Each year for the past 11, Norton Rose Fulbright has gauged the temperature of global litigation with a far-reaching survey of corporate counsel from all over the world. This year, 800 lawyers from 26 countries participated -- about two-thirds from billion-dollar organizations.
Collectively, they reported a steep decline in data volumes, an easing of regulatory pressure and less societal appetite for frivolous class actions. "I sleep like a baby," one general counsel said.
Just kidding. Here are six key takeaways from the 66-page report, which you can download here.
1. Pairing low barriers to filing with high litigation costs is a recipe for quick settlements
Global titans of industry may make for unsympathetic characters, but it's hard to ignore the rising fear of "extortionate" -- as one GC put it -- class actions and the increasing ease with which prospective litigants can organize and sue. Crowd-sourced lawsuits, anyone? Stir this trend with soaring litigation costs, particularly discovery-related costs, which were again identified as a top concern, and you have a cocktail for swift settlements of -- again, corporate lawyers say -- meritless claims.
This pretty much sums it up:
“I think (my biggest concern) is probably the class action litigation particularly in the US. A lot of the times it is without foundation, (but) you end up tackling it just to avoid the ongoing cost of being involved in the process. It is a pretty unsatisfactory global system for class action in that regard.” ~ Australian Technology and innovation company GC
2. General counsels want predictable costs
More than half of respondents said they used alternative fee arrangements, and of those, 66% said they preferred fixed fees. 78% said fixed fee arrangements had been effective or very effective in helping their company achieve financial goals, and -- here's the kicker -- 97% of respondents who had used AFAs were satisfied with the work performed under them. The bigger the company, the more likely to use AFAs.
Discovery costs are a wildcard, and smart corporate legal teams will do whatever it takes to lock them in as precisely as possible. It doesn't look good to the rest of the C-suite to come in way over budget -- or way under budget for that matter. Fixed fees promote efficiency because they disincentive feet-dragging on work that would otherwise be billed by the hour, and help eliminate "make work" advising.
3. When outsourcing, corporate is cutting out the middleman
In addition to demanding more alternative fees arrangements to lock in costs, an increasing number of organizations are turning to legal process outsourcing to withstand the avalanche of legal work they're facing from increased regulatory scrutiny, internal investigations, M&A and litigation. What's perhaps most interesting, though, is that while 21% of respondents said they worked with law firms that hired their own LPOs, a full third of respondents reported either working with the LPO directly or using their own shared or captive service centers for elements of legal work.
Nearly half of respondents indicate it is “Very Important” or “Moderately Important” that outside counsel demonstrate cost-effective sourcing of legal services. In other words, on the whole, organizations that are large enough to need to outsource work in the first place are showing more willingness to own the LPO relationship or do the work at a service center they control. But as the size of the corporate legal department increases, so does the likelihood outside counsel owns the outsourcing -- and the likelihood corporate is demanding that money is well spent.
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