GCs Seeing More Bet-the-Company Lawsuits

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By Michael Greene

Nov. 19 — The number of companies facing high-stakes litigation increased over the last 12 months, a Nov. 19 survey of general counsel and compliance officers suggests.

AlixPartners' Annual Litigation and Corporate Compliance Survey, which polled 242 general counsel and compliance officers at U.S. and European companies with annual revenues of at least $250 million, found that 11 percent of respondents indicated that their organizations were involved in a “bet the company” lawsuit over the last year, compared to only eight percent that said so in the consultant's prior survey.

The survey also found that 22 percent cited regulatory/investigatory issues as the focus of their “bet the company” lawsuits, up from only 6 percent that previously responded to the question.

Conversely, the survey found a significant drop in the percentage of respondents that cited antitrust and class actions as the focus of such litigation.

‘Challenging Environment.'

Similar to the survey's prior results, almost a third of the respondents (32 percent) reported an increase in the number of commercial legal disputes at their organizations over the past 12 months, with an additional 57 percent saying that the number of disputes stayed the same. Only 12 percent of the respondents said they saw a decline.

Meanwhile, 24 percent of the respondents said their companies saw an increase in disputes involving overseas partners or cross-border transactions.

“Companies, particularly those that operate overseas, are conducting business in a challenging regulatory and enforcement environment,” said Harvey Kelly, managing director and global head of AlixPartners Financial Advisory Services practice, in a release. “Given this dynamic, it is not surprising that companies are not only facing more disputes in this area, but are increasing their use of techniques to deal with these risks.

Commercial Litigation 

In other findings, survey respondents said the most common types of commercial disputes their organizations were involved in included:

• contract (57 percent)

• employment (38 percent);

• intellectual property or patent infringement (29 percent); and

• tax (20 percent).

 

The survey also indicated that despite the uptick in cross-border and high-stakes legal fights, litigation spending is not experiencing the same amount of growth compared to the previous year. Thirty-seven percent of the respondents said their organizations increased spending on litigation in the last 12 months. In AlixPartners' 2014 survey, 47 percent of the respondents said they saw an increase.

In the latest survey, the issues that respondents said were important to their legal departments were:

• controlling costs (73 percent);

• data security (66 percent)

• proactive risk management (66 percent);

• early case assessment (57 percent); and

• global compliance issues (55 percent).

 

To contact the reporter on this story: Michael Greene in Washington at mgreene@bna.com

To contact the editor responsible for this story: Yin Wilczek at ywilczek@bna.com

A summary of the survey is available at http://www.alixpartners.com/en/Publications/AllArticles/tabid/635/articleType/ArticleView/articleId/1815/AlixPartners-Annual-Litigation-and-Corporate-Compliance-Survey.aspx#sthash.BCFbMoXF.oF9GoXeS.dpbs.