Manufacturing Lawsuits Expected to Rise

Annual survey details current business litigation activity and projects a growing number of suits fueled by challenging economic conditions.

Litigation has obviously become a major line item in manufacturing company budgets. More than a quarter (26 percent) of manufacturing firms surveyed in a recent study by international law firm Fulbright & Jaworski L.L.P. (www.fullbright.com) said that they spent at least $5 million on litigation last year, excluding costs of settlements and judgments, while 51 percent reported spending more than $1 million per year on business disputes.

In its “2008 Fulbright & Jaworski Litigation Trends Survey,” Fulbright found that 75 percent of manufacturing companies faced at least one new lawsuit last year, with 53 percent facing six or more new suits in the past year. And 25 percent of the manufacturing companies surveyed reported facing at least one $20 million action.

Big picture

In its fifth year, the Fulbright & Jaworski Litigation Trends Survey is designed to take a macro look at the landscape for business disputes in the United States and United Kingdom. The survey reports on findings from multiple industries, as well as breakdowns by company size and region. The survey spans numerous topics, from the most prevalent types of lawsuits that businesses face to what new legal burdens are impacting their budgets.

In the survey, manufacturing companies’ in-house law departments reported that product liability matters (57 percent) were their biggest concern, followed by contracts (51 percent) and labor/employment (39 percent).

Twenty six percent of manufacturing companies expect litigation to increase in the next year, while only 9 percent are expecting a drop in suits. That’s in line with business as a whole. Following two straight years of reporting declines in the number of new lawsuits and regulatory proceedings, U.S. companies in all industry groups said they now anticipate an uptick in new actions and government probes.

Inflection point?

“This year’s survey appears to mark an inflection point for American business, between the end of a prolonged period of prosperity and the start of a period of economic challenge that is likely to fuel litigation over who is to blame and who should pay for the consequences,” says Stephen C. Dillard, who chairs Fulbright’s global litigation practice. “Given that we were polling in-house counsel on the cusp of that transition, it’s no wonder that this year’s findings highlight both the evident calm before the storm, as well as the sense that disputes are on the rise.”

This year’s survey was conducted from May 22 through July 18 by Greenwood Associates, a business research firm in Houston that has produced previous editions of the report. The survey canvassed 358 in-house counsel in the in the United States and the United Kingdom.

Fulbright & Jaworski L.L.P.
www.fulbright.com

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