Inigo publishes the 2025 Defense Counsel Survey

Trade wars and geopolitics set to drive more securities class actions

Although the SPAC and DeSPAC litigation frenzy is now over, growing political and economic uncertainty at home and abroad, plus the growth of litigation funding are among the factors that are likely to drive an increase in securities class actions over the next 12 months, according to Inigo’s 2025 US Defense Counsel Survey. 

Our survey, in which we ask many of the top securities practitioners in the US dozens of questions, offers a unique and fascinating snapshot of regulatory and private securities landscape.  

Third-party litigation funders have been attracted to securities class actions because of the potentially lucrative payouts on offer. These funders, who range from very rich individuals to sovereign wealth funds, are not only looking to back individual class actions, but are also funding a portfolio of cases, as well as investing directly in law firms. 

Half of our respondents said they expect funders to become more involved in this area of litigation and for plaintiff lawyers’ behaviour to change as a result.  Although it’s not easy to track their impact, as there are no nationwide disclosure rules on which cases have been funded, nearly eight out of ten defense counsel we polled said more plaintiffs’ law firms are looking to muscle into securities class actions, while firms are already litigating cases more aggressively, making higher opening settlement demands and being less willing to negotiate. We think these trends are only likely to continue.

Filings rate to return to pre-pandemic levels

Nearly two thirds of our respondents expect the number of new claims to rise over the next 12 months, a much higher proportion than in last year’s survey. The main factor, according to our research, is the slowing US economy, which will make it harder for US listed companies to hit their earnings guidance. As the pressure on them builds, senior executives may resort to massaging the figures, which could result in lawsuits, defense counsels told us.

Some unscrupulous directors and officers might see a greater opportunity resulting from the mass exodus from the SEC and DOJ. The SEC alone has lost 15% of its staff. Most of our respondents believe the Trump administration’s more laissez-faire approach will favour companies, because public companies will be less encumbered by red tape, while fewer regulators could mean fewer enforcement actions.

But state attorneys general and the plaintiffs’ bar – which has hired many of the lawyers who left the federal agencies – are likely to fill the litigatory void created by the SEC’s and DOJ’s retrenchment. More than three quarters of our respondents said they believe states and law firms are likely to file more antitrust claims against companies they believe are trying to control markets. This is already happening, some defense counsel told us.

Dexit fears overdone

As the list grows of companies that have moved away from Delaware or are considering redomiciling elsewhere, we asked defense counsel if they think The First State could soon cease to be the first choice for where public companies incorporate. They told us that Delaware had certainly become less attractive for public companies, because its Chancery Court has become more plaintiff friendly in the past decade. But, they added, both Nevada and Texas – the states pushing hardest to woo companies away from Delaware – have legal systems that are largely untested, making it a gamble for companies to move there. Also, Delaware’s recent law changes aimed at countering the threat from other states – including a change to its notorious Section 220 “books and records” inspection requests – will help to reassure some corporate boards. So, we believe it is unlikely there will be an exodus of companies moving away from Delaware.

Tariffs set to impact guidance

The worsening global trade war was cited by many defense attorneys as a major problem for US public companies. The current geopolitical turbulence is the first non-US issue to come up as a potential driver of securities litigation since we started conducting the survey. Directors and officers have two main problems, respondents told us. First, whether to disclose the impact that tariffs are already having on their businesses. Second, how cautious they should be in caveating their future earnings guidance due to the global tensions. Both are likely to lead to more class actions against firms alleging they misled investors, defense attorneys believe.   

We also asked respondents which plaintiff law firms they respect and fear the most. A new name has appeared in our top five, while we also make more predictions for how we think the securities class action landscape will shape up in 2025.

For further insights, predictions, and the complete findings from our interviews with top US securities practitioners. Read the full 2025 Defense Counsel Survey here