Reasons Behind the Continued Rise in US Commercial Litigation

In today’s USA, the news is dominated by lawsuits relating to the actions undertaken by the US government. But lurking beneath the surface are trends that continue to see companies of all sizes finding themselves in disputes that are being played out either in a court of law or with an arbitral body. Particularly as the global economy continues to perform sub-optimally, many businesses find themselves experiencing financial challenges, supply stream interruptions, or even customers that do not want to pay what they are obligated to pay. The increase in claims is also − at least in part − being driven by the availability of litigation funding, which is itself facing increasing scrutiny.

All trends evidence that the number of lawsuits or arbitrations being filed continues to increase. Those trends further reflect that litigation is expensive, with electronic discovery contributing mightily to the high costs.

AI use dominates current discussions regarding litigation

Any discussion of current issues in litigation starts and ends with AI, which has become embedded in legal practice and in the operational side of many businesses. Long gone are the days of young lawyers sitting in an isolated warehouse located in the middle of nowhere reviewing documents or researching and drafting legal pleadings without some use of AI. Courts are struggling with how to treat AI-produced filings and what indicia of reliability are necessary to authenticate AI-generated evidence. Presently, no established guardrails exist, and courts and lawyers continue in their struggle to adapt to a rapidly changing world.

The issues of AI go beyond questions of authenticity and reliability. In an evidentiary realm, AI-generated materials lack a human author and often provide no details regarding provenance, which necessarily raises issues of admissibility and authenticity. Additionally, as parties seek information regarding AI-related materials in discovery, this raises issues that may expose proprietary information regarding processes − not to mention intruding on information protected through vendor and other non-disclosure agreements. And examples continue to be made by judges of lawyers using AI for review and drafting, when the AI-produced materials lead to filings containing fictional or otherwise unreliable citations and sources.

During the coming months, courts and legislative bodies are expected to develop and adopt explicit standards for AI evidence and the use of AI throughout the litigation process.

Data shows continuation of class action claims in the USA

The first half of 2025 has seen a continuation in trends in the class action landscape from the previous year. Securities class action filings have remained steady in comparison to the second half of 2024, with 108 new federal securities class actions filed in the first half of 2025.

During the first six months of 2025, class actions targeted three primary sectors – namely, technology, influencer marketing (which is new), and consumer protection claims related to false advertising and disputes over fees charged. On the settlement front, the total amount of money from class action settlements in 2025 is more than USD21 billion, including a nearly USD400 million antitrust settlement related to poultry processing as well as a USD100 million settlement by Verizon.

Throughout the past few years, class actions involving Americans with Disabilities Act (ADA) compliance and data breaches have ranked among the fastest-growing areas of litigation. This exponential growth has not taken a breather in 2025. The ADA has been on the books for more than 30 years, leading to profound changes in access to public and private spaces, as well as targeting discrimination based on disability.

The growth of technology has transformed ADA enforcement by taking it into the digital world, as ADA class action suits today often revolve around virtual spaces. Maintaining an ADA-compliant website may prove more challenging than building a ramp or providing seating for those with disabilities. Many companies have begun using generative AI to maintain the accessibility of their websites, which may have led to the continuing increase in ADA claims related to website accessibility. Simply put, counting on generative AI to maintain website accessibility and avoid compliance issues is no more reliable than using ChatGPT as a source of definitive or uncontroverted facts. What is different in 2025 is that many of these lawsuits are targeting small and mid-sized businesses − many of which incorrectly assumed they were too small to be at risk.

In the employee arena, labour and employment class actions continue to rise, and companies report spending more money on defending such suits than on any other form of class action. The increase in such claims may reflect increasing employee dissatisfaction with pay or hybrid work policies, as well as a general increase in workplace activism.

Role of technology in relation to litigation

Cyber-incidents remain a top driver of commercial litigation throughout the USA, with insurance playing a significant role in shaping these disputes. It is beyond dispute that data breaches have generated the largest single category of costly litigation throughout the USA during the past few years. That trend continued in 2025 and shows no indication of slowing down any time in the near future. Compared to 2022, 2024 saw three times the number of data-related class actions filed, and that trend continued for the first part of 2025. Indeed, 2025 witnessed data breach class actions initiated against companies ranging from PNC and Discord to Sotheby’s, McHire (McDonald’s AI platform), Oracle, PeopleGuru, and Blue Cross-Blue Shield of Montana, among others. 

Throughout the past decade, business has become more technology-centric as paper forms increasingly become a relic of the past. Businesses depend on cloud computing and other online activities to compete on a global scale. Massive amounts of data are collected and stored as part of companies’ regular business operations.

However, as a result of this technological shift, the news is replete with stories about data breaches and cyber-attacks in companies ranging from Fortune 100 companies to small start-ups. During the first half of 2025, more than 1,700 data breaches were reported. Inevitably, following such a breach, lawsuits are filed. Some of the claims are being brought as class actions by plaintiffs’ lawyers on behalf of consumers; others are asserted on behalf of the party whose IT system was hacked against their insurers or other accountable parties, in order to seek compensation for any damage that was suffered.

