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Litigation on the up in the US?

Posted by: Laurence Simons 17/07/13

In-house lawyers in the US are facing an increase in litigation as the regulatory environment facing companies becomes more complex, according to the Litigation and Corporate Compliance Survey conducted by business consultants AlixPartner.

Increasingly general counsel are being asked to act as the metaphorical canary in the allegorical mineshaft by warning companies about any legal issues they could face when expanding into new markets or changing their approach to a particular problem.

Especially in the US, new layers of regulation have become an onerous burden, especially for those companies that operate across more than one national border.

Louis Dudney, managing director at AlixPartners, told Law magazine that: "General counsel must deal with not only the potential damage that litigation may inflict but also defending these lawsuits, which can be costly and detract from day-to-day activities."

This trend was also highlighted in the ninth Annual Litigation Trends Survey by the law offices of Fulbright & Jaworski, and has been widely recognised across the industry.

What this means is that in-house lawyers need to take on a more directional role, encouraging executives and boardroom members to avoid situations that could lead to expensive and time-consuming litigation.

However, some 84 per cent of corporate legal departments are trying several ways to lower legal costs, including keeping more work in-house, using alternative fee arrangements, and resorting to alternative dispute resolution - highlighting the tightened budgets lawyers are being forced to operate with.

Contract and intellectual property disputes remain the most common type of legal action seen in the US business world, while many companies are considering bulking up their compliance programmes and policies to avoid legal action.

"Litigation and the threats associated with commercial disputes remains a critical issue facing companies and their executives today," concluded My Dudney.

On the bright side, high levels of regulation have made the in-house role increasingly important, potentially leading to an increase in prestige and income for top general counsel across the globe.