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Some corporate counsel are failing to embrace the most effective measures to mitigate litigation risk, despite an increase in the percentage of companies anticipating an uptick in disputes, according to a survey by Norton Rose Fulbright.
Thirty-five percent of surveyed corporate counsel are predicting a rise in disputes, according to the 2019 Litigation Trends Annual Survey. That’s a significant increase from 2018, when 27% predicted an increase in disputes, and 2017, when 25% predicted an increase.
“This sharp rise in the forecast should be received by businesses as a major red flag, signaling the need to prepare for potentially turbulent times ahead,” according to the survey’s executive summary.
Some of the most effective measures to mitigate litigation risk are embedding lawyers within business operations and early case evaluation and resolution, the summary says. Neither measure has “yet to gain real traction,” according to the summary.
Forty-five percent said they have embedded lawyers within business operations in the last year, the same percentage as in 2018. Sixty-six percent said they had used early case resolution and evaluation, a slight decline from 68% in 2018.
More popular methods of decreasing litigation risk were training and seminars with internal people; proactive review of contracts; and strict internal controls, policies and reporting.
Yet the most common methods weren’t most effective, the survey found. Among nine options, the most effective strategies relative to the proportion using it were embedding lawyers (33% using it found it most effective) and early case resolution and evaluation (24% using it found it most effective).
The survey is based on responses from 287 corporate counsel, some of whom were Norton Rose Fulbright corporate clients. Median revenue for the respondents’ corporations was $1 billion.
Other survey findings included:
• Sixty-four percent said an economic downturn tends to increase litigation volume.
• Asked to identify the three most common disputes in the last year, respondents most often chose labor and employment (chosen by 49%), contracts (chosen by 42%) and personal injury (chosen by 18%).
• Asked what new disputes they see in the next two to three years, respondents most often chose cybersecurity and data privacy (at 44%). Ninety-four percent said cybersecurity risk assessments are highly important, while 6% said they are somewhat important.
Norton Rose partner Saul Perloff told Law.com that the spike in corporate counsel expecting an increase in disputes is the first that he’s seen in a while.
“A downturn in the economy can often lead to increased litigation. I think our job is to be aware of it and be ready,” Perloff said. “When we get a survey like this, and see, ‘Yes, our clients have the same concerns that we do about the economy and a potential increase,’ we begin to reach out to them now and say, ‘What is it we can do for you to help you understand and manage the risk?’ ”