnation. “How are they going to be regulated? What type of exposure is there?”
The COVID-19 pandemic restrictions have also caused a lot of trials to be delayed, Perloff says, which creates a growing backlog of work.
Fuerst sees that on the horizon as well. Most provinces in Canada, as part of the emergency orders brought into effect when COVID-19 restrictions first hit last year, included a tolling of limitation periods, meaning the times for commencing claims are extended.
“So we may well see a delayed uptick in litigation in many Canadian provinces as a result of limitation periods having been tolled for a part of 2020,” she says.
