Measures firms can take to avoid becoming the focus of the increased initial public offering litigation being filed in more plaintiff-friendly state court include developing a relationship early with their directors and officers liability insurers.

“We’re advising our clients, among other things, to prepare in advance to start looking into D&O insurance as early as possible in the process of deciding to go public,” said Sarah Downey, New York-based FINPRO and D&O product leader for Marsh USA Inc.

“Start as a private company to work with D&O insurers to start a relationship … knowing you’re eventually going to go public,” Ms. Downey said.

Iyan G. Alfredson, senior vice president and co-national practice leader of executive liability at Risk Strategies Inc. in Chicago, said his firm negotiates rates paid to defense counsel into the policy, “because that’s always a point of contention.”

It is just a matter of “good homework on your disclosure documents, and being really mindful” of litigation risk, said Matthew W. Close, a partner with O’Melveny & Myers LLP in Los Angeles.

However, even before the U.S. Supreme Court’s March ruling in Cyan Inc. et al. v. Beaver County Employee Retirement Fund, “most companies were aware that doing things like missing earnings shortly after an IPO was not a good thing, and even if you’re going to be sued in federal court, that was a suboptimal outcome,” said Priya Cherian Huskins, San Francisco-based senior vice president, D&O, for Woodruff-Sawyer & Co.

Delaware-incorporated companies may also be able to put a provision into their bylaws that litigation must be filed in federal court, although this tactic’s success hinges on the outcome of a case now before the Delaware Chancery Court on the issue, Matthew W. Sciabacucchi v. Matthew B. Salzberg et al. and Blue Apron Holdings Inc. et al.

Meanwhile, some defendants may find success in seeking stays in state court cases where there are parallel federal court claims, said Jason de Bretteville, a shareholder with Stradling Yocca Carlson & Rauth P.C. in Newport Beach, California.