Litigation & Corporate Compliance Survey

Transcription

1 Litigation & Corporate Compliance Survey July

2 Disclaimer Important Information Regarding This Report This report was prepared by AlixPartners LLP ( AlixPartners ) for general information and distribution on a strictly nonreliance basis. No one in possession of this report may rely on any portion of this report. The recipients of the report accept that they will make their own investigation, analysis and decision relating to any possible transactions and/or matter related to such and will not use or rely upon this report to form the basis of any such decisions. To the extent that it is lawfully able to do so, no liability or responsibility whatsoever is accepted by AlixPartners for any loss howsoever arising from any use of, or in connection with, the Report. This report may be based, in whole or in part, on projections or forecasts of future events. A forecast, by its nature, is speculative and includes estimates and assumptions which may prove to be wrong. Actual results may, and frequently do, differ from those projected or forecast. Those differences may be material. Items which could impact actual results include, but are not limited to, unforeseen micro or macro economic developments and/or business or industry events. The information in this report reflects conditions and our views as of this date, all of which are subject to change. We undertake no obligation to update or provide any revisions to the report to reflect events, circumstances or changes that occur after the date the report was prepared. In preparing this report, AlixPartners has relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise provided to us. AlixPartners has not audited or verified the data reviewed in connection with the preparation of this report. Neither this report nor any of its contents may be copied, reproduced, disseminated, quoted or referred to in any presentation, agreement or document with or without attribution to AlixPartners, at any time or in any manner other than for the internal use of the recipient, without the express, prior written consent of AlixPartners. The opinions expressed are those of the authors and do not necessarily reflect the views of AlixPartners, LLP, or its affiliates or any of its or their respective other professionals or clients. 2

3 Litigation and Corporate Compliance Survey Survey Overview Executive Summary Research Findings 3

4 Survey Overview Date: December, 2012 Population: More than 100 General counsel at companies with annual revenues of $250 million or more, primarily located in the United States. Survey Focus: Key areas include: Frequency and nature of commercial disputes in the last year Retention of outside counsel Types of litigation and approach to settlement Budgetary constraints within corporate legal departments 4

5 Executive Summary Companies are involved in more disputes: 36% of companies surveyed say the number of legal disputes their companies have been involved in increased during the preceding 12 months. Consequently, litigation-related spending is on the rise: 51% of companies surveyed said that spending increased over the preceding 12 months; 27% report an increase in the size of their legal departments. The stakes in such lawsuits are high: One in 10 companies surveyed said they were involved in a bet-the-company lawsuit over the preceding 12 months. Dealing with the high cost of litigation: legal departments are employing a host of strategies to minimize legal costs such as maintaining more work in-house, negotiating alternative fee arrangements, and alternative dispute resolution. Reducing litigation risk: companies are re-thinking their compliance programs and policies, while adopting new tools to mitigate risk. 5

6 Survey Overview - Industries Industries Represented Financial Services 20% Professional Services 12% Information Technology 11% Energy 11% Retail 8% High Technology/Telecom 7% Consumer Products 7% Automotive/Transportation 6% Life Sciences/Healthcare 4% Aerospace 4% Real Estate/Construction 2% Chemical 2% Agriculture Restaurant/Foodservice 1% 2% Note: Respondents could select multiple industries Business Services 1% 6

7 Survey Overview Company Revenues Company Revenue ($ annual) 44% 19% 19% 14% 4% $250M to $499M $500M to $999M $1B to $4.99B $5B to $9.99B $10B or more 7

8 Litigation and Corporate Compliance Survey Survey Overview Research Findings 8

9 More Than a Third (36%) Say the Number of Legal Disputes their Companies Have Been Involved in Increased During the Preceding 12 Months Over the past 12 months, the number of commercial legal disputes your organization has been involved in has: 57% 29% 7% 6% 1% Increased significantly Increased slightly Stayed the same Decreased slightly Decreased significantly 9

10 Contract and Intellectual-Property Disputes Are the Most Common Types of Legal Actions Facing Litigation Departments Please indicate the type(s) of commercial disputes your organization has been involved in over the last 12 months: Contract 89% Intellectual property or patent infringement 59% Product-related Class action 41% 45% Securities E-discovery Bankruptcy Accounting/Financial reporting/disclosure Antitrust Other 23% 22% 21% 17% 12% 9% Note: Multiple selection allowed, totals will equal more than 100% 10