As long as data protection laws continue to be strengthened worldwide, new governmental regulations continue to be promulgated and massive settlements are announced, no one should expect the brakes to be pushed on the filing of these lawsuits. In 2024 alone, the ten largest settlements in data breach class actions totalled nearly USD600 million.

A newer trend reflects lawsuits regarding online tracking and communications. The federal Video Privacy Protection Act has been the source of these suits, as companies are being sued for using web analytics pixels and replay code. In 2024, more than 250 such suits were filed − almost doubling the number filed in the previous year.

Moreover, US states such as Illinois have statutes regarding the collection and storage of biometric information. As businesses have digitised many of their security, payroll and time-keeping functions, they have (often) inadvertently run afoul of state laws providing for the storage, collection and use of such information. This has led to a plethora of litigation that is poised to continue.

The trend for new suits in this regard has significantly slowed as most companies adopted the consents and other documents necessary to insulate themselves from liability. Yet a number of such suits remain pending and, as further states adopt laws regarding the collection and storage of biometric information, this trend may reverse. One interesting development in 2025 relates to the remedies for such suits. By way of example, in March 2025, a settlement was approved granting class members a substantial equity stake in Clearview AI.

The next wave of these suits may be lurking around the corner as companies gather genetic information. The collection of genetic information is governed by federal law as well as state statutes, often providing for steep penalties. These laws prohibit enquiries into family medical history, among other things, in connection with employment. Recently, there has been a surge in the filing of class action lawsuits relating to genetic information, particularly under Illinois’ Genetic Information Privacy Act − continuing a trend that developed in 2024. More than 25 such cases were filed in 2025.

Technology has also led to increased litigation in the trade secret arena. The odds of a company unwittingly finding another company’s trade secret on its computer system or experiencing an unplanned disclosure of its own trade secret are substantially increased today. This stems from a variety of reasons, ranging from employee mobility being on the rise, reductions in force, workplaces that are remote or hybrid, and workers increasingly bringing their own devices to the workplace. The number of lawsuits filed alleging the misappropriation of trade secrets has been continually increasing for the past several years and 2025 is no exception to this trend.

Suits relating to employee non-compete agreements used to clog up court dockets. Now, as the federal government has taken steps to curtail the enforceability of such non-compete agreements and many states have followed suit, non-compete litigation is largely a relic of the past. However, trade secret litigation has taken its place, as companies endeavour to protect their assets. In recent years, litigation involving trade secrets has increased in sophistication, and clients have become more aware of the legal protections available under state and federal law.

Additionally, as competition has intensified in many industries, companies often turn to trade secret protection for their core economic business drivers instead of seeking protection under the patent laws. Financial drivers such as customer lists, algorithms, and other proprietary technology or business methods enjoy better protection as trade secrets, which essentially enables companies to continue to derive economic value from their protected secrets in perpetuity. As workforces with access to confidential and proprietary information remain increasingly remote, and workers display an increased willingness to speak out about business practices they do not agree with, the need for businesses to protect their confidential information is magnified.

Trade secrets are often core to a business’ economic viability, if not its success, and rank among a company’s most valuable assets; put another way, they are often a company’s “crown jewels”. Well-known examples include the formula for Coca-Cola, Google’s search algorithm, and the secret sauce recipe of McDonald’s. None of these examples enjoy patent, copyright or trade mark protection – rather, each is a protected trade secret. A trade secret enjoys significant advantages over the other forms of IP protection in that disclosure is not required and the “secret” can be protected for an unlimited period. Although many of the big IP litigation battles historically involved patent challenges, that is no longer the case. Many well-known companies are or have been involved in costly trade secret litigation in recent years.

This litigation in the trade secret space cut across a wide swathe of industries, ranging from cannabis to fashion and retail, e-commerce and consumer products. Historically, trade secret claims had been brought in state courts, but now ‒ following the 2016 passage of the federal Defend Trade Secrets Act (DTSA), which created a federal cause of action for trade secret theft ‒ claims are routinely brought in the federal courts.

On the recovery side, courts have continued to award successful plaintiffs substantial damages in trade secret cases. Although most claims are resolved prior to trial, the past years have seen federal court trade secret claims result in large jury verdicts. If nothing else, recent years serve as a stark reminder that the damages that are being awarded for trade secret claims remain staggering.

Return of ERISA suits

2024 reflected the emergence of class action lawsuits brought under the Employee Retirement Income Security Act (ERISA) and that trend continued in 2025. Many of these claims relate to the fees charged to plan participants and the range of investments offered and their cost. In 2022, the US Supreme Court issued a ruling that eased the burden for an ERISA suit to avoid dismissal at the initial pleading stage − the result of which has led to the current trend in new suits being filed.

