Class action litigation defense costs continue to rise

On Behalf of | May 7, 2019 | Liability Defense |

The number of companies facing class action lawsuits may be on the decline, but the cost to defend those class action lawsuits is steadily rising. According to an article published on Insurance Journal, the defense cost increases can be attributed to more complex cases that are of higher risk to the business organization. In addition, many of the companies facing class action lawsuits are battling multiple suits at a time. 


Class action lawsuits by the numbers

The annual Carlton Class Action Survey revealed the following data:

  • In 2018, companies spent more than $2.46 billion on defense for class action lawsuits.
  • In 2018, about 54 percent of all companies surveyed reported that they had faced a class action lawsuit. This was a slight decline from the year prior.
  • In 2018, the average number of matters per company was 7.8, which was an increase from 6.3 in 2017.
  • About 28.7 percent of matters dealt with in 2018 were related to employment and labor disputes. About 26.1 percent of defense spending was dedicated to these types of cases, which largely focused on wage and hour disputes.

Will future costs continue to rise at the same pace?  

It seems that rising defense costs for class action lawsuits is a trend that is going to stick around for a while. Many industry experts anticipate that defense spending for these complex lawsuits will continue to rise throughout 2019 and beyond. The rising costs are a result of increasingly complex cases that involve more matters per lawsuit. In fact, many companies and organizations are developing in-house legal teams that focus on these matters entirely. This can be an incredibly expensive move, but is necessary for large corporations and companies that face class action lawsuits on a regular basis.

It’s expected that wage and hour disputes will quickly lose the top spot as the most common type of class action lawsuit. Companies are preparing for an onslaught of data privacy class action lawsuits, especially in the wake of the European Union’s new privacy laws. In fact, in 2018, about 54 percent of companies anticipated that class action lawsuits related to data and digital privacy would rise. Nearly 86 percent of companies have a plan in place for how they would address these class action lawsuits should they arise. 

What should you do if your business is facing a class action lawsuit?

Not every organization has an in-house legal team with a class action lawsuit plan in place. Whether you want to defend at all costs or you want to settle in the early stages of a class action lawsuit, it’s important to have an experienced team of legal professionals on your side. For more information about how you can defend your organization against a large, complex class action lawsuit, contact us today.

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