11 A Wide Majority of Companies (89%) Say They Are More Likely to Settle a Case Than Go to Trial Over the past 12 months, how likely were you to settle a case rather than go to trial? 43% 46% 11% Very likely Somewhat likely Somewhat unlikely Very unlikely 0% 11

12 Respondents Are More Likely to Retain Outside Counsel for M&A and Regulatory Investigations than for other Legal Actions During the past 12 months, have you retained outside counsel in connection with: M&A or other transactions 60% Regulatory investigations 60% Internal investigations 34% Other 18% FCPA 15% Whistleblower allegations 15% Cross-border investigations 12% Other Corruption 3% Note: Multiple selection allowed, totals will equal more than 100% 12

13 One in 10 Say Their Company Was Involved in a Bet-the-Company Lawsuit During the Past 12 Months Over the past 12 months, have you been involved in a bet-the-company lawsuit? 90% 10% Yes No 13

14 More Than a Quarter (27%) Report an Increase in the Size of their Litigation Department During the Past 12 Months During the last 12 months, the size of your litigation department has: 64% 22% 5% 9% 0% Increased significantly Increased slightly Stayed the same Decreased slightly Decreased significantly 14

15 Among Companies that Saw an Increase in Disputes, 45% Have Seen the Size of their Litigation Department Grow During the last 12 months, the size of your litigation department has: 53% 31% 14% 3% 0% Increased significantly Increased slightly Stayed the same Decreased slightly Decreased significantly 15

16 More than Half (51%) Say Spending on Litigation Has Increased over the Preceding 12 Months Over the last 12 months, has your spending on litigation: 42% 39% 9% 9% 1% Increased significantly Increased slightly Stayed the same Decreased slightly Decreased significantly 16

17 25% Say their Utilization of Outside Law Firms Has Increased in that Time Over the last 12 months, the number of outside law firms you have used has: 59% 25% 16% Increased Decreased Stayed the same 17

18 Respondents Say They Are Reducing Risk Mostly by Reassessing Compliance Programs and Implementing New Tools Which of the following steps is your company taking to reduce the risk of potential litigation? Increasing reviews of existing compliance programs and identifying gaps 84% Implementing tools to mitigate risk 64% Monitoring and enforcing document retention policies Increasing the number of internal and external compliance audits and documenting results Increasing due diligence procedures 53% 52% 63% Development of a litigation response plan 25% Other 1% Note: Multiple selection allowed, totals will equal more than 100% 18

19 More than Half (52%) Say Retaining More Work In-House Is Important On a scale from 1-5, where 1=Not at all important and 5 = Extremely important, how significant were each of following issues for you / your legal department during the past 12 months? Retaining More Work In-House 35% 26% 17% 17% 5% Extremely important Somewhat important Not sure/no opinion Somewhat unimportant Not at all important 19

20 59% Say Alternative Dispute Resolution Is Important On a scale from 1-5, where 1=Not at all important and 5 = Extremely important, how significant were each of following issues for you / your legal department during the past 12 months? Use of Alternative Dispute Resolution 45% 29% 14% 8% 4% Extremely important Somewhat important Not sure/no opinion Somewhat unimportant Not at all important 20

21 79% Say Managing Outside Counsel Expectations Is Important On a scale from 1-5, where 1=Not at all important and 5 = Extremely important, how significant were each of following issues for you / your legal department during the past 12 months? Increased Management of Outside Counsel Expectations 48% 31% 15% Extremely important Somewhat important Not sure/no opinion Somewhat unimportant Not at all important 6% 0% 21

22 55% Say Alternative Fee Arrangements Are Important On a scale from 1-5, where 1=Not at all important and 5 = Extremely important, how significant were each of following issues for you / your legal department during the past 12 months? Use of Alternative Fee Arrangements 34% 30% 21% 12% 3% Extremely important Somewhat important Not sure/no opinion Somewhat unimportant Not at all important 22

23 68% Say Early Case Assessment Is Important On a scale from 1-5, where 1=Not at all important and 5 = Extremely important, how significant were each of following issues for you / your legal department during the past 12 months? Early Case Assessment 32% 36% 24% 6% 2% Extremely important Somewhat important Not sure/no opinion Somewhat unimportant Not at all important 23

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