Law Department Management Blog
I’m tired of hearing about BTCL.
You’d think from the press and pundits that make-or-break, do-or-die, all-in Texas hold ‘em litigation cases were a dime a dozen. They are not. They are once in a blue moon and so not the reason for law departments being blue about outside counsel costs being over the moon.
Ponder some data on federal securities class actions, the iconic high-risk lawsuit. According to data compiled by the Stanford Law School and Cornerstone Research, between 1998 and 2005, each year somewhat more than two percent of listed companies faced such a lawsuit (Wall St. J., Feb. 15, 2006 at A16). Moreover, defendants in those lawsuits were disproportionately Dow Jones Industrial Index, biotech or Nasdaq Internet Index companies. Another study, “Recent Trends in Securities Class Action Litigation” (NERA, July 2003), found that the annual rate of filings was 214 securities class actions during the 18 months after Sarbanes-Oxley became law, a rate just above the 208 filings per year between 1996 and 2001.
A lawsuit that can put a company out of business, where the company has a law department, happens rarely, yet this bogey-man gets bandied about as if it were par for the course.
Obviously, law suits can cost millions of dollars a year to defend and settlement costs can reach and exceed hundreds of millions of dollars. But BTCL that capsizes a Fortune 500 company? No way.