The wounds of recession often encounter a particularly painful form of salt: litigation. Corporate attorneys stand ready to pour it on if they sense weakness in a rival, or as a way to compensate for their own economic woes. At the same time, regulators have gotten more aggressive, and the costs and complexity of any legal action continue to climb. In short, CFOs can expect to spend more time with in-house counsel this year, getting briefed on a bevy of risks.
Recession-related litigation last spiked in 2001. As the dot-com bubble burst, an embattled tech sector bore the brunt of angry investors. Today, with global capital markets gravely impaired and consumer confidence at an historic low ebb, recession has a much larger footprint. Legal wrangling is erupting across the board as aggrieved plaintiffs battle over breached labor contracts, unwarranted executive layoffs, dubious financial disclosures, broken supply chains, ailing strategic partnerships, ravaged 401(k) plans, unjust competitive practices, intellectual-property infringements, and curtailed credit lines. And that's only a partial list.
Source: CFO