E-discovery disputes still rare rare in corp. litigation

In spite of their concerns about e-discovery, the vast majority of American businesses have never had their electronic discovery procedures challenged in court, according to a survey of 422 in-house lawyers conducted by Fulbright & Jaworski in its annual report on corporate litigation trends.
For 70 percent of the respondents, e-discovery issues had “rarely or never” been the subject of a motion, hearing or ruling over the past year, and only 4 percent indicated they faced an e-discovery challenge with any frequency.
The industries that have felt the heat in this regard are technology and communications, with 43 percent reporting that they frequently litigated e-discovery disputes in the past year.
The only other sectors showing a meaningful blip in e-discovery contests were health care (14 percent) and manufacturing (8 percent).
Nonetheless, “Should a wave of e-discovery problems wash over American business, as some observers have predicted, companies may have to scramble to get ready,” said the report, noting that only 15 percent of respondents said they are well-prepared to handle a difficult e-discovery challenge.

Litigation culture
The 2006 Litigation Trends Study demonstrates the lawsuits remain a way of life for American companies, regardless of their size.
“Even more than our two previous studies, our new survey reveals how thoroughly litigation is woven into U.S. corporate culture,” said Stephen C. Dillard, chair of Fulbright & Jaworski’s global litigation practice.
“The sheer number of cases and huge slice of spending taken up by lawsuits make abundantly clear that litigated disputes are a fundamental part of doing business.”
The largest companies continue to be hardest hit, with the average billion-dollar company facing 556 lawsuits worldwide and 50 new suits a year. The insurance industry tops that list with an average of nearly 1,700 lawsuits each year, more than five times the tally from the next highest sectors: energy (364), retail (333) and financial services (300).
Although large companies were the most frequent targets of litigation, the number of lawsuits endured by mid-sized companies is also daunting, with an average of 305 each year.
By contrast, British-based companies reported an average of only 178 cases each year, 63 of which were in the U.S.

Internal investigations
Dillard said one of the more surprising results of the survey was the number of internal investigations conducted by law firms. A stunning 63 percent of respondents said they conducted at least one internal investigation that required outside counsel in the past year.
Energy and health care firms had the most concerns, with 30 percent of counsel in both industries reporting commencing three or more investigations in the past year.
“The surge in investigations is an inevitable consequence of the big corporate meltdowns that have occurred in recent years,” said Dillard.
Dillard also cited the increase in inquiries from federal regulators, particularly the Securities and Exchange Commission.
Forty-nine percent of U.S. in-house counsel surveyed reported an increase in regulatory inquiries at their companies in the past three years, with 33 percent saying they had received a knock at the door from either the SEC or OSHA.

Other findings
The study also found that: