Leading UK companies have been hit by a growing number of regulatory investigations, according to research by Fulbright & Jaworski.


The US firm's 2007 litigation trends survey, which interviewed senior corporate counsel at more than 300 UK and US companies, revealed that while regulatory inquiries had decreased in the US, 54% of UK companies had had one or more internal investigations over the past year. Nearly four in five (78%) of UK respondents had seen an increase in regulatory inquiries and investigations over the past three years.



Despite the rising number of investigations, the survey showed a decline in the number of court proceedings issued against companies, with 38% of UK respondents and 17% of US businesses reporting that no court proceedings were brought against them in the past 12 months.



The report also showed an increase in the number of inquiries into UK companies by the main regulator in the US, the Securities and Exchange Commission. In 2006, less than a quarter of UK respondents had received them, but in 2007 this figure had risen to 81%.



It revealed that UK businesses were coming under more pressure to waive lawyer-client privilege, with 38% of companies having agreed to waive privilege in the past 12 months in order to avoid more severe action by enforcement agencies.



Lista Cannon, partner in charge of Fulbright & Jaworski's London office, said the UK was seeing a 'creeping assault' on privilege, which mirrored the erosion seen in the US, where waiver of privilege is viewed as a sign of co-operation with the regulator.



Simon Davis, president of the London Solicitors Litigation Association, agreed that regulatory work is on the increase. He said: '[This is] as a result of a combination of more enforcement action by regulatory agencies, increased regulation from Europe [through] the EU market abuse directive, and an increasing appetite for US regulatory agencies to take action outside US borders.' He added that he expected an increase in litigation as a result of the recent volatility in the financial markets.



Catherine Baksi