For just about any business, the thought of costly and potentially reputation-damaging securities litigation is, at the very least, disconcerting. Since 1997, on the average, 95 companies per year go to court to face class action securities filings and lose billions in trial costs and market capitalization in the process.
The good news for businesses is that in 2013, securities litigation filing levels declined to the lowest they’ve been since before the financial collapse. The rub, however, is that just having a general decrease in the amount of cases going to court doesn’t necessarily mean your company is in the clear. Depending on the industry, the size of the organization, and what tactics the plaintiffs’ bar decides to use in their case, the likelihood of being sued may not be any lower.
Even keeping an eye out for those trends doesn’t excuse a company from its fiduciary duty. As the old adage goes, “an ounce of prevention is worth a pound of cure.” While being aware of your surroundings is important in any context, law departments should be less attentive to defining trends that will help them to see why they’ll be sued, as well as the quality of statements that will reduces their losses if they get suited.