Litigation rising, say corporate counsel

Corporate counsel at leading multinationals predict rising volumes of litigation, believe regulators have become more interventionist and fear class actions, according to Norton Rose Fulbright’s 12th annual global litigation trends survey.

Consequently, many in-house legal teams are becoming more proactive in their approach to risk.

More than 600 in-house lawyers from companies across 24 countries responded to the survey, conducted by Acritas. More than half the companies represented have revenues of US$1bn or above.

Nearly one quarter of the respondents expect the amount of litigation their company is involved in to continue rising—versus only 13% who anticipate a decrease. Four out of five respondents said their companies were sued in the past year.

The survey report attributes the rise to difficult market conditions, particularly in industries affected by low oil prices, as well as an increased volume of regulation and increased regulator intervention.

Litigation arising from contractual disputes is both the most numerous, at 40%, and the top concern for respondents, at 42%. Employment disputes follow closely behind.

The increasing volume of class actions is another major concern, and the report notes the impact is now being felt outside the US. Financial institutions, in particular, are “significantly more likely to identify class actions as the type of dispute they are most concerned about”.

Earlier this month, a £14bn claim—believed to be the biggest class action in UK legal history—was filed against Mastercard over its processing fees

Deirdre Walker, Norton Rose Fulbright's head of dispute resolution and litigation for Europe, Middle East and Asia, says: “Market volatility, geopolitical uncertainty, currency fluctuations and rising regulatory intervention all combine to create an environment which will give rise to increased litigation.

“Class actions are also of growing concern according to our survey and respondents from financial institutions were more like to cite class actions as the most concerning type of dispute. The trend is driven in part by rising social connectivity and funding support.”

In response to the increased risks, in-house legal teams are increasingly focusing on training and other preventative measures. Along with the survey, therefore, Norton Rose Fulbright has launched a “litigation minimisation framework”, which in-house counsel can use as a practical tool to review and reduce litigation risks. It includes a table where counsel can benchmark their company’s own litigation spend against a peer group selected by annual revenue, region and industry sector.

Gerry Pecht, Norton Rose Fulbright’s global head of dispute resolution and litigation, says: “We see the trend of businesses becoming more proactive in how they assess and control litigation exposure.

“As a result, this year’s survey introduces a litigation minimisation framework as well as expenditure benchmarking tools. We have launched these as a way to assist in-house counsel with litigation management.”

Some 60% of respondents have opted to use alternative fee arrangements, with nearly all of them satisfied with their decision. They cited the benefits as being better control, greater efficiency and more certainty.