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General Counsels Anticipate More Class Actions, Less Spending

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By Stephanie Rabiner, Esq. on June 12, 2012 6:03 AM

Citing a rise in anti-business sentiment, a group of over 300 general counsel have predicted that, in 2012, we will see an uptick in the number of class action lawsuits. However, these same attorneys also plan to spend 17% less defending these suits in the coming year.

You read that right. A recent survey by Carlton Fields suggests that corporate counsel expects, on average 5.4 suits per company in 2012. Compare this to only 4.4 suits in 2011. Nonetheless, these attorneys have made plans to cut their class action budgets. The majority will do so by more closely monitoring outside counsel billing.

In fact, approximately 45.8% percent will turn to alternative fee arrangements, compared to 23.9% last year. As we have reported before, 2012 may be the year that alternative billing becomes the norm.

Respondents also plan to cut their budgets by strengthening risk management programs (about 25%). However, only 4.7% plan to bring more work in house. Why?

What makes the alternative fee arrangement more attractive and cost-effective than bringing work in house? Is it a lack of expertise or resources? Are corporate legal departments not equipped to handle class actions?

Also, how are firms responding to these new arrangements? Have they affected working relationships or the quality and quantity of work?

We'd like to invite corporate counsel and their law firm counterparts to share their views on the subject of alternative fee arrangements and answer these questions. We want to know what you're thinking. So if you've got something to say, head on over to the FindLaw for Legal Professionals Facebook page.

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