AlixPartners releases results of 4th annual Litigation and Compliance Practices Survey

Class-action cases stood out in this year's survey, with 92% of respondents saying that the number of class-action disputes their company has been involved in increased or stayed the same during the past 12 months. Within large-scale or bet-the-company disputes, counsel also saw a rise in these cases: 53% say these types of lawsuits were class actions compared with 15% in the 2015 survey.

The survey found that the most common disputes that companies were engaged in involved employment, contracts, and data privacy issues. The importance of data privacy and security was stressed throughout the study, with 60% of US respondents and 63% of European respondents saying that data security is one of the most important factors in managing risk, while 46% of all respondents say information governance is critical.

"Our survey reflects the concern by corporate legal and compliance officers that changing regulations and the threat of data breaches have produced a fertile ground for corporate litigation and high-impact disputes," said Harvey Kelly, Managing Director and global head of AlixPartners Financial Advisory Services practice. "This year, corporate legal departments are increasingly seeking out new technologies and sophisticated tools that meet standards and provide security to not only ensure compliance but also protect data from the risk of exposure and the litigation that may ensue."

Among large-scale disputes, other areas that are on the rise include matters involving regulatory issues or investigations, and mergers and acquisitions. The survey showed that 27% say these types of suits involved regulatory issues or investigations compared with 22% in 2015 and 91% say the number of M&A disputes increased or stayed the same compared to 2015.

Spending on compliance has also been on the minds of survey respondents. Evolving regulations and increased enforcement is causing companies to focus on risk preparedness by increasing training and strategies aimed at proactively identifying risk. The use of new technology has been one method employed by organizations to reduce risk, with 38% of respondents saying they have increased their spending on new technology in this area.

eDiscovery tools are increasingly in use as well, with 40% of respondents saying they will only work with eDiscovery providers that offer the highest level of compliance and nearly one-third of respondents will pay more for service providers that offer certified data centers.

"Our survey highlights prevailing trends in the marketplace that have companies facing aggressive stances from not only regulators, but also from groups such as activist shareholders," Kelly added. "These forces have produced an uptick in the resources committed by legal departments to dealing with litigation as well as increases in the steps they are taking, and the service providers and technology they are using, to identify and address risk."

Key highlights include:

Litigation

• Nearly one in ten (8%) respondents have been involved in a "bet-the-company" lawsuit.
• 53% say these lawsuits were class actions compared with 15% in our 2015 survey.
• 27% say these suits involved regulatory issues or investigations compared with 22% in 2015 and only 8% in 2013.
• 92% say the number of class action disputes their company has been involved in increased or stayed the same.
• 23% say their companies have been involved in a dispute related to data privacy, up from 13% in 2013.
• 44% have been involved in an international arbitration in the past 12 months compared with 30% in 2015 and 24% in 2013.

Compliance

• According to respondents, to reduce risk, companies have increased compliance program gap identification, education and training, and compliance audits.
• 60% of US respondents and 63% of European respondents say data security is important in managing risk; 46% say information governance is critical to managing risk.
• 38% have increased implementation of new technologies in their legal departments in order to reduce risk, compared to 41% in 2015 and 27% in 2014.

Technology (eDiscovery)

• 96% say implementation of new technologies to mitigate risk has increased or remained the same.
• 40% of respondents say they only work with eDiscovery providers who provide the highest compliance.
• 30% of US respondents and 34% of European respondents say they would pay more for certified data centers.

Legal Spending and External Counsel

• 93% say the size of their litigation department increased or stayed the same; 22% said their use of outside law firms increased compared with 21% in our 2015 survey.
• 94% of respondents say they have spent the same amount or more on litigation; only 6% say spending decreased compared with 16% in 2015.

About the Survey

The AlixPartners Litigation and Corporate Compliance Survey polled corporate counsel and compliance officers at US and European companies with annual revenues of $150 million or more. Industries represented included financial services, professional services, information technology, energy, retail, consumer products, automotive, healthcare, life sciences, aerospace, construction, chemicals, agriculture and retail, among others. The focus of the survey included frequency and nature of commercial disputes, retention of outside counsel, types of litigation and approach to settlement, budgetary constraints within corporate legal departments and use of e-Discovery and certified data centers.