{"id":252064,"date":"2025-03-05T18:05:30","date_gmt":"2025-03-05T18:05:30","guid":{"rendered":"https:\/\/dominiclevent.com\/blog\/?p=252064"},"modified":"2025-03-05T18:05:30","modified_gmt":"2025-03-05T18:05:30","slug":"experts-see-many-reasons-for-an-increase-in-litigation-this-year","status":"publish","type":"post","link":"https:\/\/dominiclevent.com\/blog\/experts-see-many-reasons-for-an-increase-in-litigation-this-year\/","title":{"rendered":"Experts see many reasons for an increase in litigation this year"},"content":{"rendered":"\n
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Lauren Mendolera<\/figcaption><\/figure>\n

\u201cOne of the things that we\u2019re seeing is more prevalence of litigation for trade secrets and to protect IP [intellectual property],\u201d said Lauren R. Mendolera, an attorney who is a partner at Harter Secrest & Emery, LLP. \u201cThis seems to be coming out of this lack of clarity and lack of comfort people have with non-compete agreements.\u201d<\/p>\n

This stems from the Federal Trade Commission\u2019s (FTC) issuance of a rule in April 2024 that would have imposed a comprehensive ban on new non-compete agreements with all workers and a ban on existing non-competes against most workers. The rule was set to begin in September 2024 but was set aside by a federal court in August 2024, thus prohibiting the FTC from enforcing it.<\/p>\n

\u201cThere were some months where people were eliminating non-competes from their agreements or looking for ways around them, looking for ways to protect their trade secrets and their IP in other ways than non-competes,\u201d Mendolera said.<\/p>\n

This, coupled with \u200aindividual states dealing with non-competes in very different ways, has prompted some parties to look to litigation, lawsuits or other provisions in contracts to protect trade secrets or IP where they normally would be relying on non-competes.<\/p>\n

Mendolera also expects to see more general business owner and shareholder litigation this year.<\/p>\n

\u201cWhen the economy is a little bit uncertain like it is now I think people are more reluctant to start new businesses and tend to dig into the businesses they\u2019re currently operating which tends to mean that there aren\u2019t business breakups or divorces as often, but there are business disputes,\u201d Mendolera said. \u201cAnd what that looks like is you stay the course in your business, but you litigate the issues with co-owners or shareholders.\u201d<\/p>\n

Another trend Mendolera has seen over the past few years has been an increase in insurance coverage disputes.<\/p>\n

\u201cI think part of that is because insurance premiums are on the rise, so people have more of a tendency to sue their insurance companies when something isn\u2019t covered because they feel like they\u2019ve been paying sometimes for years for coverage that they thought they understood and perhaps didn\u2019t understand or what they thought was covered wasn\u2019t covered,\u201d she said. \u201cWhen they bring that to court, and it\u2019s litigated it tends to be heavily favoring on the insured side.\u201d<\/p>\n

Lastly, Mendolera is seeing more diverse data privacy and security litigation.<\/p>\n

\u201cThere are so many different creative situations that we\u2019re just not used to dealing with and that there is no precedent for, and you see that overlapping too with cyber insurance,\u201d she said. \u201cYou buy cyber insurance thinking it\u2019s covering you and then a hacker creates a new scheme we\u2019ve never seen before. And you sort of are unclear whether you\u2019ll have insurance coverage for the breach for litigation for the losses.\u201d<\/p>\n

When it comes to avoiding litigation, \u200a Mendolera stresses the importance of understanding your insurance coverage and being properly insured.<\/p>\n

\u201cI think reaching out to professionals who do this for a living and who can understand this in a very efficient way, is really helpful for businesses,\u201d said Mendolera, who notes these professionals can include an insurance broker and\/or insurance attorney. \u00a0\u201cSometimes just getting a little bit of additional coverage or cutting out some coverage can make all the difference in the world.\u201d<\/p>\n

She also encourages businesses to reach out to their legal counsel whenever they have a question.<\/p>\n

\u201cJust getting in front of issues is so important nowadays,\u201d Mendolera said. \u201cDon\u2019t let it slip down as something that\u2019s not as time sensitive as the rest of what you\u2019re doing with your business and then have it be too late. It\u2019s all in the planning.\u201d<\/p>\n

Julian B. Modesti, an attorney who is co-leader of Harris Beach Murtha\u2019s Business Litigation Practice Group, says litigation is very active right now, with one of the drivers being distressed debt at an all-time high.<\/p>\n

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Julian Modesti<\/figcaption><\/figure>\n

\u201cRates have been a problem for a while now and if those rates don\u2019t come down or if they come up I think you\u2019re going to see lenders start to put more pressure on their borrowers,\u201d said Modesti, explaining this could result in increased commercial lending litigation or commercial foreclosures.<\/p>\n

He also explains this is not just on the public finance side, but on the private finance\/private equity side as well.<\/p>\n

\u201dIf the economy becomes challenged in any way further, you\u2019re just going to see that whole realm of commercial lending and distressed debt uptick the activity even further,\u201d he said.<\/p>\n

Modesti is also seeing an upward trend in commercial mediation and commercial arbitration where parties are trying to find more efficient and less costly means of resolving disputes, as opposed to going to court.<\/p>\n

\u201cThe courts are all jam-packed with cases right now, so finding a competent commercial mediator or arbitrator to perhaps get to the result faster is something that many attorneys and their clients in the commercial realm are looking for,\u201d Modesti said.<\/p>\n

He also points to the explosion of class actions and the diversity of class actions as a major continued trend in litigation.<\/p>\n

\u201cClass actions are at an all-time high and they keep rising,\u201d he said. \u201cAnd it\u2019s not just necessarily among the same industries like pharmaceuticals, medical products, chemical companies and food products. It\u2019s across the board.\u201d<\/p>\n

When it comes to reducing one\u2019s business litigation risks, Modesti believes it begins with a \u200a combination of setting your business up correctly from the start; having the correct policies and procedures in place; using forms that are specific to your business; belonging to trade groups so you can stay on top of risks that are particular to your industry and communicating with counsel.<\/p>\n

\u201cI think it\u2019s really important for everybody to what I would like to call like an outside general counsel, somebody who you can call and run something by really quickly,\u201d Modesti said. \u201cBecause I\u2019ve seen those five-to-10-minute phone calls save clients tens of thousands of dollars.\u201d<\/p>\n

Caurie Putnam is a Rochester-area freelance writer.<\/em><\/p>\n

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