Survey: Manufacturers expect rise in lawsuits

CNY Business Journal (1996+), Dec 12, 2008 by Reinhardt, Eric

Northeast manufacturers are among those nationwide expecting an increase in lawsuits in 2009, following two years of declines.

That's according to the 2008 Litigation Trends Survey that Fulbright & Jaworski, L.L.P., a New York City-based international law firm, released Oct. 14.

First conducted in 2004, Fulbright contends the survey is the largest canvas of corporate counsel on litigation issues and trends.

The 2008 survey drew responses from 358 in-house attorneys in the United States and United Kingdom on the state of global litigation, including 251 U.S. respondents.

Of the U.S. respondents, 28 represent companies from New York and the New England states, including Vermont, New Hampshire, Connecticut, Massachusetts, Rhode Island, and Maine. Fulbright refers to this group of respondents as East Coast/New England.

Greenwood Associates, a Houston, Texas-based business research firm that produced previous editions of the report, conducted the survey from May 22 through July 18, says Robert Owen, a partner at Fulbright & Jaworski.

More than one-third of corporate counsels expect the pace of new filings to increase in the coming year, with 34 percent of respondents anticipating an increase in litigation involving their companies, the survey found.

In the 2007 survey, only 22 percent of in-house attorneys expected to see an increase in legal disputes against their companies.

"In the past, those (percentage numbers) have been fairly accurate predictors of what's to come," says Owen, noting that respondents in previous surveys had indicated they felt litigation trends would stay the same or decrease, and their companies ended up with fewer cases.

Among the East Coast/New England respondents, 13 (46 percent) believe their companies will face the same number of legal disputes in 2009, 10 anticipate an increase in lawsuits, four expect a decrease, and one company didn't provide a response.

Fulbright asked respondents why they expected legal disputes to either increase, decrease, or stay the same. Among the 26 East Coast/New England respondents, 10 cited the stability of their company or industry, nine cited the economy, three pointed to their company's growth, and the remaining four respondents provided other reasons or no reason at all.

The law firm asked the respondents to identify the three most common types of litigation pending against their companies. As in past surveys, the three most common lawsuits facing U.S. companies dealt with labor and employment issues, contracts, and personal injury, according to Fulbright.

The East Coast/New England companies were no different, with just over half of the 28 respondents also citing disputes involving contracts and employment. In addition, five respondents each mentioned lawsuits over regulatory, patent and intellectual property, and insurance matters.

The responding companies were also asked to select up to five types of lawsuits that concern them.

Among all the respondents, concerns were spread across 15 separate categories of disputes, with all but two reaching double-digit percentages among reporting companies. Smaller companies showed a greater concern over securities, insurance, and real estate litigation than middle-market or billion-dollar firms, while private companies expressed considerably more concern than public companies in cases related to contracts, labor, and personal injury.

The firm found it interesting how prevalent labor litigation is as a source of concern, says Owen, saying the law firm figures it's probably due to the number of suits that are filed annually.

"We think lots and lots of discrimination cases are filed against American companies, and for that reason alone, they are at least nettlesome, if not [worse]," he says.

Among the 26 respondents in the Northeast, 17 cited contract disputes, 11 companies-pointed to labor and employment concerns, and six firms cited intellectual properly and patent disputes as the ones concerning them the most. Respondents could choose mere than one answer.