Surge in ‘Bet-the-Company’ Lawsuits Targeting Large Corporations Is Undermining the Economy
A consulting group’s annual report shows that the percentage of large corporations facing high-risk “bet-the-company” lawsuits has quadrupled in the past two years.
BTI Consulting Group revealed the startling rise in “Litigation Outlook 2017,” released this week. BTI’s report is based on interviews with 330 chief legal officers and general counsel, as well as other top lawyers and decision makers at U.S. companies with an annual revenue of at least $1 billion.
Slightly more than half of those corporate legal eagles said their companies faced very high-risk litigation thus far in 2016 — that’s up from approximately 37 percent in 2015 and roughly 12 percent in 2014.
BTI president Michael Rynowecer told Corporate Counsel, “When you have more than 50 percent of all companies facing [bet-the-company] matters, you’ve got a lot of high-risk activity going on in the marketplace. You’ve got more aggressive investigations, more aggressive regulation and activist investors. They all watch each other, and as each one becomes more aggressive, the others become more emboldened, and the companies get hit from all these different places.”
In a comment posted on Corporate Counsel’s website, the American Tort Reform Association’s director of communications Darren McKinney assessed the economic consequences of this increasingly aggressive stance by government regulators and private sector plaintiffs’ lawyers:
“When an administration so comfortably in bed with the plaintiffs’ bar effectively signals both to federal regulators and its rabidly partisan allies in the states (e.g., Eric Schneiderman, Kamala Harris, et al.) that it’s open season on what they presumably believe are infinitely deep corporate pockets, no one can be surprised by anemic business investment, historically low productivity growth and labor-force participation, 43 million Americans on food stamps and projected 2016 GDP growth of 1%.”