Class Actions Are Top Litigation Issue For U.S., Canada, and Australia Respondents, And Alternative Fee Arrangements Are Frequent.
On May 14, 2015, Norton Rose Fulbright released its “2015 Litigation Trends Annual Survey,” the ll1th one overall and extensively polling more than 800 corporate counsel representing a wide array of companies across 26 countries (including the U.S., U.K., Canada, Australia, France, Germany, Singapore, and Hong Kong—with U.S. respondents being over 50% of the survey and with the average polled U.S. company having 20 in-house attorneys).
Class action lawsuits were listed as the top litigation issue by respondents in the U.S., Canada, and Australia. A quarter of all respondents reported at least one class or group action against their companies in the preceding 12 months, with survey participants from the U.S. comprising 80 percent of that number. 71 percent of those who reported having to handle a class action also indicated having more than one filed against their companies as compared to the previous 12 months.
U.S.-based respondents also reported a more litigious business environment than their non-U.S. peers, with 55 percent facing more than five lawsuits filed against their companies in the previous 12 months, compared with 23 percent in the U.K., and 22 percent in Australia. Just 18 percent of U.S. companies reported no lawsuits, compared with 42 percent in the U.K. and 36 percent in Australia.
Regulatory and investigations matters also dominated as a focus of attention for in-house counsel on a global basis.
Respondents generally seem to expect that the legal environment will continue to grow in complexity. Overall, 25 percent of respondents anticipate litigation against their companies increasing in the next 12 months, compared with just 14 percent who predict it will decrease. Twenty-two (22) percent increased the number of outside firms on their rosters in the past year.
The number of U.S. companies with an annual litigation “spend” of $1 million or more rose significantly between 2012 and 2014. The share of companies with legal budgets of more than $1 million increased to 69 percent from 52 percent in 2012. A total of 34 percent reported budgets of $1 million to $5 million, up from 26 percent two years ago.
Respondents identified a number of significant differences in the types of litigation that US companies face compared with their peers worldwide. For example, personal injury litigation is significantly more prevalent in the US than in other countries, with 21 percent of respondents selecting it as one of the most numerous types of cases they faced in the previous 12 months. That compares to just 15 percent in the survey overall.
Intellectual property/patents (18 percent) and product liability (17 percent) cases were more common in the U.S. than worldwide (13 percent and 11 percent, respectively), which segues in with a May 19, 2015 LexisNexis Group report showing general counsel are devoting more time and resources to IP matters. IP/patents disputes are of greater concern in the U.S. (30 percent) compared with all respondents (21 percent). Only about one in 10 respondents in Australia, Canada and the U.K. listed IP/Patents among their top dispute concerns.
On a prospective basis, more U.S. respondents say regulatory/investigations are a top concern compared with the broader sample (48 percent to 39 percent). The percentage of U.S. respondents most concerned with contracts disputes declined to 29 percent, from 36 percent in the previous survey.
More U.S. respondents list class actions (25 percent) and product liability (18 percent) as top concerns compared with the total sample (18 percent and 14 percent, respectively). The U.S. reported the greatest incidence of one or more regulatory proceedings commenced against respondent companies (43 percent). This proportion has remained steady during the past three years.
Forty-two (42) percent of U.S. companies reported being a party in one or more arbitrations over the past 12 months, slightly more than the 35 percent reported among all respondents. Arbitrations commenced by U.S. respondents have remained steady since 2011, with no statistically significant change.
Sixty-two (62) percent of U.S. companies used alternative fee arrangements (AFAs) in the previous 12 months, consistent with 2013 findings and slightly higher than the 56 percent worldwide using AFAs. Overall, the most common type of AFA used was fixed fee (66 percent). In the U.S., use of performance/rewards-based fees (25 percent) fell compared with last year (35 percent). However, capped fees were less common in the U.S. (51 percent) compared with the total sample (59 percent). Across the survey, more than 97 percent of respondents having experience with AFAs are satisfied with the work performed.