Commercial Litigation Update

When a key business relationship shows signs of financial distress, your next move could protect you—or cost you.

Key Takeaways

• Early Action Is Everything: Whether you're owed money or need a supplier to survive, proactive conversations with legal and financial advisors dramatically expand your options before problems become crises.
• Know Your Toolkit: From security interests and guarantees to debtor-in-possession financing and critical vendor programs, knowing which tools apply and when depends entirely on whether a distressed party is pre-bankruptcy or already in a proceeding.
• Legal Strategy Can Only Take You So Far: Deciding whether to keep doing business, renegotiate terms, extend credit, or walk away entirely comes down to business judgment and open communication with your counterparty—no legal strategy can replace either.

In this episode of Speaking of Litigation, Epstein Becker Green attorneys Ryan Cochran, Wendy Marcari, and Bob Mendes discuss strategies healthy companies can implement when they find themselves doing business with a financially distressed or insolvent partner—whether that's a slow-paying customer, a critical supplier, or a struggling tenant.

On April 10, the U.S. Department of Justice (DOJ) announced the first settlement to resolve False Claims Act (FCA) allegations regarding a private employer’s failure to comply with anti-discrimination requirements in contracts with the federal government. The settlement with IBM comes just two weeks after the March 26 signing of a new executive order called “Addressing DEI Discrimination by Federal Contractors” (EO 14398), curbing diversity, equity, and inclusion (DEI) programming (read more here). 

• Several areas of federal criminal prosecution, including health care fraud, have been pulled under the umbrella of the new National Fraud Enforcement Division (“NFED”) of the Department of Justice (“DOJ”), with the stated goal of “rapidly and substantially” increasing resources and creating a robust litigating division.
• DOJ is centralizing enforcement priorities by deputizing local U.S. Attorney’s Offices, and encouraging state and local governmental fraud-fighting authorities to align with the NFED.
• Priority areas of the NFED are yet to be announced, although we expect them to align with the priorities targeted by the Trump Administration in its other enforcement capacities, including “illegal” DEI, weaponization, and others.

Key Takeaways: 

• State Attorneys General (AGs) Are Stepping Up: With reduced federal enforcement staffing, state AGs are expanding their budgets, hiring former federal prosecutors, and taking the lead in health care fraud investigations.
• Medicaid Takes Center Stage: As federal enforcement focuses on Medicare, state Medicaid Fraud Control Units are prioritizing Medicaid fraud, creating a shift in enforcement focus and risk profiles for health care companies.
• Proactive Compliance Is Critical: Companies must prioritize internal complaint management, monitor their external reputation, and engage experienced local counsel to navigate the complexities of state and federal enforcement.

In this episode of Speaking of Litigation, Epstein Becker Green attorneys Zachary Taylor, Sarah Hall, and Jeremy Avila discuss the implications for general counsel regarding the expansion of state-level health care enforcement and explore how companies can proactively manage risk in this evolving environment.

On March 10, 2026, the Department of Justice (“DOJ”) announced its “first ever” department-wide Corporate Enforcement and Voluntary Self-Disclosure Policy (“CEP”) for all criminal cases.

On March 4, 2026, Nippon Life Insurance Company of America (“Nippon Life”) filed suit against OpenAI Foundation and OpenAI Group PBC in U.S. District Court for the Northern District of Illinois—claiming that a covered employee’s zealous use of the artificial intelligence (“AI”) tool, ChatGPT, for pro se litigation caused the chatbot to engage in tortious interference with a contract, abuse of process, and the unlicensed practice of law.

A federal judge recently concluded that the defendant in a white-collar securities dispute may not claim that his conversations with the artificial intelligence (“AI”) tool, Claude, are privileged. Litigators and clients now must take heed.

Kalshi, a federally regulated prediction market, is betting big on its business model. Whether that bet pays off depends on how courts resolve a growing conflict between federal commodities regulation and state gambling laws.

Our colleagues Thomas Jaworski, Elena M. Quattrone, and Maurice Wells published an Insight that will be of interest to readers involved in white collar defense: “Recalibrating Economic Crime Sentencing: The U.S. Sentencing Commission’s Proposed Reforms to Section 2B1.1 and What They Mean for the Defense Bar.”

What You Need to Know:

The U.S. Sentencing Commission (the “Commission”) has proposed amendments to federal fraud sentencing guidelines and is soliciting comments from the public.

• Simplified Loss Table: The proposed amendments reduce the 16-tier loss table to eight broader tiers, aiming to simplify sentencing and reduce disputes over marginal loss amounts.
• Focus on Culpability and Harm: New guidelines emphasize non-economic victim harm (e.g., emotional trauma) and introduce mitigating factors for defendants acting under coercion or showing early remediation.
• Retroactivity and Public Input: The Commission is considering retroactive application of these changes and invites public comments by February 10, 2026, ahead of a May 1, 2026, deadline for Congressional submission.

Read the full Insight here.

Artificial intelligence is moving beyond standalone large language model wrappers toward collections of specialized AI agents that reason, act, and collaborate to achieve complex outcomes. This multi-agent vision, articulated in Google’s Introduction to Agents whitepaper,[1] marks a subtle, but seismic, shift in how businesses will deploy AI; and spotlights nuanced legal challenges that litigators and in-house counsel should start addressing now.

[1] https://www.kaggle.com/whitepaper-introduction-to-agents (last visited January 21, 2026).