June 2023 Business Litigation Update

If you have been following the news, you may have noticed an increase in items about state attorneys general ramping up their efforts to prosecute businesses fraud and other corporate misconduct – both in criminal actions and civil actions.  One such high profile case involves Donald Trump – sued by the State Attorney General of New York for alleged business fraud.

While such high profile actions routinely occur at the federal level, we are now seeing state attorneys general becoming more aggressive in their pursuit of purported corporate wrongdoings.

With that in mind, here are some steps that business owners and executives can take to try to protect themselves and their companies from potential legal action by a state attorney general:

1. Understand the laws affecting your company: Companies should be familiar with the laws and regulations governing their industry and operations. It’s important to keep up with any changes or updates to these laws, as non-compliance can result in costly fines and lawsuits. This means understanding the laws in every state in which your company does business.
2. Be transparent: Companies should be transparent in their dealings with customers, shareholders, and other stakeholders. This includes providing clear and accurate information about products and services, as well as being open and honest about any potential risks or liabilities.
3. Implement robust compliance programs: Companies should have a robust compliance program in place to ensure that they are operating within the law. This should include regular risk assessments, employee training, and monitoring and reporting mechanisms.
4. Maintain accurate records: Accurate record-keeping is essential to defending against lawsuits. Companies should maintain detailed records of all transactions and communications, as well as any compliance activities.
5. Engage with state attorneys general: Where appropriate, companies should engage with state attorneys general proactively and in good faith. This means responding promptly to inquiries and providing requested information. Building a positive relationship with state attorneys general can help resolve any issues before they escalate into litigation.
6. Seek legal counsel: Companies should seek legal advice from experienced attorneys to help navigate the complex landscape of state attorney general investigations and lawsuits. This includes reviewing compliance programs, conducting internal investigations, and providing representation in court actions.

Many of these steps sound like “common sense,” but even common sense measures can be challenging to implement and follow.  By taking the initiative, however, companies can help protect themselves against the rising threat of lawsuits from state attorneys general.