Legal issues are one of the biggest risks that Johnson & Johnson (NYSE: JNJ) faces today. From its role in the opioid crisis to lawsuits involving its pharmaceutical and consumer products, it's not uncommon to see the company spend billions in litigation expenses during a year. One of the biggest legal challenges it is facing right now includes its talc baby powder products, which plaintiffs allege led to them developing cancer.

The company is trying to minimize its potential liability due to these lawsuits by using a controversial strategy known as the Texas Two-Step, where it would put all the claims in a subsidiary and then bankrupt it. However, an appeals court recently threw out that case.

In 2021, Johnson & Johnson created a subsidiary, LTL Management LLC, for the purpose of shifting its talc lawsuits there and bankrupting the company to avoid the uncertainty and hefty costs that could come with the related litigation.

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Source Fool.com