With a divided Congress and polarizing presidential politics, the pundits don't predict much by way of an aggressive Washington regulatory agenda. While the newly flipped House is predicted to begin shuttling subpoenas to the White House, and Democrats focus on teeing-up reform in areas such as healthcare and immigration at the national level, real regulatory power—which affects corporate decision making now—has in many cases shifted to state legislatures and state attorneys general.

State AG offices are some of the most nimble government offices in the country, wield wide ranging civil and criminal authority, and potentially have the greatest regulatory impact on corporate behavior. Distinct from functional state industry regulators who usually work under direction of a governor, most AGs are able to pick their own priorities and the tools they employ to advance their initiatives. Not only do they routinely initiate investigations and file lawsuits against companies, they are often influential voices in state legislatures.

While the hallmark characteristics of AG offices remain unchanged, newly elected Democratic AGs in states such as Colorado, Connecticut, Illinois, Minnesota, Nevada, and New York may well result in a renewed sense of priority and urgency on the enforcement front in several areas. This is not to mention the AG offices with incumbents who won with wide enough margins to set aggressive agendas, such as the AGs in California and Massachusetts.

Put simply, these AGs—and others—have their work cut out for them. They need to demonstrate a willingness to enforce laws in areas that the federal government will not, and they are likely to seek ways to restore the electorate's belief that Democrats are the better choice for underserved populations and voices that often go unheard.

Besides suing the federal government in record numbers (as they have done in the last two years), and continuing to hold businesses accountable for the opioids epidemic, the following trends are ones to follow:

Privacy, Data Flow and Disclosures

Several state attorneys general offices already have data, information or technology units. Over the last 10 years, these units and have largely focused on data breaches. While privacy is a bipartisan issue, albeit for different reasons, expect Democratic AGs to step up enforcement in this area, particularly in the financial sector where they may be able to show alleged harm to consumers.

Specifically, companies can expect to see subpoenas containing questions on how consumer data is being used and what disclosures were provided on the front end regarding that use. Even in states without robust privacy laws, AGs can initiate actions under state laws prohibiting unfair, deceptive or abusive trade practices (UDAAP).

Use of Private Counsel

Most AG offices are under resourced. With new faces on the scene, expect plaintiffs law firms, including some that are specialized in representing state attorneys general, to make another run at handling major AG cases. Although most tend to stick with handling cases in-house, this is an important and underrated trend to watch—particularly with a new generation of AGs coming into office.

Law firms utilize different resources and tactics than staff at an AG's office, which fundamentally changes the nature of litigation. Moreover, states employing private counsel may be less likely to settle early. Defending against an AG represented by private counsel requires first asking the right questions: Who is calling the shots? Is the private lawyer coordinating with other state AGs? Are there any unique defenses due to private counsel representation?

Energy & Environment Multistate Actions

With the federal Environmental Protection Agency continuously rolling back Obama-era regulations, expect state AGs to vigorously enforce state environmental laws. This ramped-up enforcement may be through localized action, but it may also mean increased multistate efforts.

State AGs routinely coordinate with other AG offices around the country to bring enforcement actions against mid-sized and large industry players. Multistate actions frequently have been used in consumer, antitrust and healthcare sectors. Now companies can expect to see an increase in the coordination of energy and environment cases as AGs attempt to take on broader scale issues.

Protecting Workers' Rights

State AG offices already have picked up enforcement in labor and employment matters and this trend is likely to continue. The issues range from challenging no-poach agreements and clawing back non-competes for lower wage workers, to disrupting historically untested relationships between staffing agencies and employers.

Companies also can expect to see further efforts in this area on issues such as enforcing state and local minimum wage requirements and overtime and prevailing wage laws. In sum, Democratic AGs are likely to focus on cases that strengthen workers' rights, preserve union principles and seek to ensure employers' policies and practices are designed to treat employees with fairness and dignity.

'Ability to Pay' Comeback

State Attorneys General offices have always served a pivotal role in cases involving consumer protection, especially ones that affect consumers' financial rights. With the demise of a strong Consumer Financial Protection Bureau, expect state AGs to fill the void by picking back up on 2010-2015 era concepts such as unfair or deceptive fees, and consumers' ability to pay. Particularly with the steady increase in online lending for products like personal loans, AG offices may step up subpoena actions inquiring about the adequacy of underwriting for unsecured products such as personal loans and private student loans, as well as marketing and disclosures made to consumers at the time of purchase.

Another indication there will be a renewed focus on lending is the pull back of what was once considered a done deal on payday loan rules. The dearth of action at the federal level provides space for AGs to once again focus on core consumer advocacy concepts: Can consumers afford the products they are taking out? Are particular populations adversely affected by certain product offerings? Are companies growing in responsible ways?

On these topics and many more, the impetus for state AG action is greater than simply catching the industry outlier scam artist. The AGs view their role as leveling the playing field when the marketplace appears imbalanced. As a result, they often pick a publicly visible target, engage in a media campaign, and have multiple targets on the same issue. It is certainly possible to resolve an AG action with minimal damage, but it takes approaching the matters with the 5Rs on hand: (1) Relationships—Know your regulator; (2) Regulatory Framework—Know the rules; (3) Rational—Understand the regulatory motivation; (4) Risk—Know what is at stake; (5) Resources—Leverage your choice of counsel, and formulate your strategy.

Vaishali Rao is a partner at Hinshaw & Culbertson who represents corporations in compliance, investigations and enforcement actions. Before joining Hinshaw, she worked in the Consumer Fraud Bureau of the Office of the Illinois Attorney General for nearly a decade, coordinating closely with AGs around the country.