2026 Commercial Litigation Outlook

Key Takeaways

• AI challenges evidence authentication in courts
• States intensify privacy enforcement on data and biometrics
• Bankruptcy filings rise among franchisees, real estate, healthcare
• Restrictive covenant law becomes fragmented across states
• Remote work exposes trade secret vulnerabilities

Summary

Seyfarth Shaw’s sixth annual Commercial Litigation Outlook highlights how AI, privacy regulation, economic strain, and shifting restrictive‑covenant law are reshaping corporate legal risk in 2026. Courts are wrestling with authentication of AI‑generated evidence while businesses seek to protect hybrid intellectual‑property assets. State privacy statutes are expanding into biometric data and transparency, raising compliance costs. Rising interest rates and lingering pandemic effects are expected to drive higher bankruptcy filings, especially among franchisees, commercial real‑estate owners, and healthcare providers.

Pulse Analysis

Artificial intelligence is moving from a novelty to a substantive legal battleground. Courts are now tasked with determining the authenticity of AI‑generated documents, emails, and code, forcing litigators to develop new evidentiary standards. For corporations, this means revisiting discovery protocols, bolstering data provenance controls, and reassessing intellectual‑property strategies to protect creations that blend human and machine input. Firms that invest early in AI‑aware compliance frameworks will mitigate the risk of costly evidentiary disputes.

Parallel to the AI surge, state‑level privacy enforcement is accelerating, with new statutes targeting biometric identifiers, granular data‑collection disclosures, and heightened proof‑of‑injury thresholds. Companies operating across multiple jurisdictions must now map a patchwork of regulations, integrate real‑time monitoring of data‑handling practices, and allocate resources for ongoing privacy audits. The compliance burden is not merely administrative; failure to adhere can trigger substantial fines and reputational damage, making privacy governance a strategic priority for boardrooms.

Economic headwinds further compound litigation risk. Elevated interest rates and the tapering of pandemic‑era relief are prompting a wave of bankruptcies, particularly among franchise networks, commercial‑real‑estate owners, and healthcare providers. Simultaneously, the evolution of restrictive‑covenant law creates a fragmented legal landscape, demanding precise, jurisdiction‑specific drafting to protect trade secrets in an era of remote work and cloud collaboration. Companies that align their legal, financial, and operational strategies now will be better positioned to navigate the complex litigation environment of 2026 and beyond.