New lawsuit filings against corporate America have dropped somewhat, but one-third of U.S. firms still are facing at least 25 legal actions, according to a new survey.
Fulbright & Jaworski Litigation Survey found that 18 percent of companies have an even greater burden and are defending more than 100 cases domestically. Most in this category were manufacturing firms.
Ninety-three percent of insurers and retailers reported having to defend at least one new case this past year, and more than half from both sectors got hit with one or more $20 million disputes, the highest of 10 industry segments represented. Insurers contended with the most $20-plus million cases, 54 percent, taking on more than 20 such actions.
The New York-based law firm's report was based on interviews with in-house counsel at 250 major U.S. corporations of which 64 percent are publicly traded.
Seventeen percent of respondents said that this year they did not have to defend a single new lawsuit, up from only 11 percent in 2005-06.
The study found corporations are engaging in less litigation on their own behalf with 65 percent saying their company had initiated at least one lawsuit in the past year, down from more than 70 percent a year ago. In 2004, 88 percent of companies surveyed said they had initiated litigation.
The number of in-house counsel saying they expect to see an increase in the number of legal disputes over the next 12 months also declined, dropping to 22 percent from a year ago when 33 percent said they were anticipating a rise in lawsuits involving their company.
On the regulatory front, 48 percent of companies reported some regulatory proceedings brought against them in the past 12 months, down more than 4 percent from a year ago. Internal investigations fell even more sharply. The law firm said that by contrast, U.K. companies have experienced significant increases in both categories.
The firm said this is the first time in four years that it has detected a decline in overall case filings, but as some types of actions appear to have dipped, notably securities and bankruptcy disputes, other kinds of litigation are on the rise, particularly patent cases and lawsuits stemming from product liability.
Forty percent of U.S. companies in the survey said they were hit with at least one suit in the past year with more than $20 million at issue. Among billion-dollar businesses, 62 percent were served with at least one $20 million lawsuit.
Examining cost, the survey found that nearly 20 percent of respondents reported that their annual litigation spending (apart from cost of judgments and settlements) is $5 million or higher.
Stephen C. Dillard, chair of Fulbright & Jaworski's global litigation practice, said a stable economic climate through the first half of 2007– including a generally rising stock market– likely lessened the number of public company disputes. He also noted an ebbing of big corporate accounting scandals.
The full report is available online at www.fulbright.com/litigationtrends.
Among other items in the report was the finding that in-house counsel identified labor and employment matters as the most frequent source of lawsuits filed against them during the past year, followed by contract disputes and personal injury cases. Financial services reported the highest degree of securities litigation and financial service firms worried more about regulatory actions than other businesses.
Fifty-six percent of those surveyed said they settled the majority or all of their new plaintiffs' litigation in the past year before going to trial. Small companies were less willing to settle than mid-cap or billion-dollar firms–only one-third of small companies said they resolve the majority of their cases, compared to two-thirds for large companies.
The energy industry had the highest overall settlement rates, 80 percent, followed by engineering, health care and insurers.
Companies based in the Midwest settled more often than those in other parts of the country.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.