TAMPA, Fla.--(BUSINESS WIRE)--Companies reported an increase in their annual class action spending of 12 percent from 2012 to 2013, with nearly 25 percent anticipating that their spending will continue to rise this year according to Carlton Fields Jorden Burt’s 2014 Class Action Survey. Consistent with this trend, corporate counsel reported a rise in ‘high risk/bet-the-company’ matters compared to more routine matters — up from six percent to more than 11 percent.
“The significant growth over the past two years of ‘high-risk/bet-the-company’ cases increases corporate counsel spending and makes winning, as opposed to the cost of defense, their number one priority,” said Chris Coutroulis, co-chair of Carlton Fields Jorden Burt’s National Class Action practice.
Corporate counsel also expect an onslaught of new class action litigation related to data privacy and security, with 24 percent reporting this hot area will present the greatest challenge to companies going forward.
With an increase in spending and exposure to high risk class action suits, respondents revealed that they are doing more work in house, averaging almost one additional full-time lawyer on their staffs to manage the defense of class actions. As in past years, the data show that companies with a single individual accountable for class action outcomes enjoy significant cost savings — in the range of 22 percent. Companies that assess potential financial exposure based on a rigorous case-by-case evaluation also reap substantial cost savings. These companies are better able to direct and strategically manage the defense of their cases.
“The combined effect of having a single individual responsible for class action outcomes and routinely taking a deep dive early into the facts, circumstances, and law applicable to individual cases results in significant cost savings,” Coutroulis said.
The data also show that the use of alternative fee arrangements (AFAs) with outside counsel nearly doubled between 2011 and 2013, with fixed fees remaining the most popular among respondents. Projections indicate that almost 50 percent of companies will use AFAs this year.
Corporate legal departments are being more aggressive in their approach to defending class action suits. In particular, the recent Supreme Court decisions Wal-Mart v. Dukes and Comcast v. Behrend are driving proactive strategies at the class certification stage. In the wake of another significant decision, AT&T v. Concepcion, the survey reveals that the use of arbitration clauses to preclude class actions has soared. Forty percent of companies reported now using arbitration clauses that specifically foreclose class actions. This is more than double the percentage in 2012.
Now in its third year, Carlton Fields Jorden Burt’s Class Action Survey tracks trends identified by in-house counsel and best practices for controlling class action risk and cost. The results were compiled from 346 in-depth interviews with general counsel, chief legal officers, and direct reports to general counsel of 326 companies. Survey participants’ companies had average annual revenue of $18.6 billion and median annual revenues of $4.5 billion. They operate in more than 25 industries, including banking and financial services, consumer goods, energy, high tech, insurance, manufacturing, professional services, and retail trade.
“We are excited about the results,” said Coutroulis. “We hope this benchmarking data will help in-house counsel identify the best approaches for their companies to manage class action litigation more effectively.”
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About Carlton Fields Jorden Burt: Carlton Fields Jorden Burt has more than 370 attorneys and government consultants serving clients from offices in Florida; Atlanta, Georgia; New York; Washington, D.C.; and Hartford, Connecticut. The firm is known for its litigation practice, including class action defense, national trial practice, white collar representation, and high stakes appeals, and for handling sophisticated business transactions, corporate counseling, and regulatory practice for domestic and international clients. For additional information, visit www.CFJBLaw.com.
