The average insurance company in the United States currently faces 40 lawsuits, five of which it initiated, according to recent survey of corporate counsel by the law firm Fulbright & Jaworski.
"Accepting the reality that litigation is a constant in their business lives, close to 90 percent of U.S. corporate counsel have no plans to reduce the number of outside lawyers that handle their cases," the study's authors noted. "The ubiquity of litigation in American business goes a long way toward explaining the overriding concern corporate counsel have with controlling litigation expenses. Indeed, respondents expressed more concern about what they perceived as the high costs of litigation than they did about winning or losing the underlying lawsuits."
The insurance industry is not as litigious as Corporate America as a whole, however. Nearly 90 percent of the nation's corporations are engaged in lawsuits, with the average $1-billion company involved in 147 cases at a time. Although insurance companies were toward the lower end of the scale regarding the number of lawsuits filed during the past year, the industry was the second highest in terms of arbitrations initiated.
The survey also found that nearly one quarter of insurance companies have legal budgets of more than 2 percent of their total gross revenue. For 23 percent of the insurer respondents, litigation costs represent more than 50 percent of their legal budgets, by far the most of any industry.
Insurance litigation and contract issues were the two main areas of lawsuits for insurance companies, followed by labor/employment and professional service actions. Insurance counsel reported that these remain top future concerns, along with class action lawsuits.
Electronic discovery was the top new litigation-related concern for companies. More than 80 percent of the respondents now have record-retention.
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