Monday, 06 Feb 2012
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Litigation is soaring, says in-house counsel survey
06 February 2009
Litigation levels are set to soar as a result of the credit crunch, according to a survey of in-house counsel by US law firm Fulbright & Jaworski.
Nearly one in every three (31%) of the 358 businesses surveyed believe that litigation will rise in the coming year, but only 8% expect the numbers to decrease. The figures vary from industry to industry with half of respondents in financial services (50%) anticipating an increase, followed by healthcare (40%), retail/wholesale (39%) and insurance (36%).
However, the survey also found that litigation actually fell last year, which it Fulbright & Jaworski attributes to more benign economic conditions. One in six (16%) of respondents had at least one lawsuit commenced against them worth in excess of $20 million but two in five (41%) of U.K. companies had none at all.
This, however, could be the "the calm before the storm," according to Fulbright's head of International Financial Services Disputes, Chris Warren-Smith. "In-house lawyers are bracing themselves for an increase in legal disputes involving their companies during the coming year."
Whether law firms will benefit from the rise in litigation is unclear. Only 3% of those surveyed have engaged outside counsel to assist with credit crunch related litigation and the report indicates only a slightly greater number anticipate doing so in the coming year. "This is a sensitive area," explains Warren-Smith, "and those involved currently prefer not to wash their dirty linen in public."
The report also found that twice as many U.K. respondents as last year are spending more time on regulatory matters but are half as likely as their U.S. counterparts to face regulatory proceedings. All in all 48% of public companies surveyed and 27% of the private businesses have experienced regulatory proceedings in the last year.
A substantial amount of regulatory activity for U.K. companies is also from non-U.K. regulators. Only 27% said they had been approached by the Financial Services Authority (FSA) and the Office of Fair Trading, while 40% have retained outside counsel for regulatory investigations involving the United States Department of Justice, 33% for the Securities and Exchange Commission (SEC) and the same number for the European Commission.
Lista Cannon, partner-in-charge of Fulbright's London office, says: "The increasing cooperation amongst international regulatory bodies means that U.K. businesses are just as exposed, if not more so, to regulatory matters that originate outside the U.K."
Only a small number of U.K. businesses have experienced dawn raids in the past year too. Overall 3% of respondents replied in the affirmative with the figure for the U.K. standing at just 2%.
Likewise, class actions remain a rarity. In the U.K. 5% of the businesses surveyed had class actions pending against them. However Fulbright litigation partner Melanie Ryan warns:"If the proposals of the Civil Justice Council are accepted in their entirety, there will be a fundamental change in the class action landscape."
Nearly one in every three (31%) of the 358 businesses surveyed believe that litigation will rise in the coming year, but only 8% expect the numbers to decrease. The figures vary from industry to industry with half of respondents in financial services (50%) anticipating an increase, followed by healthcare (40%), retail/wholesale (39%) and insurance (36%).
However, the survey also found that litigation actually fell last year, which it Fulbright & Jaworski attributes to more benign economic conditions. One in six (16%) of respondents had at least one lawsuit commenced against them worth in excess of $20 million but two in five (41%) of U.K. companies had none at all.
This, however, could be the "the calm before the storm," according to Fulbright's head of International Financial Services Disputes, Chris Warren-Smith. "In-house lawyers are bracing themselves for an increase in legal disputes involving their companies during the coming year."
Whether law firms will benefit from the rise in litigation is unclear. Only 3% of those surveyed have engaged outside counsel to assist with credit crunch related litigation and the report indicates only a slightly greater number anticipate doing so in the coming year. "This is a sensitive area," explains Warren-Smith, "and those involved currently prefer not to wash their dirty linen in public."
The report also found that twice as many U.K. respondents as last year are spending more time on regulatory matters but are half as likely as their U.S. counterparts to face regulatory proceedings. All in all 48% of public companies surveyed and 27% of the private businesses have experienced regulatory proceedings in the last year.
A substantial amount of regulatory activity for U.K. companies is also from non-U.K. regulators. Only 27% said they had been approached by the Financial Services Authority (FSA) and the Office of Fair Trading, while 40% have retained outside counsel for regulatory investigations involving the United States Department of Justice, 33% for the Securities and Exchange Commission (SEC) and the same number for the European Commission.
Lista Cannon, partner-in-charge of Fulbright's London office, says: "The increasing cooperation amongst international regulatory bodies means that U.K. businesses are just as exposed, if not more so, to regulatory matters that originate outside the U.K."
Only a small number of U.K. businesses have experienced dawn raids in the past year too. Overall 3% of respondents replied in the affirmative with the figure for the U.K. standing at just 2%.
Likewise, class actions remain a rarity. In the U.K. 5% of the businesses surveyed had class actions pending against them. However Fulbright litigation partner Melanie Ryan warns:"If the proposals of the Civil Justice Council are accepted in their entirety, there will be a fundamental change in the class action landscape."
