Law Department Management Blog
Amounts initially awarded by juries do not reflect any reductions or offsets subsequently granted by judges or appellate courts, but they do represent data points regarding corporate legal costs. So, let’s start with data for the top 100 verdicts in United States as published in Corp. Counsel, May 2012 at 22. If you exclude the bizarrely high 2011 wrongful-death figure of $150 billion, for the past two years the 100 largest verdicts amounted to approximately $10 billion a year.
If plotted on a graph highest to lowest, the underlying data for each of these verdicts would allow us to estimate the sum of all jury verdicts during those two years. The downward trend line would eventually intersect the bottom horizontal axis and the area below that line would approximate the total awards. Let’s suppose For example, it to be $32 billion annually in jury awards.
Data somewhere would allow us to deflate that gross amount to a smaller amount after appeals and reductions (or post-trial settlements). Pretend that reduction was one-quarter, leaving us with a rough-cut $24 billion for judgments paid in the United States. If we further reduce that figure for an unknown amount attributed to corporations paying judgments, as compared to individuals, we draw even closer. Ninety percent paid by companies might be plausible, so that leaves something like $21 billion in corporate judgments paid.
During those same years, payments by U.S. companies to law firms presumably ranged between $60 and $80 billion (See my post of Feb. 26, 2008: estimates total US law department expenditures.). Does it dismay anyone to realize that judgments paid equal something on the order of 25-30 percent of legal fees? More fittingly, if litigation accounts for about 60 percent of legal fees, thus accounting for $36-48 billion a year, court-ordered awards would bulk as high as two-thirds to one-half more.