In the following guest post, Ed Whitworth, the Head of Directors and Officers Liability at Inigo, and Yera Patel, Head of Casualty & Financial Lines Claims and Analytics for Inigo, summarize the results of a recent survey Inigo conducted of U.S. securities litigation defense counsel.. The original of the survey summary previously was published on Inigo’s blog, here. I would like to thank Ed, Yera, and Inigo for allowing me to publish the report summary on this site. I welcome guest post submissions from responsible authors on topics of interest to the blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article. 




Inigo’s D&O Securities Defense Counsel Survey came about because we wanted to go straight to the experts to understand what they thought were the key issues in the current D&O litigation environment.

We decided to share the results publicly as we believe this will help to inform the discussion on the key issues affecting our industry. We will publish the survey each year. We also wanted to stick our necks out and make several predictions based on the survey findings.

We identified the top U.S. Securities Defense firms and asked them 45 questions on a range of topics, broadly grouped into four key themes. These themes are as follows

  1. US federal securities class actions – how many, how expensive to defend and are cases settling early?
  2. Derivative litigation – what are the aggravating factors?
  3. Environmental, social and governance (ESG) – will it be a game changer?
  4. Biden’s regulatory environment – Is the watchdog’s bite starting to match its bark?

We asked securities defense firms to opine on a range of different issues within these themes, then collated the responses and analyzed them. The findings were informative and, in some cases, surprising.

Nearly three quarters (74%) of these respondents, who regularly defend corporate class actions, believe the number of lawsuits is set to rise in 2022 after a two-year lull.

Recent stock market volatility and the rise in the number of Special Purpose Acquisition Companies (SPACs) going public are amongst the factors likely to prompt more claims being filed, the survey found. One respondent said: “Expect a tsunami of filings against SPACs and DeSPACs in the coming years.” Whilst we are already seeing significant numbers of claims, respondents expect this to accelerate further.

Another major finding was that securities defense firms do not believe ESG will be a major claims driver in the near term. The belief from firms surveyed is that claims that incorporate ESG -based allegations involve conduct that would have led to these actions and investigations with a different label in the pat.

The survey also found that it is likely that the Securities and Exchange Commission (SEC) and Department of Justice (DoJ) will take a tougher line with the companies they investigate. The likelihood of regulators resisting no fault settlements is high as they more aggressively pursue individuals.

Other key findings include:

  • The derivative claims environment continues to deteriorate. The survey reveals a gloomy outlook in which defense firms predict claims will rise. More than seven in ten respondents feel that the frequency of derivative actions has increased over the past five years. They also expect settlement sizes to continue to increase.
  • 220 Demands are mushrooming. These requests, in which lawyers representing stockholders of Delaware-registered companies can demand to inspect company books and records, are regarded as a growing nuisance as more plaintiff’s firms file them alongside other litigation.

On the back of these findings, we are sticking our necks out to make several predictions for 2022 in the report. We will assess the accuracy of these predictions in our next D&O report.

  • In 2022, the number of securities class actions – which have fallen during the pandemic – may rise back to the high seen in 2019.
  • SPACs and DeSPACs will be the centrepiece of increasing claims and coverage litigation.
  • Companies’ ESG performance is unlikely to result in many securities claims – for now.
  • US regulators are likely to become more aggressive and may seek more admissions of guilt from the companies they investigate.

Finally, we asked our firms to rank the best Plaintiffs’ law firms, based on their effectiveness as shareholder advocates, as litigators and in case outcomes. Bernstein Litowitz Berger & Grossman LLP beat Robbins Geller Rudman & Dowd into second, being described as a “formidable advocate for shareholders” by one respondent.

To see the full results, as well as much more detail on the survey results, the report can be found here.