2008 Litigation Trends Survey Shows U.S. Companies Preparing for Rise in Litigation Following Two Years of Declines
NEW YORK-Following two straight years of declines in the number of new lawsuits and regulatory proceedings, including a drop in large-dollar cases, a 2008 survey sponsored by international law firm Fulbright & Jaworski L.L.P, indicates that U.S. companies now anticipate an rise in new actions and government probes.
The survey asked the legal counsels and senior counsels of corporations to report on the types and number of cases they are facing and expect to face in the coming year. The survey covered ten industry groups, including financial services, energy, manufacturing, health care, retail, real estate, insurance, education, technology and telecommunications. The companies surveyed were from all regions of the U.S. and included a cross section of sizes.
So what did the survey find?
Bigger companies face more disputes.
As the size of U.S. firms increased, so did the chance of being involved in a lawsuit. However all businesses, regardless of size, faced a significant chance of being involved in a dispute.
- 53% of U.S. firms with revenues under $100 million reported new lawsuits
- 73% of U.S. firms with revenues between $100 million and $999 million reported new lawsuits
- 89% of billion-dollar U.S. firms reported new legal actions
The most common lawsuits facing U.S. companies were labor/employment.
It’s interesting, from my point of view, that the survey singled out California companies as reporting employment actions as their number one legal concern. However, all across the U.S. employment cases encompass the largest percentage of corporate legal battles. For example, the report cites wage-and-hour suits, in which employees allege underpayment for overtime, meal and rest times as the largest single issue (19% of U.S. companies cited an increase in wage-and-hour cases during the past year).
U.S. companies also saw increases in five other areas of workplace litigation:
- Discrimination suits
- Privacy issues
- Employee Retirement Income Security Act (ERISA) actions
- Disability claims
- Age discrimination suits
The remainder of top litigation issues in the U.S. were:
- Personal injury
- Product liability
- Intellectual property/patents
- Environmentally-toxic torts
- Class actions
- Professional services
The survey found that government actions are also on a rise.
Nearly half (49%) of U.S. companies responded they had retained outside counsel in the past year to assist in government investigation issues.
30% of U.S. companies were served with a grand jury subpoena or administrative summons this past year (administrative subpoenas and summons are used by various enforcement agencies such as EDD).
U.S. companies facing regulatory/enforcement matters identified more than 15 different agencies and offices calling on them during the year. I see this as a direct result of government enforcement agencies actively sharing information about businesses more than ever before. Another indication is that 29% of U.S. companies surveyed indicated they had settled a regulatory proceeding in the past year.
What does this mean?
The survey concluded that the number of actions in the above categories will increase over the next year. This means if you have a weak spot in your defenses you are more likely to be involved in a government investigation and/or civil action against your company in the near future.
I strongly recommend that you plan ahead for the possibility your company will be involved in an IC/employee/labor dispute.
A small investment now to insure you properly classify your IC’s and employees, that you are properly administering your contingent workforce, and that you are securing the documentation to be able to prove you are right, can save you many times the dollars invested if challenged. It is even possible plaintiffs and government agents will look elsewhere for a softer target to attack, knowing there is no chance of winning against your company.
Survey Note: The 2008 Fulbright & Jaworski Litigation Trends Survey was conducted from May 22 through July 18 by Greenwood Associates, a business research firm in Houston. The survey, sponsored by Fulbright, canvassed 358 in-house counsel in the U.S. and U.K. Primarily only the U.S. results are reported in this article.
For a link to complete survey findings and a descriptive “white paper” go to: www.fulbright.com/litigationtrends28