Survey Says: Regulatory Actions And Internal Investigations Continue To Climb

We see a lot of surveys and, frankly, we’re often underwhelmed. But that’s not the case with the annual Fulbright & Jaworski Litigation Trends Survey. The firm always has interesting and important information to report. Just look here and here, for example. 

Now Fulbright is out with its 2011 Fulbright & Jaworski Litigation Trends Survey. We’re mining it for information of significance to Financial Fraud Law blog readers, and we can tell you that there is some teeny bit of good news on the litigation front:  Businesses in the United States and United Kingdom initiated and faced slightly less litigation in 2011 than in 2010.
 
But there also are storm waters ahead. The Fulbright survey confirms what we here at the Financial Fraud Law blog have recognized: Regulatory actions and internal investigations are continuing to climb.
 
More than one-third of corporate counsel report an increase in external regulatory inquiries directed at their companies, and more than one-quarter of respondents expect the year ahead will bring more litigation and regulation as companies attempt to grow in an economy that remains volatile.
 
The vast majority of corporate counsel polled in the U.S. and the U.K. predict litigation will either rise or remain the same in the next 12 months: 92 percent of U.S. companies and 85 percent of U.K. companies. Of those, one-third of U.S. respondents predict an increase while 20 percent of U.K. respondents expect a rise in legal disputes in the coming 12 months. That compares with 31 percent and 16 percent, respectively, last year.
 
By size, nearly twice as many large-caps ($1 billion or more in gross revenues) as mid-caps ($100 million to $999 million in revenues) expect litigation to rise during the next 12 months. Sector-wise, more than one-third of respondents in the technology, engineering and health care industries are bracing for a jump in disputes.
 
Stricter regulation and company growth topped the reasons cited for the anticipated increase in litigation. Meanwhile, worries over the poor economy, the No. 1 reason cited last year for an expected rise in disputes, declined significantly to 21 percent from 41 percent.
 
Survey respondents have reported an upward trending of regulatory proceedings commenced against their companies each year since 2009, when 34 percent of all respondents said at least one regulatory proceeding had been filed against their company in the previous 12 months. In 2010, 37 percent reported at least one regulatory proceeding. In this year’s survey, 40 percent reported one or more regulatory proceeding.
 
“Our survey respondents have a front-row seat to the increased scrutiny brought on by stricter regulatory enforcement,” said Stephen C. Dillard, the head of Fulbright’s global disputes practice. “This year, our survey confirmed a heightened level of governmental investigations focused on the energy and insurance industries, with the health care, manufacturing and engineering sectors not far behind.”
 
This is the eighth year that Fulbright has polled corporate law departments in the U.S. and U.K. on the state of disputes. The 2011 survey gathered input from 405 in-house counsel, including 275 U.S. respondents. Launched by Fulbright in 2004, the survey canvasses corporate counsel on litigation issues and trends.
 
We’ll have more from the survey as the morning progresses.