Litigation on the Rise: How to Reduce the Risk of Litigation

By Gabriella Khorasanee, JD on July 22, 2013 | Last updated on March 21, 2019

Consulting firm AlixParnters conducted their Litigation and Corporate Compliance Survey last December, fielding questions to general counsel at U.S. companies pulling in over $250 million in annual revenue. Just over half of the survey respondents said that litigation -- and its associated costs -- is on the rise.

The news of increased litigation is troubling because it is a massive drain on resources. Not only is litigation costly, but it also distracts managers and employees. Distractions can be time-consuming, but also drain employees emotionally and get in the way of existing assignments.

Let's face it, with an estimated 97% of civil cases settling, there really are no winners, that is, except for outside counsel. So, the question is, how can you avoid litigation and reduce the costs of litigation? Here are a few tips.

Reducing the Risk of Litigation

1. Contract Negotiation

With 89% of corporate disputes involving contracts, if you're a transactional attorney, it's imperative to make sure you walk away from the negotiating table with the terms you want. Not only that, you need to make sure your drafting is immaculate to reflect the agreed upon terms. The contract can get you into trouble years down the line when the parties to the contract threaten litigation; it all comes down to dotting all the i's and crossing the t's.

2. Evaluate Compliance and Risks

With the increase of whistleblower statutes, the study found that 84% of GCs have begun to reevaluate internal policies regarding risk management and internal compliance. In-house counsel should not only have whistleblowers on the radar, but should also think about compliance in intellectual property, trade secrets, and other risky areas that may be of concern.

3. Use Technology to Monitor Compliance

Now that you've evaluated your existing compliance, next you should consider implementing new ways to continue monitoring compliance. When instituting new processes, don't be afraid to utilize technology to help you gauge compliance.

The best way to reduce the risk of litigation is to diligently monitor all transactions, and deal with issues as they occur. The longer you let an issue ferment, the worse it will be to deal with. Hopefully these tips will help reduce the risk of litigation, but there are times when it seems inevitable. So, next week, we'll look at ways to reduce the costs of litigation.

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