Regulatory proceedings and investigations are increasingly affecting businesses on both sides of the Atlantic as companies are continuing to navigate a crowded field of regulatory issues and litigation.

This is according to law firm Fulbright & Jaworski International’s latest Litigation Trends Survey, which suggests that the trend for increased regulatory investigations is showing no sign of abating. The number of UK respondents reporting an increase in regulatory enquiries and investigations brought against their company over the past three years has risen to 44% from just 27% in 2011.

In the US the figure remains constant, with 41% of US respondents again reporting an increase. While 34% of UK respondents reported facing regulatory proceedings in the past 12 months (similar to last year’s figure of 35%), most expect the number of regulatory proceedings their company faces in the next 12 months to either increase (33%) or stay the same (50%).

As well as an increase in the number of regulatory investigations and proceedings companies are facing, survey respondents report that these proceedings are becoming increasingly time consuming. Over a half (51%) of UK respondents (and 43% of US respondents) reported spending more time dealing with these types of matters over the last three years, than double the rate in 2011 (24%).

Across both US and UK companies, there has been an increase in respondents retaining outside counsel for assistance in a government or regulatory enquiry this year (61% overall compared to 46% last year). In the UK, the jump is even greater from 27% in 2011 to 72% this year.

Industry sectors most frequently facing investigations are healthcare (80%), manufacturing (73%) and energy (71%). Last year the Insurance sector had been among the most affected sectors. Perhaps surprisingly, only 48% of respondents in the financial services sector reported having retained outside counsel for assistance in government/regulatory investigations in the last year.

Larger companies (gross revenue of US$1 billion or more) appear to be particularly susceptible, with 52% reporting an increase in regulatory inquiries or investigations against their company in the last three years and 73% reporting that they have retained outside counsel for assistance in government/regulatory investigations in the last year.

The regulators most frequently named by UK businesses facing regulatory proceedings were the Financial Services Authority (38% an increase from 15% in 2011), the Competition Commission (13% down from 15% in 2011), the Office of Fair Trading (13%), the Serious Fraud Office (13% up from 8% in 2011) and the Bank of England (13%). Eight out of ten (80%) UK respondents who reported having been subject to an investigation by a US regulator were dealing with the Department of Justice.

Lista M Cannon, partner and co-chair of the firm’s International Investigations practice group, commented: “The financial crisis has meant that businesses of all sizes are confronted by a complex and widening landscape of increased regulatory activity. Pressure from regulators combined with the growing threat of whistle-blower allegations continues to concern respondents of the Litigation Trends Survey. Unfortunately for them, this regulatory pressure is here to stay.”

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