As federal regulatory agencies narrow their enforcement priorities and decline to challenge significant practices and transactions in areas such as consumer protections, Big Tech and antitrust, state attorneys general (AGs) are stepping into the void. The implications for corporations are discussed in this Informed Board podcast. The host, Ann Beth Stebbins, a partner in Skadden’s M&A group, is joined by Skadden partners Andrea Griswold, co-head of the firm’s White Collar Defense and Investigations Group in the Americas, and David Wales, head of the firm’s Global Antitrust Competition Group. A Structural Shift, Not a Passing Trend State AG enforcement activity is not new, but its scope and sophistication have changed dramatically. Leading AG offices now maintain specialized units focused on technology, privacy, healthcare, financial products, and complex consumer protection. As Griswold explained, “I wouldn’t say that federal retrenchment created this phenomenon, but I do think it has accelerated a structural trend that was already underway, as state AGs increasingly see themselves as important regulators in their own right.” The breadth of state statutes now being applied to complex business practices — artificial intelligence (AI), algorithms, data use, pricing, children’s safety — is striking. The recent Meta settlement, involving a bipartisan coalition of 48 attorneys general, illustrates the scale: States secured not just a major financial settlement but prospective changes to how Meta operates its products for minors. Notably, state AGs are also filling gaps left where Congress has been unable to legislate, moving with a swiftness that federal legislators have not matched. Beyond Red vs. Blue While Democratic AGs have tended to focus on privacy, AI, labor and environmental issues, and Republican AGs have focused more on Big Tech, the most consequential development for companies is the large area of bipartisan overlap. “I would not ask only is this a red state or blue state issue, but rather, could this become a compelling consumer or investor protection issue across the political spectrum?” Griswold said. “And once the answer to that question is yes, I think the potential scale of the risk changes significantly.” M&A in the Crosshairs For dealmakers, state AG involvement can no longer be treated as secondary. Wales noted that, while states have long had authority to challenge mergers, they historically piggybacked on federal actions. States are now intervening in DOJ consent decree proceedings, pressing federal enforcers for tougher remedies, and, in some cases, independently challenging transactions that federal regulators cleared. States are staffing up, with California and New York building antitrust teams that rival law-firm practice groups. In the pending Paramount/Warner Brothers Discovery deal, for example, state AGs intervened after the DOJ closed its investigation, extending the timeline and creating significant deal uncertainty. “If you are contemplating a deal where you expect there to be state AG involvement, you have to think about the timeline potentially being extended,” Wales said. Industries with inherently local markets such as hospitals and food distribution, and sectors attracting broad political interest, such as healthcare, energy, tech and media, face the highest risk of state AG scrutiny. Deal Planning and Risk Allocation Griswold and Wales identified several concrete considerations for deal planning: Extended timelines. Merger agreements may need longer outside dates or automatic extensions to account for state AG proceedings that run beyond the federal review period.Risk-shift provisions. Parties should consider whether states might press the feds for more onerous remedies or threaten independent actions that raise the cost of settlement or reduce the benefits of a transaction.Closing conditions. State AG’s can act after a deal is cleared by federal regulators, as the pending Paramount/Warner Brothers Discovery transaction demonstrate, creating deal uncertainty even after federal clearance.Diligence on the target. Acquirers’ diligence should go beyond traditional questions about pending subpoenas or whistleblower complaints. Griswold advised asking, “What is the company that’s being acquired doing that could become compelling to a state AG based on the priorities and the trends that we’re seeing?” Responding to State AG Engagement When it comes to antitrust challenges, politics doesn’t typically dictate the outcome. “In the end, the merits probably matter the most,” Wales said. States face the same burden of proof in court as the federal government and, while they may be willing to be more aggressive, “it’s harder for them to justify spending literally tens of millions of dollars on a case if they think they’re going to lose.” Outside the antitrust context, Griswold highlighted that many AG investigations never reach trial. The reputational pressure of a public investigation can itself be a powerful tool. She urged companies to consider how AGs think about public narratives: “They may actually be more interested in a press release that indicates that they got certain concessions than in getting a certain dollar amount or ultimately prevailing in court.” Clear-Day Preparedness Both panelists cautioned against reflexive outreach to state AGs. Proactive engagement can backfire if a company inadvertently triggers scrutiny in an area where the AG was not already looking. Instead, Griswold recommended that companies prepare as if an inquiry were imminent: “Put yourself in a position that, if the phone rang, you could say, ‘You know what? I’m coming in on Friday, and I’m ready to talk about this.’” Companies should also audit their public messaging — websites, press coverage, marketing — to ensure consistency with how they would defend their practices under scrutiny. 💡 Meet Your Host 💡Name: Ann Beth Stebbins Title: Partner at Skadden Connect: LinkedIn Featured GuestsName: Andrea Griswold Title: Partner, Co-Head, White Collar Defense and Investigations (Americas), Skadden Connect: LinkedIn Name: David Wales Title: Partner, Antitrust/Competition, Skadden Connect: LinkedIn Connect with Skadden☑️ Follow us on X & LinkedIn. ☑️ Subscribe to The Informed Board on Apple Podcasts, Spotify or your favorite podcast app. ☑️ Let us know what topics you would like to hear about on The Informed Board by reaching out to us at info@skadden.com. The Informed Board is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. 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