Although U.S. companies experienced a decline in lawsuits filed against them in the past year, legal departments are staying busy, according to a survey of more than 300 U.S. and U.K. in-house counsel conducted by Fulbright Jaworski

“The data this year point to a pronounced drop in new case filings–both against and by American companies, a reversal of the upward trajectory in the number of new lawsuits from our previous three surveys,” said Stephen C. Dillard, chair of Fulbright & Jaworski's global litigation practice.

The litigation trends survey reveals 17 percent of U.S. companies made it through 2006-2007 without defending a new lawsuit, up from 11 percent in the 2005-2006 survey. Of the 83 percent who did face at least one new case, 25 percent reported more than 20 new suits against their company. Those suits were most likely to be labor and employment matters, the most frequent source of lawsuits last year, followed by contract dispute and personal injury cases.

Larger companies were more likely to face new cases. While 44 percent of companies under $100 million made it through the year without a new suit, only 3 percent of billion-dollar companies had the same luck.

Lawsuits in the other direction have also decreased among the U.S. companies: 65 percent of U.S. in-house counsel said their company had initiated at least one lawsuit in the past year, a sharp drop from last year (70 percent) and 2004 (88 percent).

A majority of in-house counsel do not expect a reversal of the downward trend. Twenty-two percent of respondents expected the number of legal disputes in their company to rise, down from 33 percent last year.

Still, legal departments are staying busy with pending cases. A third of respondents are facing more than 25 pending suits, while 18 percent have a docket of at least 100 domestic cases. Only 10 percent of U.S. companies were free from pending court or regulatory matters.

Some other survey findings:

Regulatory: Thirty-six percent of U.S. in-house counsel report their company has been a target of a regulatory proceeding or investigation in the past three years, down from 49 percent last year. Twenty-five percent sensed regulatory proceedings against their company would be going up in the near future.

Class actions: Sixty percent of companies have had to defend at least one case of a group of “similarly situated” parties. Among smaller companies, 45 percent face class actions; among billion-dollar companies, 69 percent face class actions with 19 percent handling more than 20 class-based suits.

Securities litigation: Securities litigation has dropped, and respondents attributed this mainly to Sarbanes-Oxley legislation, closely followed by an increase in government enforcement.

IP matters: Nearly 40 percent of companies reported an increase in pace of IP cases filed against them. Twenty-eight percent said they were bringing more patent claims now than three years ago.

Outside counsel: Nearly half of U.S. companies said their annual outside counsel spending is under $1 million, including 85 percent of smaller companies, 42 percent of mid-sized companies and 16 percent of billion-dollar companies. Fifteen percent spent at least $10 million on outside counsel, including 27 percent of billion-dollar businesses. In-house counsel remained open to alternative billing arrangements, with most preferring fixed-fee arrangements. Still, 80 percent of respondents said they rarely or never pay their firms on a flat-fee basis. Sixteen percent said they would stick with hourly rates.