NEW YORK, N.Y., Nov. 19, 2015 (GLOBE NEWSWIRE) -- Legal disputes continue to impact companies both in the United States and Europe, according to a survey released today by AlixPartners, the global business-advisory firm. Thirty-two percent of U.S. and European corporate counsel and corporate compliance officers said their companies experienced an increase in legal disputes and an additional 57% stated that the volume stayed the same. Only 12% of respondents indicated a decline.
When asked to categorize the legal disputes encountered by their organizations, respondents identified contract (53% of respondents), employment (38%), intellectual property or patent infringement (29%), tax (20%), and insurance (19%) as the five most frequent. Notably, 11% of respondents said their companies were involved in "bet the company" litigation during the last 12 months compared with 8% in the 2014 survey. Of these disputes, 22% involved regulatory issues, compared with only 6% last year.
"Companies, particularly those that operate overseas, are conducting business in a challenging regulatory and enforcement environment," said Harvey Kelly, Managing Director and global head of AlixPartners Financial Advisory Services practice. "Given this dynamic, it is not surprising that companies are not only facing more disputes in this area, but are increasing their use of techniques to deal with these risks."
Cross Border Litigation and Arbitration
Adding to the complexity of legal disputes is the fact that they may span across global borders: 24% of respondents said that their companies' legal disputes involved overseas business partners.
European companies, in particular have seen more cross-border disputes: 34% of respondents at European companies said disputes in the preceding 12 months involved cross-border issues, compared with 25% for those at U.S. companies. Meanwhile, 23% of European respondents said they expect the number of international arbitrations their organization will be involved in to increase, compared with just 15% of US respondents.
"We continue to see an increase in the use of international arbitration throughout EMEA, which is evident in our survey results, said Andrew Grantham, managing director at AlixPartners and co-lead of the firm's Financial Advisory Services Practice in EMEA. "At the same time, a tight regulatory environment seems to be producing an uptick in the number of disputes in this area, a number of which are cross-border in nature."
Corporate Legal Departments and Spending
Growth in headcount within legal departments and spending on litigation eased when compared with our 2014 survey. Thirty-seven percent of respondents reported an increase in litigation spending over the last 12 months; compared with 47% last year. Meanwhile, 22% of respondents reported an increase in the size of their in-house litigation departments over the past year, compared with 34% last year. Usage in outside law firms also decreased, suggesting that companies may be retaining more work in-house: 16% of respondents reported a decrease in their company's use of outside law firms, compared with 11% in 2014.
Compliance, Data and Mitigating Risk
Based on the survey, controlling costs, data security, proactive risk management, early case assessment, global compliance issues, and information governance are the most critical issues for corporate legal and compliance departments. With regulatory investigations and compliance risks mounting, corporate legal departments continue to focus on risk-management techniques that emphasize prevention and early detection of potential problems.
The survey suggests that education and training are the most commonly used techniques to reduce risk, with 53% of respondents citing an increase in their education and training programs. Fifty percent of respondents also said they have increased the frequency of reviews of compliance programs designed to reduce litigation-related risks.
"The threat of litigation is real, as are the potential costs for companies," said Kelly. "As a result, we see a number of companies focusing on preventive measures such as education and training programs to reduce compliance and litigation risk."
About the Survey
The AlixPartners Litigation and Corporate Compliance Survey polled corporate counsel and compliance officers at U.S. and European companies with annual revenues of $250 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, and budgetary constraints within corporate legal departments.
AlixPartners is a leading global business advisory firm of results-oriented professionals who specialize in creating value and restoring performance at every stage of the business life cycle. We thrive on our ability to make a difference in high-impact situations and to deliver sustainable, bottom-line results. The firm's expertise covers a wide range of businesses and industries whether they are healthy, challenged or distressed. Since 1981, we have taken a unique, small-team, action-oriented approach to helping corporate boards and management, law firms, investment banks, and investors to respond to crucial business issues. For more information, visit www.alixpartners.com.