In-house counsel tackled an increased number of class-action lawsuits last year, but managed to tamp down legal spend by an average of $100,000 per matter, according to the 2013 Carlton Fields Class Action Survey.
The second annual survey polled 368 legal executives from 342 companies with median annual revenues of $3.8 billion. About half of the respondents said they deal with class action lawsuits. Among those who do handle class actions, they saw their load increase from an average of 4.4 class actions in 2011 to 5.1 class actions in 2012. Accordingly, their overall spending on class actions increased by $300,000 on average, from $2.91 million to $3.19 million.
Yet, at the same time, legal departments achieved a 13.6 percent reduction in costs per suit, from $776,500 in 2011 to $671,100 in 2012. In last year’s survey, respondents said they were aiming for a 17 percent reduction in class action spend for 2012.
"Per class action, they’re spending lessand that is exactly in line with what they said they were hoping to do when we surveyed them last year," says Chris Coutroulis, who chairs the firm’s litigation council.
So how did legal departments get proactive on their class action spend? Three key strategies can make a big difference on cost control:
1. Use alternative fee arrangements
"Nearly one-third of companies rely on these arrangements, a 35 percent increase from 2011," according to the survey. Fixed fees were the most popular form of alternative fee arrangement (AFA), the preference of 63 percent of the companies that use AFAs.
In-house counsel appear to favor AFAs for a certain category of case: "Only 15 percent of all class action spending takes place under an [AFA], indicating that AFAs tend to be used on smaller, more routine class actions than on more complex or high risk matters," the report finds.
