Tech Companies Are Swimming in Lawsuits
Posted by: Olga Kharif on October 18, 2005
I just read some rather startling results from a survey done by law firm Fulbright & Jaworski. The firm asked 354 companies in various industries about their top legal concerns. And it turns out that tech companies are swimming in lawsuits — particularly if they are in the telecommunications business.
An average U.S. technology company currently faces 42 lawsuits vs. 37 lawsuit for an average company. The tech industry places third, after healthcare and energy companies, in the number of lawsuits it deals with. It’s ahead of the insurance industry, for Pete’s sake!
Needless to say, that's quite expensive. Nearly a third of these companies spend more than 2% of their gross revenue on legal expenses, according to one of the largest surveys of corporate counsel in America.
That probably has something to do with tech companies having by far the greatest number of in-house attorneys managing litigation - an average of nine per company. The overall average for all companies participating in the survey was 3.7. What are all these attorneys dealing with? Labor and contract work, followed by intellectual property and personal injury litigation.
Though I was astounded by these findings at first, I shouldn't have been. Many tech-related industries are changing fast: The telecom business, for instance, is being transformed by a technology called Voice over Internet Protocol. Lots of legal issues still have to be ironed out.