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October 14, 2008 11:17 AM

Fulbright & Jaworski Study: In-House Counsel Brace for More Litigation

Posted by Ed Shanahan

In tough economic times, law firms have always counted on countercyclical practices like bankruptcy and litigation to pull them through. We've heard endless talk about an increase in litigation activity this year, but will it be enough to offset what's expected to be a dramatic downturn in corporate work? If you don't work at one of the handful of firms hired by the government and the financial institutions trying to avert disaster, you are likely hoping--nay, praying--for a monster year in litigation.

A study of litigation trends released today by Fulbright & Jaworski gives reason for cautious optimism. Fulbright surveyed 358 lawyers working in-house at corporations; 251 of them in the U.S. The in-house lawyers reported that for the first six months of this year, new case filings dropped--but few believe that decline will last. Only 8 percent of the lawyers at U.S. corporations predicted a drop in legal disputes involving their company into 2009. Among the in-house counsel with companies of more than $1 billion in revenue, only 3 percent foresaw a drop in litigation next year, while 43 percent predicted a jump in activity.

Yesterday we spoke with Stephen Dillard, chair of the litigation department at Fulbright. He told us that the survey respondents are usually accurate forecasters. Following the Class Action Reform Act and the passage of tort reform laws in a number of states, for example, the Fulbright survey correctly predicted a drop-off in class actions. So this year's responses should be good news for lawyers specializing in the Foreign Corrupt Practices Act and wage-and-hour class actions--both of which, according to survey respondents, are going to boom. Internal investigations into options backdating, on the other hand, are predicted to tail off.

Among the survey's other key findings, according to Dillard, was persistent unhappiness with the cost of e-discovery. "The federal rules were recently amended to liberate the rules of e-discovery and it was touted as a cost control measure," says Dillard. "Over time, it's been the opposite."

We asked Dillard if anything in this year's survey suggests that clients would exert more pressure to control legal fees. "The corporate community is always concerned about the cost of legal services and I suspect when times are tough, there'll be more scrutiny of that cost," Dillard tells us. "But it's also true that the cost of legal services is several pegs down on the list of what's most important to the client, and I think that's true this year and will be true even in a very difficult economic environment." What clients want, Dillard says, are results and responsiveness. And that's not going to change, no matter the economic circumstances.

--Andrew Longstreth, The Am Law Litigation Daily

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