2018 outlook: Litigation spending up, law firm rosters down

In a legal market that continues to ask firms to do more with less, there is a bright spot expected to bring about a possible business increase in 2018: litigation.

As part of its 2018 Litigation Outlook, Massachusetts-based BTI Consulting has predicted that large companies will spend roughly $20.7 billion on litigation this year, compared to $19.7 billion in 2017.

Baldwin

While there is some disagreement about the extent of litigation growth over the next 12 months, most local attorneys agree that the commercial litigation market is seeing an uptick. But even so, they also agree that the market is becoming increasingly competitive, forcing litigation firms to re-evaluate how they position themselves to attract the right clients.

Sources of growth

There are multiple factors contributing to the projected growth of the commercial litigation industry. For example, litigation matters have become more complex and, thus, more expensive to work through, said BTI President Michael Rynowecer.

Abel

Business competition is also driving the predicted spending increase, Ogletree Deakins managing director Chuck Baldwin said. He pointed to intellectual property litigation as an example.

Along similar lines, Kightlinger & Gray LLP senior partner Thomas Jarzyniecki Jr. said some companies are willing to litigate matters if they think the litigation will reap a long-term benefit. For example, companies might be willing to invest more in product liability litigation now in an effort to curb the number of similar suits in the future.

Though Lewis Wagner LLP partner John Trimble’s experience has shown that corporate counsel are being asked to do more with less, he also pointed to a recent trend of litigation finance investments, which might be inspiring companies to bring their claims to court in the hopes of receiving an investment.

Putting all of these factors together, Cohen & Malad LLP partner Arend Abel pointed to a seemingly simple reason for an uptick in litigation spending: costs. If businesses are willing to go to court to stay competitive, then they must also be willing to foot the rising cost of legal services, such as e-discovery, Abel said.

Selective market

Even with a growing willingness to devote more financial resources to business litigation, firms aren’t automatically seeing more potential clients knocking on their doors. In fact, the BTI Litigation Outlook predicts just the opposite — a 20 percent drop in the number of firms hired to handle commercial litigation.

Each of the local attorneys agreed with that assessment, saying that regardless of whether the litigation market grows or shrinks, they must continuously reevaluate their services and marketing methods to ensure they remain competitive.

There are several factors firms must consider to be considered a viable competitor in the litigation field, they said, with fee arrangements among the most important. Today’s business clients are not satisfied with a one-size-fits-all billing model, Trimble said, but rather want to use hybrid payment plans that fit their specific needs.

Similarly, consistency is another key for businesses, because they don’t want to be surprised by a fee arrangement that charges them more than expected, Abel said.

A firm’s ability to resolve litigation efficiently also weighs heavily on businesses, Trimble said, noting that the notion of efficiency is often tied to an attorney’s experience. Some companies will stipulate that their litigation must be handled only by partners, or at least by attorneys with four or more years’ experience, he said.

Subject matter expertise is similarly an important part of efficiency, Baldwin said. Business clients want to know that their outside counsel has the requisite knowledge about their business that will enable them to effectively advocate for their position. Becoming an expert in what Baldwin calls “sub-specialities” can distinguish a litigation attorney in that regard.

Making the cut

If the litigation law firm roster does shrink by the expected 20 percent, then Rynowecer said firms will need to employ an “educated sell” to clients that highlights the firm’s value. That means educating potential business clients on the specific risks they could incur through litigation, and demonstrating how a firm can help manage those risks.

On an individual level, a demonstrated mastery of the subject matter at issue is another factor that can set an attorney apart, Jarzyniecki said. In his own product liability practice, Jarzyniecki tries to stress the breadth of his experience handling fire-related claims.

Trimble

Demonstrating that subject matter expertise hearkens back to basic marketing techniques, Trimble said. Nearly every attorney’s webpage features a short biography, and that biography should highlight not only the cases the attorney has worked on, but also their education, presentations, writings and other work related to that practice area, he said.

Further, if multiple firms or legal companies have been hired for a commercial litigation case, then project management can become an important consideration for businesses hiring a litigation firm, Trimble said. Considering the value companies place on efficiency, predictability and fee flexibility, firms can make themselves more attractive to potential clients by offering to appoint one attorney to oversee all facets of the company’s litigation.

Perhaps most importantly, Jarzyniecki said building relationships with litigation clients can demonstrate both an understanding of the client’s business, as well as an attorney’s expertise in the subject matter. But regardless of a business’s expectations, the litigation attorneys agree that securing that business as a client in an increasingly competitive market is a matter of honing in on their specific needs.•