A New Report Shows an Increase in Litigation Spending in the U.S.
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Legal Finance-Full steam ahead

According to a new report, litigation spending in the United States continues to increase and is expected to “outpace new cases.” The newly released BTI Consulting Group’s 12 Litigation Outlook 2022, discussed in Law360 Pulse, shows that both companies and law firms are spending more on outside counsel while clients are spending more on litigation.

Trends indicate that more money will be spent on litigation and individual matters along with law firms increasing partnerships to handle the increased volume. The pandemic resulted in a backlog which many firms are currently addressing. It also catapulted specific industries which are spending more on litigation or gearing up to protect themselves from lawsuits.

How Long Will the Trend Last?

The spending trend is expected to last well into 2022. There are no signs of litigation spending slowing. As noted in the report, areas of law like class actions, commercial litigation, and employment litigation saw significant jumps from 2020 to 2021 and are projected to continue growing.

Spending on class actions was recorded at $3.4 billion in 2021 and is expected to reach $3.64 billion next year. Commercial litigation saw one of the most significant increases from 2020 to 2021, growing from $6.5 billion to $7.3 billion. Employment litigation also saw a massive leap from $5.79 billion last year to $6.73 billion in 2021.

Where Firms Are Spending Money

One of the most surprising trends to emerge from the report is the increase in spending on outside counsel. More firms are opting to hire outside counsel to help with the backlog as opposed to bringing on new associates.

Law 360 notes that for many firms, hiring outside counsel to help with matters is less expensive than adding new attorneys to the practice.

A Focus on Settling Matters

The post-pandemic market is expected to see a renewed focus on settling matters. Traditionally, most issues had settled out of court. Less than five years ago, “over 60% of legal matters could be resolved without going to trial.” More recently, that trend has slowed. In 2020, the number fell to just over 40%, and by 2021 only 38.1% of matters could be settled before trial.

It is believed that the industry will cycle back to the pre-pandemic world, where more cases were settled without going to trial. According to the report, projections for 2022 have as much as 42% of cases settling before trial.

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