The average American energy company now faces 49 lawsuits, 10 internally initiated in the past year, according to a survey by law firm Fulbright & Jaworski of 354 corporate attorneys across multiple industries. The rate is No. 2 to that of the U.S. healthcare industry, which has an average 64 cases pending per company. In the energy industry, more than a third of companies spend between 21% and 50% of their legal budgets on litigation, with the most frequent disputes being contractual and personal injury. Energy companies also came in second for the number of in-house attorneys they employ, averaging about six. In the face of such a large amount of lawsuits, companies fret over one major issue: cost. "Ironically, despite the certainty that litigation expenses will continually accrue, the inherent unpredictability of their pace or size makes budgeting for litigation a difficult task for many corporate counsel," the firm reports. "Even as companies have figured out how to predict spending for other strategic areas such as R&D, technology, or sales and marketing, just under 40% of U.S. corporate counsel are still unable to predetermine the costs of managing business disputes, reporting that they could not quantify their litigation budgets in relation to their overall legal budgets." Companies that did track this spending had an average legal budget of $20.1 million, of which $8 million was on litigation. For more on this, see the November issue of Oil and Gas Investor. For a subscription, call 713-993-9320, ext. 126.
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