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Litigation Trends Survey of In-House Counsel Offers (a Little) Reason for Optimism
The American Lawyer
October 16, 2009
A year ago, when we wrote about Fulbright & Jaworski's 2008 Litigation Trends report, we noted that the 358 in-house lawyers who responded to the survey reported a drop in new filings in the first half of 2008, but few of them expected the decline to last. As the Great Recession dawned last October, in-house lawyers and their outside firms were still counting on litigation to be a countercyclical hedge, as it had been in previous economic downturns.
As we all now know, things didn't turn out that way. Clients cut back on litigation spending, curtailing new filings and forcing firms to cut fees. But the year's disappointing litigation landscape makes the just published 2009 Fulbright Litigation Trends survey all the more important. The 66-page report is a chronicle of the impact of the recession. It's also a guide to where recovery, at least for litigators, will begin.
This is the sixth year that Fulbright & Jaworski asked independent researchers to survey senior corporate counsel to determine significant trends in litigation. Two hundred and sixty-seven in-house lawyers from the U.S. and 125 from the U.K. participated in the survey, with more than half of the 408 corporate counsel representing businesses with revenue of more than $1 billion.
The survey confirms some developments we've been reporting over the last year. Labor and employment litigation is up; 40 percent of the survey respondents reported increases in wage-and-hour and other employment cases over the last year. Bankruptcy litigation is also on the rise; 9 percent of the outside counsel in the survey said they have pending bankruptcy matters, up from 5 percent in the 2008 survey. Regulatory litigation, internal investigations and corruption-related work are all creating opportunities for outside counsel, and all of those areas seem to be on course to continue to do so.
Patent litigation, on the other hand, was down last year and looks to continue the downward trend. Only 9 percent of the largest companies in the survey said they expected to pursue patent infringement claims next year, compared to 12 percent a year ago. "We have been reducing the number of active cases," one energy company lawyer told surveyors.
The survey dedicates several pages to litigation costs and billing trends. It will surprise no one to hear that alternative fees are a hot topic this year, with 48 percent of the U.S. respondents reporting that they use alternative billing arrangements, mostly contingent or fixed-fee deals. "That confirms what we're experiencing as practicing lawyers," said Fulbright litigation department chairman Stephen Dillard. "Our instincts and what we hear on the grapevine tells us that number is going to continue to go up. We're going to track it carefully." (We should note that the survey indicates alternative billing still accounts for only 10 percent to 25 percent of outside counsel expenditures, so that the hourly rate maintains a powerful hold.)
Dillard said he sees good news in the survey's finding that more than 40 percent of respondents expect an uptick in litigation in the next year. "This has been a different type of recession," he told us. "But there's reason to believe there's going to be more litigation next year than there was last year."
This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.
