A new report identifying commercial litigation waves likely to pick up steam in 2025 highlights one particular theme that could further lengthen the tail of general liability claims for insurers writing policies for contractors and builders.

The 2025 “Commercial Litigation Outlook,“ published by the law firm Seyfarth Shaw provides an annual look at the legal landscape in multiple areas, including Gen AI, privacy, healthcare, cannabis, intellectual property, securities, consumer protection and class actions, real estate, and antitrust, among others.

In the real estate section of the report, the firm notes the disputes over defective construction are likely to increase in 2025.

While the report describes construction defect litigation as “evergreen,” several factors could spur more of it, including the focus of President Trump’s administration on immigration. Construction defect litigation rises in years following shortages of skilled labor—and that’s been in short supply in the construction industry for most of the last decade, the report states, also noting that 30-40 percent of all construction workers in the U .S . are immigrants, “with an undetermined number who are undocumented.” (Editor’s Note: The National Association of Home Builders offers similar figures on its website.)

The construction labor shortage has hovered around half-a-million workers since 2023, the report says.

The Seyfarth Shaw lawyers also pointed to the high demand for rebuilding in areas that have been impacted by recent hurricanes and wildfires as another factor that could fuel future construction defect litigation. In California, the urgent need to replace housing has has already resulted in loosening or elimination of certain requirements for rebuilding, which in turn may increase the risk of defective construction.

Noting that defect claims tend to have a one to three-year lag time, claims could show up in 2025 and beyond.

Throughout much of the report, authors refer to actions by the current administration that may be changing the legal landscape in various areas—for example, shifting some types of actions to state courts.

“Federal ESG litigation has, for the moment, had its day,” the firm said in a media statement. “SEC greenhouse emissions rules announced just a year ago will probably gather dust, meaning individual states are set to become the favored fora for ESG-related allegations, such as corporate greenwashing.”

The report writers also expect consumer fraud class actions based on testing for alleged harmful substances like PFAS and heavy metals, again highlighting state-specific regulations that could spur litigation.

“Businesses selling consumer products in California should be aware of the state’s specific regulation of PFAS-containing products, including new requirements effective in 2025. Current laws already prohibit or require labeling and disclosures for certain PFAS-containing items, such as children’s products and cookware. Starting in 2025, these regulations will expand to cover more products, including textiles, clothing, and cosmetics,” the report says. “Given growing concerns over PFAS exposures, businesses will need to ensure that their products fully comply with all state and federal PFAS regulations, including upcoming California requirements.”

Whether at the federal or state level, consumer fraud lawsuits around PFAS and other substances allege two main theories of deception—that product claims of being “pure” and “organic” were false based on the presence of the substance, or simply that defendants failed to disclose the presence of the substance in its product.

Other commercial litigation trends highlighted in the Seyfarth Shaw report are two that could directly impact insurers as defendants—privacy lawsuits and Generative AI challenges.

“With the proliferation of Internet of Things (IoT) devices, telematics, and advanced tracking technologies, plaintiffs’ attorneys are leveraging both new and longstanding privacy statutes to address emerging privacy risks,” the report says, also noting heightened regulatory scrutiny that could extend to insurers relying on IoT and telematics devices.

Related articles: Allstate, Arity Legal Troubles Mount; Class Action Filings Allege Privacy Violations; Unappreciated Gen AI Risks: Carbon Emissions and D&O Litigation

“In 2025, privacy litigation is expected to grow in volume and scope, with corporations facing unprecedented challenges in collecting, managing, and safeguarding sensitive data,” the report says.

With respect to Generative AI, the Seyfarth Shaw focuses on the use of AI in bringing and defending lawsuits—”in everything from discovery and disclosure to the rising potential for immaculately forged evidence.”

Related articles: Defendants, Insurers Risk Falling Behind on AI for Litigation

Here, the report notes, however, that the Trump administration has “removed guardrails” in place under the former president, Joe Biden, and “embraced AI as central to the U.S, economy and national security.”

Of particular interest to D&O insurers, the report notes that business bankruptcies jumped in 2024. With “record high consumer debt, lingering inflation, labor shortages, and high interest rates, that bankruptcy number has nowhere to go but up,” the report authors said.