New types of ERISA-related cases include how retirement plans use forfeiture provisions when an employee departs and whether balances that remain can be used to pay for plan expenses or other costs. Likewise, healthcare plans are an increasing target for claims related to excessive administrative fees and how they account for and obtain prescription drug rebates.

ESG and shareholder lawsuits

Many businesses, both public and private, have embarked on ESG initiatives in recent years. Some of these plans were large and audacious, whereas others were more modest in scope. Either way, even though companies have traversed through increasing scrutiny from consumers, investors and government agencies in terms of ESG issues, the risk of litigation related to these efforts has never been higher. The rise in these types of suits resulted from:

• increased awareness and heightened scrutiny surrounding ESG issues;
• non-profit organisations using local consumer protection laws (eg, in Washington, DC) that afford standing to sue; and
• increased litigation funding that has made the costs of such litigation more palatable on the plaintiff side.

Companies are also being challenged over their ESG initiatives as a whole. As a result, companies may be taking a new approach to laying out their environmental goals ‒ namely, they are not doing so, demonstrating an increasing trend towards “greenhushing” (or being radio silent regarding their approach to environmental goals). This most certainly does not mean that companies have eschewed setting environmental goals for their businesses. On the contrary, they continue to set goals but are simply not discussing those goals publicly, so as to avoid fomenting litigation.

Although engaging in greenhushing may be one antidote to the problem of increasing ESG litigation, it also deprives companies of the inherent value underlying public pronouncements of an ESG programme. Whether as investors or consumers, many are looking to engage with companies that are deemed to be advancing ESG initiatives. By staying silent, companies miss out on these associations and any attendant benefits that may accrue.

One path that some companies have engaged in as part of a litigation avoidance programme is to make their environmental statements aspirational rather than definitive. These statements are made in the vein of “we hope to achieve” or “we expect that we will improve” rather than definitive statements espousing concrete, measurable goals. Properly substantiated aspirational claims may prove to be a path to success.

However, companies should be forewarned that merely transforming goals into “aims” or putting “want” or “should” in front of a stated goal may not suffice to render that goal aspirational. And, even if the goal is aspirational, is it still definite enough for investors or consumers to rely upon it? If so, it may still be actionable, even if properly substantiated.

But what does it mean for a claim to be “properly substantiated”? How much substantiation is needed? Can the substantiation be from an industry group or does it need to be “independent”? These are just a few of the questions that need to be considered in substantiating claims. Best practices would suggest that independence and scientific rigour go a long way in providing a safe harbour for aspirational pronouncements.

Green marketing has also been a hot source of claims recently. While companies have responded to increasing calls for environmentally and ethically sustainable products by marketing their new offerings as “green”, private lawsuits alleging that these efforts are misleading or deceptive have multiplied exponentially ‒ a trend that will most probably continue its upwards trajectory. As a result, companies should engage in heightened efforts to avoid making environmental claims that may be overstated, inaccurate, or misleading in any way.

But with no real defined standards as to what those terms mean, many companies find themselves under attack as a result. This is particularly true with regard to claims that a product is carbon-neutral. Apple is one of the most recent defendants of such a claim. In February 2025, Apple was sued over allegations that its Apple Watch and whether the carbon offset projects Apple relied on to achieve neutrality actually provided real reductions in carbon emissions. The lawsuit alleges that the plaintiffs paid a premium for an Apple Watch in reliance on Apple’s sustainability claims.

“Clean” and “sustainable” are marketing words that are often used. Yet these words are currently giving rise to false advertising claims, proving once again that language matters. And the risk is not only of a false advertising suit. For public companies, if their marketing claims about a product lead to a decrease in the stock price, a derivative or securities claim will likely follow.

Litigation costs continue to rise

The discovery process in litigation used to be characterised by teams of lawyers visiting warehouses where documents were maintained and reviewing those documents page by page in search of the proverbial “smoking gun” ‒ identifying which documents had to be produced in discovery and which documents might be left untouched, hidden in a company’s annals. However, this rarely happens today, given that most company information is stored electronically.

Yet the electronic storage of information has not, in consequence, decreased the cost of litigation – it has increased it. The vast amount of electronically stored information means that there is so much more data to be collected and combed through. Companies are required to store their data or may face claims that they have spoliated information, which can often have drastic consequences. And there is often a significant imbalance in information, meaning costs related to e-discovery are disproportionately borne by one party to a dispute.

The end result of this mountain of information is that the timeframe for a typical piece of litigation gets extended and the associated costs continue to rise.

Where does US commercial litigation go from here?

Litigation will always exist. Business disputes exist and plaintiffs’ lawyers will continue to explore new causes of action as businesses take steps to minimise risks based on existing types of claims. As long as insurance companies do not adopt a business model of paying out on every asserted claim, insurance litigation will continually be on the court dockets.

Recent litigation trends are not likely to disappear in 2026. Companies need to assess these trends from a strategic perspective and consider how business operations may be affected. There are certainly steps that can be taken to minimise risk; however, litigation risk cannot be avoided completely.