Corporate litigation in the U.S. is not reserved for headline-grabbing scandals. It happens regularly, across companies of all sizes, and often stems from disputes that could have been anticipated or prevented.
Understanding the most common litigation triggers is the first step toward managing them.
Breach of Fiduciary Duty Is One of the Most Litigated Claims.
Directors and officers owe fiduciary duties to the corporation and its shareholders. When those duties are breached, through self-dealing, conflicts of interest, or decisions made without adequate information, litigation usually follows.
These claims surface most often in three situations:
- Mergers and acquisitions, where shareholders challenge whether the board got the best deal.
- Executive compensation disputes, where pay is alleged to be excessive or improperly approved.
- Related-party transactions, where insiders benefit at the company’s expense.
Delaware courts handle a significant share of these disputes. In 2023, the Delaware Court of Chancery received over 1,400 new filings, a substantial portion of which involved fiduciary duty claims against corporate directors.
Shareholder Disputes Can Paralyze a Business.
Shareholder litigation covers a wide range, from minority shareholders challenging majority decisions to disputes over dividend rights, share dilution, or alleged freeze-outs in closely held companies.
In private companies, these disputes can be particularly damaging. Without a liquid market for shares, a minority shareholder who feels wronged has limited options outside of litigation.
Oppression Claims Are Common in Closely Held Companies.
Many states recognize claims of shareholder oppression where majority owners use their control to harm minority shareholders.
Courts have found oppression in cases where minority shareholders were excluded from management, denied distributions, or had their employment terminated to force a buyout.
Contract Disputes Are the Most Frequent Source of Corporate Litigation.
Whether it is a failed joint venture, a disputed earn-out provision, or a vendor who did not perform, contract disputes make up the largest single category of commercial litigation in the U.S.
According to the U.S. Chamber of Commerce Institute for Legal Reform, contract and business disputes account for nearly 60% of all civil litigation involving U.S. companies annually.
Key contracts that regularly produce litigation include:
| Contract Type | Common Dispute |
| Shareholder agreements | Buy-sell trigger disputes |
| Employment agreements | Non-compete enforceability |
| M&A purchase agreements | Indemnification and rep breaches |
| Vendor/supplier contracts | Non-performance or termination |
Employment-Related Claims Against Corporations Are Rising.
Wrongful termination, discrimination, harassment, and wage disputes are a consistent source of corporate litigation, and the numbers are significant.
The EEOC received 81,055 workplace discrimination charges in fiscal year 2023, with retaliation and disability claims among the fastest-growing categories.
Beyond federal claims, state-level employment litigation has expanded as more states enact stronger worker protections.
For corporations, employment litigation carries costs beyond settlements. Management time, reputational exposure, and potential class action risk all factor in.
Intellectual Property Disputes Are Increasingly Common.
As businesses rely more heavily on proprietary technology, brand identity, and trade secrets, IP litigation has grown accordingly.
Trade secret misappropriation claims, often involving departing employees, have risen sharply since the federal Defend Trade Secrets Act (DTSA) took effect in 2016.
DTSA filings increased by over 30% between 2017 and 2022, according to Lex Machina’s IP litigation data.
Regulatory and Securities Enforcement Actions Create Litigation Exposure.
Public companies face an additional layer of litigation risk from regulatory bodies. SEC enforcement actions, DOJ investigations, and state attorney general inquiries can trigger parallel private litigation, including securities fraud class actions.
In 2023, 209 federal securities class action lawsuits were filed in the U.S., according to Cornerstone Research, with disclosure failures and accounting irregularities among the leading triggers.
Corporate litigation rarely appears without warning. The most effective way to manage it is to identify risk areas early, in governance structures, contracts, employment practices, and disclosure obligations, before a dispute requires a courtroom to resolve.
