A new report shows that for the third consecutive year, the number of lawsuits filed by the Federal Deposit Insurance Corporation against directors and officers of failed financial institutions reached a new high.

The report, published by Cornerstone Research, shows that the FDIC filed 40 lawsuits against directors and officers in 2013. In comparison, 26 such lawsuits were filed in all of 2012, and 16 in all of 2011. Only two were filed in 2010.

The pace of new lawsuits, however, slowed dramatically in the fourth quarter of 2013 compared to preceding quarters. The FDIC filed 10 lawsuits in the first quarter; 15 in the second quarter; and 12 in the third quarter, but only three in the fourth quarter.

“While FDIC filings of new D&O lawsuits hit a lull in the fourth quarter of 2013, new filings are unlikely to continue at such a slow pace in the first half of 2014,” says Katie Galley, a senior vice president of Cornerstone Research and one of the report's authors.

Galley adds that the year ahead will be particularly interesting to watch as existing lawsuits unfold. A recent ruling in the Eleventh Circuit, for example, “allows directors and officers to assert affirmative defenses that will directly affect loss causation and damages arguments,” says Galley. “These types of judicial rulings may greatly influence the relative negotiating strength of the FDIC and defendants.”

“How this ruling and others like it affect the likelihood of settlements may determine whether we see protracted litigation in the FDIC's D&O lawsuits, or movement to settle cases earlier,” adds Galley.

The increase in FDIC D&O lawsuits stems from the high number of financial institution failures in 2009 and 2010, according to the Cornerstone report. Of the 140 financial institutions that failed in 2009, directors and officers at 64 of those firms (or 46 percent) either have been the subject of an FDIC lawsuit, or settled claims with the FDIC prior to the filing of a lawsuit. Of the 157 institutions that failed in 2010, 53 (or 34 percent) have either been the subject of a lawsuit or have settled with the FDIC.

From the start of 2010 to the end of 2013, the FDIC has claimed damages of at least $3.8 billion in lawsuits filed against directors and officers of failed financial institutions. In lawsuits filed in 2013, the federal agency claimed $1.2 billion in damages.

From 2010 through 2013, the FDIC filed 84 lawsuits against 639 former directors and officers of failed institutions. Of the 84 lawsuits filed by the FDIC, 53 were filed against directors and officers of financial institutions in just four states: Georgia, California, Illinois, and Florida.

The FDIC filed an additional three lawsuits in the initial weeks of January 2014. Those lawsuits, however, were not included in the analyses in this report.