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Employment, labor remain key lawsuit concerns


Labor and employment cases consistently rank among the top three most frequent types of litigation against employers, but a recent survey showed a downturn in companies that expect an increase in litigation against them in the next year.

The Fulbright “Litigation Trends Survey Report” prepared by law firm Fulbright & Jaworski L.L.P. shows only 26% of companies surveyed expect to face an increased number of legal disputes in the next year, down from 40% in last year's survey and 31% in the 2008 version.

Among those surveyed, 6% anticipate a decrease in legal disputes against them in the next year, down from 7% in 2009, while 68% expect the number of legal actions against their companies to remain at the same level in the coming year, up from 53% last year.

The survey showed the highest number of lawsuits pending in the United States involved contract cases, reported by 53% of survey respondents; labor and employment, 49%; and personal injury, 27%. In the 2009 survey, contract cases and labor and employment stood at 45%, with personal injury at 27%.

During a webinar last week discussing the survey's results, Cynthia M. Benedict, a Fulbright & Jaworski partner in San Antonio, noted that labor and employment litigation consistently top legal disputes facing companies.

“Employment litigation is just seen as a normal part of the scope of doing business these days,” Ms. Benedict said.

Respondents indicated that the sorts of labor and employment cases that are on the rise include wage-and-hour cases, age discrimination, sex discrimination, race discrimination, disability discrimination and Employee Retirement Income Security Act litigation.

During the next 12 months, the sorts of employment litigation that respondents said they expect to increase the most include discrimination cases, cited by 39%; wage and hour cases, 35%; ERISA cases, 5%; and labor union-related litigation, cited by 17%.

Ms. Benedict said she expects employers to face an increase in age discrimination litigation as the economy rebounds and hiring increases. “Are they going to be going back and hiring the workers who got laid off, or are they going to be hiring a younger workforce?” she asked.

As for the types of class actions businesses report facing most frequently, Marcy Greer, a partner with Fulbright & Jaworski in Austin, Texas, said the survey showed that “labor and employment and consumer (lawsuits) tend to lead the pack.” The reason is those sorts of cases have an easier time gaining certification from courts than other actions, she said. But “securities class actions continue to be very prominent.”

The annual survey also showed respondents often look for alternative fee arrangements with the law firms they employ, with 52% of survey respondents in the United States and 50% in the United Kingdom saying they do so.

Of those seeking such alternatives, 78% said they are doing so to reduce costs while 18% said they were seeking greater predictability in their legal expenses.

“We're certainly seeing much more willingness to move to alternative fee arrangements,” said John O'Tuel, senior counsel at GlaxoSmithKline Inc. in Research Triangle Park, N.C., who participated in last week's webinar.

In this year's survey, one in six U.S. respondents indicated that alternative fee arrangements account for more than 50% of their legal costs. Nearly half of the largest companies said they plan to increase their use of alternative fees, though smaller companies indicated they are less likely to do so.

“I think if there is going to be a change, it's going to be alternative fees or alternative billing arrangements,” Mr. O'Tuel said. “Right now, it's a buyer's market.”

This year's Fulbright & Jaworski “Litigation Trends Survey Report” drew 403 respondents—275 in the United States and 128 in the United Kingdom. The report is at www.fulbright.com.