AI, Cybersecurity Risks Drive Sharp Rise in Corporate Litigation Exposure, New Survey Finds
Key Highlights
- Cybersecurity and data privacy issues have caused a significant increase in federal and state litigation exposure, with over half of organizations reporting higher risks in 2026.
- AI-related legal concerns are rising sharply, including disputes over governance, bias, intellectual property, and product liability, affecting nearly half of surveyed companies.
- Technology firms face the highest litigation pressure, with 75% reporting increased federal risks, while healthcare and financial sectors also see growing AI and cyber-related legal challenges.
- Workforce management issues, such as layoffs and restructuring, are increasingly linked to class action lawsuits, especially when combined with cybersecurity incidents.
- Organizations are improving their litigation readiness through better budget management, cross-functional collaboration, and cost control, recognizing the importance of integrated risk management.
Cybersecurity breaches, AI adoption and an increasingly fragmented regulatory landscape are creating a perfect storm for corporate legal departments, according to a new survey from global law firm Norton Rose Fulbright.
The firm's 2026 Annual Litigation Trends Survey: A Midyear Industry Pulse, released this week, found that organizations across the energy, financial services, healthcare and technology sectors are facing significantly higher litigation exposure than anticipated, with cyber and data privacy issues emerging as the dominant source of legal risk.
The survey, conducted in March 2026 among 135 general counsel and in-house litigation leaders, shows that 56% of respondents have experienced increased federal litigation exposure related to cybersecurity and data privacy, while 53% reported a rise in state-level disputes. Those figures represent a dramatic increase from late 2025, when only 29% of respondents expected cyber and privacy litigation risks to grow during 2026.
Artificial intelligence has also quickly emerged as a significant driver of litigation. Nearly half (46%) of respondents reported increased federal dispute exposure related to AI, while 42% cited growing state-level AI litigation concerns. As organizations accelerate AI deployments across business operations, many are grappling with evolving legal questions surrounding data privacy, algorithmic bias, intellectual property and governance.
"What stands out is how quickly the litigation environment is evolving, especially around cybersecurity incidents, consumer claims and AI-related disputes," said Steven Jansma, U.S. Head of Litigation and Disputes at Norton Rose Fulbright, in a statement. Jansma has a national practice defending mass tort and complex product liability disputes. During his 30-plus-year career, he has served as national and regional coordinating counsel and lead trial counsel for numerous Fortune 500 companies in multidistrict litigation, class actions, and product liability cases. "We are seeing new approaches and a level of activity that is accelerating across industries. Even where federal enforcement has softened, states are often stepping in and pushing litigation forward."
Employment, AI and Cybersecurity Converge
The survey highlights the growing intersection of workforce management, cybersecurity and emerging technologies. Employment and labor disputes remain a top concern, with 39% of respondents reporting increased federal litigation exposure and 44% citing heightened state-level risks.
Respondents pointed to an increasingly complex compliance environment as states such as California and New York continue implementing new employment-related regulations that create additional legal obligations for businesses operating across multiple jurisdictions.
The convergence of cyber and workforce issues is also influencing class action litigation trends. More than half (51%) of respondents identified data breaches and cybersecurity incidents as the most likely catalyst for class action lawsuits in 2026, while 47% pointed to workforce changes, including layoffs and restructuring initiatives.
Meanwhile, AI adoption is introducing a new category of legal exposure. Forty-one percent of respondents said AI-enabled product launches and deployments are likely to trigger class-action litigation, underscoring growing concerns about governance, transparency, and accountability as organizations integrate generative AI and automation into products and services.
Technology Sector Faces Highest Litigation Pressure
Among the industries surveyed, technology companies reported the highest overall litigation exposure. Three-quarters (75%) of technology-sector respondents said federal litigation risks have increased since the beginning of 2026, while 72% reported a similar rise at the state level.
More than half (56%) expect privacy and data protection violations tied to AI use to contribute to future litigation, while 50% cited AI-related bias or discrimination claims and intellectual property disputes as major areas of concern.
Healthcare organizations also identified AI as a rapidly growing legal challenge. Fifty-three percent of healthcare respondents reported increased federal AI-related litigation exposure, and the same percentage said AI-powered product launches are likely to become a source of class action lawsuits. Healthcare organizations were also the most likely to report increased concern around AI governance and oversight issues.
Financial institutions continue to see cyber incidents as their primary litigation threat. More than half of respondents from that sector reported increased federal exposure to both cybersecurity and data privacy disputes (53%) and consumer protection litigation (53%), while 47% identified AI as a growing source of legal risk. Data breaches and cyber incidents topped the list of anticipated class action triggers for financial services firms, cited by 56% of respondents.
For energy companies, workforce-related disputes remain the leading concern. Fifty-seven percent reported increased federal employment and labor litigation exposure—the highest among all industries surveyed—and the same percentage expect workforce changes to be a likely source of class action activity in 2026.
Legal Teams Strengthen Litigation Readiness
Despite the increase in legal and regulatory complexity, many organizations report improvements in their ability to manage litigation risks.
More than half (55%) of survey participants said management of internal legal budgets has improved since late 2025, while 50% reported stronger cross-functional collaboration among legal, compliance, IT, and business units. Additionally, 71% said that controlling outside counsel costs has either become easier or remained stable, even as regulatory demands continue to evolve.
The findings suggest that organizations are increasingly recognizing that cybersecurity, AI governance and enterprise risk management can no longer operate in isolation. Instead, legal, security, and technology leaders are being forced to collaborate more closely as cyber incidents and AI deployments become as much a litigation issue as they are operational or technical ones.
The 2026 Midyear Industry Pulse is part of Norton Rose Fulbright's Annual Litigation Trends Survey program, now in its third decade, and reflects responses from general counsel and in-house litigation leaders across four major U.S. industries: energy, financial institutions, healthcare and technology.