Trends in Litigation

http://www.rmmag.com/MGTemplate.cfm?
Section=RMMagazine&NavMenuI=!"#&template=/Magazine/i$pla%Magazine$.cfm
&MG&review=!&'olume=("&I$$ueI="()&*I="+,+&Show*rticle=!
-% Morgan /0Rour1e
2itigation co$t$ are a perniciou$ hi33en ta4 for *merican -u$ine$$e$5 a$ almo$t +67 of
companie$ are currentl% engage3 in law$uit$5 accor3ing to international law firm
8ul-right & 9awor$1i:$ "66( 2itigation Tren3$ Surve% of in;hou$e corporate coun$el. The
average compan% face$ )< law$uit$ at an% given time5 an3 for tho$e companie$ with =!
-illion or more in revenue5 that num-er >ump$ to !?< ca$e$.
e$pite the multitu3e of law$uit$ the average compan% face$ an3 the o-viou$ co$t$ the%
mu$t incur5 man% 3o not have an% un3er$tan3ing of the actual impact of litigation on their
organization$. Two;fifth$ of companie$ 3o not even @uantif% their $pen3ing on litigation
a$ it relate$ to their overall legal -u3get$. 8or tho$e that 3o5 however5 =# million of the
average legal -u3get of ="6.! million i$ 3evote3 to litigation co$t$. *lmo$t "67 of
companie$ with revenue$ un3er =!66 million 3o not have a litigation -u3get at all5
3e$pite the fact that even the% have an average of !( law$uit$ going on a once.
8or the in$urance in3u$tr%5 ")7 of the re$pon3ent$ have litigation co$t$ that repre$ent
more than half of their legal -u3getA-% far the mo$t of an% in3u$tr%. More than a thir3 of
companie$ in the manufacturing an3 energ% in3u$trie$ $pen3 -etween "!7 an3 (67 of
their legal -u3get$ on litigationB the $ame i$ true for more than a @uarter of
retail/whole$ale5 health care an3 technolog%/communication companie$. In contra$t5 ",7
of real e$tate an3 finance compan% re$pon3ent$ reporte3 $pen3ing le$$ than "67 of their
legal -u3get$ on litigation. /verall5 almo$t one;@uarter of companie$ have legal -u3get$
of over "7 of their total gro$$ revenue an3 !67 $pen3 over (75 which for a =! -illion
-u$ine$$ woul3 amount to =(6 million.
e$pite the increa$e3 attention given to i$$ue$ $uch a$ cla$$ action$5 tort reform an3
corporate frau35 contract claim$ an3 la-or/emplo%ment matter$ are the mo$t common
t%pe$ of ca$e$ on an organization:$ litigation 3oc1et5 accounting for a$ much a$ half of
the ca$e$ face3 -% mi3;mar1et C3efine3 a$ revenue$ -etween =!66 million an3 =! -illionD
an3 =! -illion;an3;over companie$. 8or companie$ un3er =!66 million5 contract 3i$pute$
accounte3 for a-out one;@uarter of their ca$eloa3. &er$onal in>ur%5 pro3uct lia-ilit% an3
intellectual propert% 3i$pute$ roun3e3 out the top five.
Ehen $eparate3 -% $ector5 in$urance litigation an3 contract$ i$$ue$ were the two main
area$ of law$uit$ for in$urance companie$5 followe3 -% la-or/ emplo%ment an3
profe$$ional $ervice$ action$. Fealth care face3 profe$$ional $ervice$ litigation mo$t
often5 while pro3uct lia-ilit% ca$e$ were mo$t common for manufacturer$5 per$onal in>ur%
for real e$tate companie$5 contract$ for energ% an3 finance5 la-or/emplo%ment 3i$pute$
for technolog%/communication5 an3 -oth contract$ an3 la-or/ emplo%ment for
retail/whole$ale -u$ine$$e$.
Glectronic 3i$cover% wa$ cite3 a$ the -igge$t emerging litigation;relate3 -ur3en5 followe3
-% increa$e3 regulator% an3 compliance i$$ue$. Hut for $maller companie$5 compliance
i$$ue$ too1 the top $pot on the li$t of new concern$.
Ila$$ action$ remain an important i$$ue an3 the larger the compan%5 the more li1el% it i$
that the% will have to face one. Ehile onl% (7 of $maller companie$ were targete3 with
cla$$ action$ in the pa$t %ear5 nearl% ?67 of companie$ with revenue$ of =! -illion or
more were $erve3 with cla$$ action law$uit$.
Manufacturer$ were the mo$t li1el% to -e name3 a$ 3efen3ant$ in cla$$ action$ with
almo$t a @uarter having ha3 at lea$t one $uch action pen3ing. Gnerg%5 finance an3
technolog%/communication companie$ were the ne4t mo$t li1el% to have at lea$t one cla$$
action file3 again$t them la$t %ear5 while real e$tate companie$ were mo$t li1el% to have
-een hit with more than three $uch action$.
The outloo1 for the future in3icate3 that thi$ tren3 will not change. Three;@uarter$ of
re$pon3ent$ -elieve that the num-er of cla$$ action$ file3 again$t their companie$ woul3
remain a-out the $ame going forwar3. *n a33itional !(7 -elieve the num-er$ will
increa$e5 a view e4pre$$e3 mo$t -% tho$e in the large$t companie$ an3 in the energ%
in3u$tr%. *-out a thir3 of the re$pon3ent$ reporte3 that la-or/emplo%ment wa$ the area
that ha3 the large$t percentage of cla$$ action activit% 3uring the pa$t three %ear$. Thi$
wa$ al$o the area in;hou$e coun$el anticipate3 to -e the mo$t active for cla$$ action$ in
the future.