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BOSTON-U.S. companies face steep legal costs from juggling an average of 305 lawsuits, as well as internal investigations prompted by the Sarbanes-Oxley Act of 2002 and other corporate-governance regulations. American companies also funneled an average of $12 million, or 71% of their legal budgets, to litigation costs, not counting judgments and settlement payments, according to the third annual corporate counsel study from Houston-based law firm Fulbright & Jaworski. Companies with more than $1 billion in revenue face a heavier litigation load, carrying an average of 556 pending lawsuits. The study’s results illustrate the more complex legal problems of large companies, said Robert D. Owen, who heads Fulbright’s New York litigation group practice. American companies with sales of more than $1 billion spent an average of about $19.8 million on litigation, not including judgments and settlements, compared with $178,000 for companies with up to $100 million in revenue. Over the past year, 44% of the billon-dollar-plus companies were hit with at least 50 new lawsuits. “It’s not just an arithmetic increase,” Owen said. “It tends to be a multiple as the companies get larger.” In-house lawyers from 422 companies in 13 industry sectors, from energy to financial services to nonprofit organizations, responded to the survey. Of the 311 responses from U.S. firms, 52% came from public companies. 20% outside U.S. Litigation is also mushrooming around the globe, with more than a third of U.S. companies counting up to 20% of their cases in courts outside the United States. U.S.-style litigation-including employment claims, breach of contract allegations and even personal injury claims-is spilling over into Europe, said Andrea DiFabio, vice president and deputy general counsel at Parexel International Corp., a Waltham, Mass.-based contract research company for pharmaceutical and medical device companies. Although many foreign countries lack jury trials or punitive damages laws, retaining foreign attorneys to defend overseas cases is expensive, DiFabio said. “The increase in litigation-and the costs of defending lawsuits-is dismaying,” DiFabio said. “Even a frivolous lawsuit alleging wrongful termination, for example, can cost in the hundreds of thousands of dollars to defend.” About one-third of companies and 40% of the billion-dollar-plus firms expect litigation filings to climb next year. Although litigation costs dominate corporate legal budgets, internal investigations, sparked by an aggressive regulatory and enforcement environment and by new corporate governance rules such as Sarbanes-Oxley, are also boosting companies’ legal price tags. According to the study, 63% of U.S. companies initiated at least one internal investigation requiring outside counsel in the past year. “By and large, if you’re a public company you’ve had to hire outside counsel to do an internal investigation,” said Fulbright’s Owen. “It suggests to me and to us as a firm a far greater hunger for internal investigation help than we had realized.”

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