For the second consecutive year, class action spending is up, and the rise in spending is expected to continue in 2017. The potential exposure for companies currently managing class actions has increased. Across industries and practice areas, class actions continue to present legal departments with sizable risk.
The sixth annual Carlton Fields Class Action Survey is based on detailed interviews with general counsel or senior legal officers at 373 companies of all sizes and business types. They shared thoughts and best practices on class action exposure and management. We trust that their valuable insights will, in turn, help your company and its legal department manage these prevalent, costly lawsuits effectively and efficiently.
Class action spending is up for the second consecutive year, marking the reversal of a downward trend that occurred between 2011 and 2014.
Class Action Spending and Budgets
Class action spending reached $2.17 billion in 2016. This sum accounts for 11.2 percent of all litigation spending in the United States, up from 10.8 percent in 2015.
Type and Frequency of Class Actions
After hitting a high of 60.6 percent in 2015, the percentage of companies managing class actions normalized to 53.8 percent in 2016.
Exposure and Cost of Class Actions
Exposure levels vary greatly from company to company within each level of risk but are high across all categories. In the bet-the-company category, 75 percent of cases have exposure of $15 billion or more.
How Companies Manage Class Actions
The number of in-house attorneys managing class actions varies widely by company. Although a handful of organizations report as many as 20 attorneys work on class actions, on average, companies rely on three to four attorneys to handle their class action work.
How Companies Approach Class Action Risk
For the fourth consecutive year, potential exposure is considered the most important risk factor by corporate counsel, followed by win probability and business implications.
Strategies for Managing Class Action Cost
Virtually all companies now conduct early case assessments. Seventy-three percent of companies say outside counsel involvement in early case assessment is substantial or essential, up from 67 percent in 2015.