HR Management & Compliance

Survey Says: 21% of Companies Are Litigation Free!

Unfortunately, the headline also means that 79% of companies did experience new litigation last year, according to a survey by the law firm Fulbright & Jaworski L.L.P. Here are top findings of interest to HR managers.

Fulbright’s Fifth Annual Litigation Trends Survey, billed as the “largest canvas of corporate counsel on litigation and trends,” garnered responses from 251 U.S. companies. Here are the key results:

Twenty-One Percent of Companies Are Litigation Free

Yes, 21 percent of respondents are lucky enough (or well-managed enough) to have no new lawsuits filed (up from 17% in 2007), but a shocking 27% of respondents are fending off more than 20 new suits, including 18% of respondents coping with more than 50 new actions!

What’s up? Get ready for the suits, says Stephen C. Dillard, chair of Fulbright’s global litigation practice, because the current period of economic challenge is likely to “fuel litigation over who is to blame and who should pay for the consequences.”

Big-Dollar Suits Down

Readers may take some small comfort that the survey reports a noticeable drop in big-dollar filings. Only 26% of U.S. firms were tagged with one or more new lawsuits with claims above $20 million, a decline of 14% from last year. Not surprisingly, billion-dollar companies, with their deep pockets, were hit with these mega-suits more often, with 37% reporting that level of claims.


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But Costs Aren’t Down

Although proceedings may have slowed, U.S. respondents reported that overall litigation costs have not dropped. Indeed, the survey found that 45 percent of U.S. companies are currently spending at least $1 million annually on litigation, a touch more than last year. In addition, the survey found that:

  • One of every 10 companies spends $10 million or more on litigation annually (excluding settlements and judgments), and one of every five  companies with $1 billion or more in revenues spends $10 million or more.
  • Among smaller companies, the percentage spending $1 million or more tripled from last year and it increased by half among medium-sized companies.
  • Among publicly held companies, 15% spend more than $10 million, compared with just 6% of privately held companies.
  • One in 10 companies spends $10 million or more for outside litigation counsel, down from last year in the U.S.
  • By a five-to-one margin, respondents said they were more likely to add to their staff of in-house litigation attorneys than cut back in the year ahead.

What type of claim brings the highest monetary exposure?

Overall totals for the U.S. indicated that race, sex, and wage-and-hour cases brought the highest exposure. Here are some detailed figures: 

Company sales

Under $100 million

$100 to 999.9 million

$1 billion and over

Age

27%

28%

28%

Race

30%

28%

34%

Sex

51%

32%

30%

Harassment

16%

28%

17%

Wage and hour

24%

24%

35%

Are the sources of lawsuits expanding?

The sources of suits seem to be expanding as well, as companies reported having to contend with investigations by more then a dozen different agencies, including growing scrutiny from state attorneys general and even the European Union.


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Have you settled a regulatory inquiry or investigation?

Among U.S. companies, 29% have reached a settlement agreement with a government entity or regulator in the past 12 months. Almost 40% of the largest companies reported such a settlement, while just 15% of the smaller and medium-sized companies did so.

Have you received a subpoena or administrative summons?

Among U.S. companies, 30% reported receiving at least one grand jury or government subpoena or administrative summons in the last 12 months, and 12% had received three or more.

Have you been subject to a search warrant or dawn raid?

When asked if a search warrant or a dawn raid had been executed against their companies in the past 12 months, a surprising 3% of all respondents answered “Yes.”  Public companies and large companies were more likely to have experienced a search warrant or raid. The small education sample also had an unusually high incidence of search warrant and raid activity.

In tomorrow’s Advisor, we’ll see survey data on the feared class/collective action, and investigate a “secret weapon” against all these lawsuits.

 

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