Legal

What, Their Worries? More Feds, Expenses and Social Media

By Max Mihelich

Jun. 30, 2014

Good news for labor and employment law firms: It’s getting more expensive for organizations to manage their lawsuits.

According to a recent survey published by Norton Rose Fulbright, a global legal practice, while the total number of lawsuits facing organizations has remained relatively unchanged from 2012, companies in the United States said the cost to manage those cases increased last year.

Some 71 percent of companies reported spending an average of $1 million or more — a sharp increase from 53 percent of organizations in both 2011 and 2012. Likewise, 38 percent of organizations spent $5 million or more in 2013, up from 27 percent in 2012; and 26 percent said they spent $10 million or more last year compared with 17 percent in 2012. 

Not only have organizations increased litigation budgets, but also the dollar amounts at stake in lawsuits have increased across the board as well. The April survey, which polled 401 in-house corporate lawyers, shows companies facing at least one lawsuit with more than $20 million at stake rose to 34 percent in 2013 from 23 percent in 2011.

Companies across all industries are facing more regulatory-based cases. Nearly 20 percent of survey respondents said their company faced a regulatory or investigative matter in 2013, up from 9 percent in 2012, according to the study.

The majority of cases cited involved the U.S. Justice Department (34 percent), U.S. Securities and Exchange Commission (23 percent) or the U.S. Environmental Protection Agency (22 percent).

“We continue to see the scope and frequency of regulatory investigation matters increase in the U.S. as government agencies take a more proactive approach in determining compliance,” Otway Denny, Norton Rose Fulbright’s head of dispute resolution and litigation in the United States, said in a written statement. “Stricter regulations governing financial, environmental and workplace issues create a more complex environment for businesses, and these results show that a serious regulatory investigation is a reality for a growing number of companies each year.”

Among the more interesting findings is the rise in social media and mobile technology, which has had an increased effect on business-related litigation across a wide range of U.S. industries. Forty-one percent of survey respondents said they needed to preserve or collect data from employees’ mobile devices for the purposes of an investigation or lawsuit.

Certain industries are affected more by social media and mobile technology than others. For example, 58 percent of engineering firms needed to collect employee social media data for a lawsuit, as well as 52 percent of companies in the energy industry, according to the survey.

Max Mihelich is a writer in the Chicago area.

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