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Corporate Counsel Spent More on Outside Counsel in 2011 and Expect Trend to Continue, Survey Says

Posted Oct 18, 2011 7:51 AM CDT
By Mark Curriden

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Good news for litigators: Businesses in both the United States and the United Kingdom spent more money on litigation this year than last, and they expect their legal needs to grow next year, according to a new report released Tuesday.

Fulbright & Jaworski’s seventh annual Litigation Trends Survey (reg. req.) of U.S. and U.K. corporate general counsel and heads of litigation found that the amount businesses paid their outside counsel to handle legal disputes jumped this year to $1.4 million up from a median expenditure last year of $1 million. Nearly one-quarter of the 279 U.S. corporate counsel polled reported spending more than $5 million this year.

U.K. companies had a median expenditure of $881,000 this year, up significantly from last year’s $500,000 median.

The dramatic increase in attorney fees and other litigation costs came despite reports of a decline in litigation last year from the same group of respondents.

The survey found that 83 percent of U.S. companies were sued at least once during the past year, down from 87 percent a year ago. Technology, retail and insurance businesses witnessed an increase in litigation, while energy and manufacturing corporations saw a decline. The financial services sector reported hitting a litigation plateau after three consecutive years of significant increases.

American corporations also have been less inclined to sue other businesses. Only half of U.S. companies surveyed reporting filing new lawsuits during the past year—down from 60 percent in 2010. However, six percent more businesses in the U.K. became plaintiffs in 2011 than the year before.

Corporate counsel believe the decline in litigation will be short-lived. Some 90 percent of survey respondents expect an uptick in litigation in 2012 or, at a minimum, no change.

The primary culprit, according to the Fulbright survey, is a significant jump in government regulatory actions and internal investigations.

Fulbright partner Stephen Dillard, who heads the firm’s global litigation practice, said that energy, insurance and health care sectors are seeing the most pressure. “Our survey respondents have a front-row seat to the increased scrutiny brought on by stricter regulatory enforcement,” he said.

The survey found that 55 percent of U.S. businesses during the past year hired outside counsel to handle regulatory inquiries and related litigation—up from 43 percent in 2010.

With expenditures for outside counsel on the rise, the push for alternative billing among corporate counsel witnessed a significant jump. Sixty-two percent of those surveyed said they used an alternative fee arrangement during the past year—up from 51 percent a year earlier.

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