Credit: Carlton Fields

Class action litigation spending is on the rise, according to a new survey, and legal departments need to strategize to manage these types of lawsuits.

The 2018 Carlton Fields Class Action Survey, which draws on insight from about 400 in-house counsel across various industries, showed the number of respondent companies facing class actions rose to 59 percent in 2017, up from 53.8 percent the year prior.

Collectively, companies spent more than $2.2 billion defending class action lawsuits last year, according to the survey, which indicated these suits comprised 11.4 percent of all litigation in the United States.

The most common types of class actions were in the labor and employment space, which accounted for 21.6 percent of class action spending. The next highest number of class actions were related to consumer fraud, which accounted for 18.9 percent.

Meanwhile, companies also saw an increase in products liability and antitrust class actions last year.

Though the workload is up, most companies are still relying on roughly the same number of in-house attorneys to work on class actions as they had to handle these matters previously. The companies included in the survey relied on fewer than four in-house attorneys for that type of work—which was actually a slight drop in staffing from previous years.

“As a result, reliance on outside counsel increased, as did the number of hours that each dedicated in-house attorney spent managing class actions,” the survey noted.

The survey said that most companies continued to rely on early case assessment, with 78.2 percent of companies considering outside counsel's involvement in early case assessment to be substantial or essential, up from 73.1 percent the year prior.

As for what is requested of outside counsel in early case assessment, 71.7 percent are being asked to examine case facts, 39.6 percent are asked to calculate potential exposure, and 26.4 percent each are being asked to develop strategy and determine the likelihood of certification.

Another 15.1 percent of companies reported they are asking outside counsel to estimate the cost of litigation, and 11.3 percent are being tasked with document gathering and review and considering the jurisdiction and jury, respectively.

And, according to the survey, fewer companies are relying solely on one individual to achieve positive class action outcomes. About 51.6 percent of companies assigned one individual to a class action last year, which is down from 62.2 percent in 2016. The main benefit for holding one individual accountable is consistency in approach, respondents said.

“Although companies report an increased volume and complexity of pending class actions, their class action defense philosophies remained relatively steady,” the survey stated.

About 11.3 percent of companies reported they have a “defend at all costs” philosophy, down slightly from 13.2 percent the previous year. The “defend at the right cost/assess each case separately” philosophy was also down from 43.4 percent to 39.6 percent. Meanwhile, 20.8 percent reported taking “an aggressive stance,” compared to 17 percent in 2016. And the “go low,” or lowest cost strategy, was also up from 26.4 percent in 2016 to 28.3 percent.