Thursday, August 8, 2013

Legal Costs Up at 50% of Companies

More than half of 117 corporate general counsel said in December 2012 that over the previous 12 months their companies’ spending on litigation either increased slightly or increased significantly, according to the survey by AlixPartners, a business-advisory firm. (See Figure 1.)
Perhaps more worryingly, one in 10 respondents reported that their employers had been involved in a “bet-the-company” lawsuit last year. Such litigation could have “a material impact, including whether the company could survive,” explained Louis Dudney, the firm’s co-leader for North America.
Some of the overall surge in legal costs may stem from companies’ tendency to hire outside law firms. Twenty-five percent of the respondents reported, in fact, that their employers’ use of non-corporate lawyers jumped 25 percent last year.
The surge in hiring outside counsel comes at a time when almost every merger and acquisition is being met with a lawsuit. Indeed, 60 percent of the respondents to the AlixPartners survey said they hired outside counsel in connection with M&A or other such transactions. (See Figure 2, below.)... 
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