Corporate lawsuits fall as economy rises: legal survey

By Rob Luke | Oct 16, 2007

NEW YORK -- American companies are dealing with fewer lawsuits overall but rising numbers in different sectors, according to international corporate law firm Fulbright & Jaworski.

The firm's fourth annual Litigation Trends Survey released Monday reveals the number of companies reporting at least one new lawsuit against them in 2006-07 fell to 83 percent from 89 percent one year ago. The number of companies filing suit fell from 70 percent to 65 percent over the same period, the survey added.

And corporate in-house counsel surveyed are similarly optimistic on the lawsuit for the upcoming year. Only 22 percent expect an increase in legal disputes for their employers in the next 12 months compared to 33 percent one year ago.

But lawsuit-activity trends varied sharply across sectors, respondents reported. Lawsuits filed by investors against publicly-traded companies fell noticeably, a fact that 33 percent of respondents attributed to recent scandals, reported by LegalNewsLine last month, surrounding New York-based securities law firm Milberg Weiss.

But lawsuits in patent-protection and product liability appear to be rising, the survey noted. And this trend is no longer confined to companies in the IT sector, said Stephen C. Dillard, chair of Fulbright and Jaworski's global litigation practice.

The overall fall in corporate suits filed, the first ever noted by the survey, was likely due to a stable economic climate in the first half of 2007, Dillard stated in a press release Monday. Declining corporate accounting scandals also helped, he added.

But fighting big-money legal action is still par for the course for most larger American companies, the survey noted. One-third of respondents reported handling at least 25 simultaneous suits while 40 percent reported being hit with at least one suit worth $20 million or more. Among business with revenues of $1 billion-plus that figure rose to 62 percent.

Class action suits are still the "driving force" behind U.S. litigation, with 60 percent of respondents defending at least one last year and 69 percent among billion-dollar companies. Nineteen percent of the targets companies were juggling more than 20 class-action suits.

The survey was based on interviews with in-house counsel at 250 major U.S. corporations.

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