Litigation in United States federal courts rose 9 percent in the past year, buoyed by a growing number of disputes related to employment matters, antitrust and product safety, according to the 2009 edition of the Law360 Litigation Almanac, released on January 13.
So far, shrinking corporate legal budgets have had no impact on the overall case volume in federal courts, suggesting that corporations continue to view litigation as important both as offensive and defensive tactics in their overall business strategy, according to Law360 research.
"In the past year, we've seen a consolidation in the legal industry, with many law firms merging or reducing their staff in response to the challenging economic climate. But our research shows that litigation continued to grow during 2008, and we expect this trend to accelerate in 2009 thanks to fallout from the financial crisis and the expected increase in new regulation under the incoming Obama administration," said Margaret Daisley, a research analyst at Law360's parent company, Portfolio Media, a New York-based publisher focused on business litigation trends.
Highlights from the 2009 Law360 Litigation Almanac:
· Class actions hit a new peak in 2008, rising 8 percent from the previous year on the back of an increase in antitrust – and employment – related filings.
· The economic crisis sparked a surge in corporate bankruptcy filings in 2008, while credit conditions also forced more companies to resort to quick, nontraditional bankruptcies – trends that attorneys predict will continue until at least 2010.
· Antitrust filings grew at a rate of 27 percent, extending a multiyear trend of dramatic increases as private plaintiffs firms closely track government investigations and prosecutions. A look at the dockets just for 2008 shows a slew of cases against chocolate makers, egg product processors, packaged ice distributors and many others, all filed soon after a government investigation was disclosed.
· The number of federal environmental lawsuits filed in 2008 rose for the first time since 2005, suggesting that the Bush administration's drop in enforcement actions, growing state activism and the U.S. Supreme Court's ruling on greenhouse gas regulation have worked to drive litigation upward.
· The number of intellectual property lawsuits declined 11 percent in 2008, thanks largely to a dropoff in copyright litigation instigated by the recording industry. The trend reflects the success of the recording industry in protecting its copyrights, leading the industry to bring fewer lawsuits in the past few years.
· Employment litigation rose 6 percent in 2008, marking a reversal in the gradual decline in employment litigation seen over the previous four years. While individual lawsuits brought in federal courts have declined over the past five years, this trend has been offset by growth in class actions and state litigation. The uptick in litigation is likely to accelerate as unemployment approaches double digits in 2009.
· A series of high-profile product recalls, as well as the plaintiffs bar's sophistication with respect to using the Internet to identify budding controversies and find clients, helped bolster product liability filings by 20 percent in 2008 compared with the previous year. The trend is expected to gain momentum under President Obama.
· Securities litigation fell 8 percent in 2008. But with financial markets and titans collapsing at breakneck speed in the summer and fall of 2008, securities attorneys are preparing for a wave surfers can only dream about, and they're expecting it to last for a long time.
· In real estate practices, previously dominated by transactional work, much of the legal work now stems from buyers backing out of deals, loans failing to come through and lenders seeking to foreclose. Intricately structured transactions with layers of securitized financing are now having to be unwound, and financial difficulties for real estate-related companies are often driving real estate and bankruptcy attorneys into closer working relationships.
· Tax litigation remains stable but low, with the majority of disputes settling administratively. But the IRS appears to have changed its stance over the last five or six years, switching from an emphasis on alternative dispute resolution to a greater tendency toward litigation, lawyers say.