Commercial Litigation Versus Other Civil Litigation, and Emerging Commercial Litigation Trends

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Introducing the Smith, Gambrell & Russell’s Litigation Blog

The litigation attorneys of Smith, Gambrell & Russell, LLP are proud to announce the launch of the firm’s Litigation Blog, which covers trending news and hot topics in the area of commercial litigation. The firm’s litigators have handled commercial disputes and trials for decades, and we are excited to share our experience, insight and thought leadership on a wide range of timely litigation issues that impact businesses. To kick things off, the first post on the Litigation Blog offers an overview of commercial litigation versus other types of civil litigation, and emerging commercial litigation trends. At regular intervals thereafter, firm litigators will post blogs to help you stay current on commercial litigation news and issues. To read Smith, Gambrell & Russell’s Litigation Blog, click here. If you would like to subscribe to our Litigation Blog click here. 

Commercial Litigation Versus Other Civil Litigation, and Emerging Commercial Litigation Trends

Civil litigation is a lawsuit between two parties to enforce or defend a legal right where the plaintiff typically seeks compensation in the form of monetary damages from the defendant. Many different types of lawsuits fall under the broad umbrella of civil litigation.

When businesses or companies are involved in a dispute, the lawsuit is generally known as commercial litigation. A common question is whether commercial litigation is different from traditional litigation. The answer is both yes and no.

Similarities:

Commercial litigation generally progresses the same way that other civil litigation matters do. These typical litigation stages are:  retaining an attorney, conducting factual investigations, researching applicable law, sending demand letters, engaging in settlement negotiations, filing suit, conducting discovery, participating in motion practice, trying the case before a judge or jury, filing post-trial motions, and so on.

Differences:

Commercial litigation is different from most other civil lawsuits by virtue of the involvement of businesses rather than just individuals, and because the issues involved are very specialized and typically more complex, both factually and legally. Many times, commercial litigation is filed in federal court, rather than state court, and can be a class action or multi-district litigation. Additionally, commercial litigation can take many twists and turns and persist for years as compared to other types of civil litigation. Commercial litigation also can be more expensive due to the costs of discovery, particularly e-discovery, and the costs of forensic experts.

Types:

There are many different types of commercial litigation, including the following:

  • Antitrust
  • Aviation Disputes
  • Bad Faith
  • Breach of Contract
  • Breach of Fiduciary Duty
  • Business Torts
  • Class Actions
  • Construction
  • Debtor/Creditor
  • Employment and Labor
  • Fraud and Misrepresentation
  • Insurance Coverage
  • Intellectual Property and Patent Infringement
  • LLC Member Disputes
  • Partnership Disputes
  • Privacy, Cybersecurity and Data Breach
  • Product Liability
  • Real Estate, Land Use and Environmental Litigation
  • Restrictive Covenant
  • Securities Litigation
  • Shareholder Disputes and Derivative Actions
  • Tax Disputes
  • Trade Secret and Unfair Competition

While this is not an exhaustive list of the types of commercial litigation, it highlights some of the more prevalent types of disputes that can arise in the business context.

Trends:

Political administrations change, laws change, rules and regulations change, court appointments change, the economy changes, and the business landscape changes. The commercial litigation environment is no exception. Several areas of business litigation are poised for change, or have already changed.

Yearly case figures generally show that the volume of litigation and the time required to resolve cases is increasing. For example, the most recent federal court statistics show that civil case filings increased 5% overall for the 2016 fiscal year. Per the same statistics, the median time from filing to disposition for civil cases was 9.2 months, up from 8.8 months in the prior fiscal year.

According to one report, commercial litigation trends for 2017 indicate that companies with “bet-the-company” cases have quadrupled over the past two years. The same report found that businesses are seeking a faster and more efficient resolution of cases via settlement, and that company spending on employment, intellectual property, and class action litigation is increasing due to the greater risks involved in those types of cases.

The following types of commercial litigation have experienced increased volume, and these robust trends are expected to continue.

  • Cybersecurity and Data Breach Litigation

Increased cybersecurity and data privacy litigation is expected due to the escalating frequency, scale and sophistication of cyber-attacks and the resulting data breaches. According to one study, the average total cost of a data breach globally is $3.62 million, and the average global cost per lost or stolen record is $141. These costs incorporate legal expenditures, including litigation costs.

In cybersecurity and data privacy litigation, the key threshold issue is whether consumers have standing to seek relief for data breaches and improper disclosure of personal information. The U.S. Supreme Court’s 2016 decision in Spokeo v. Robins, 136 S. Ct. 1540 (2016), held that plaintiffs must show concrete injury, not merely a nominal injury based on a statutory violation, to satisfy the Constitution’s Article III standing requirements. How lower courts apply this test has significant implications for future cybersecurity and data breach litigation.

Also, states continue to expand and pass laws protecting consumer data. These state laws provide consumers with additional avenues for relief for data security breaches and are leading to increased lawsuits.

  • Employment Litigation

Employment disputes are increasing and they are expensive, lengthy and injurious to an employer’s reputation. This trend of increased litigation arising out of the workplace is expected to continue.

According to one study, the average employment claim takes 275 days to resolve and the average cost to defend and settle is $125,000. And, per the same study, for those employment claims that are not settled, the median judgment is approximately $200,000, which is in addition to the cost of a defense. However, the study found that about 25% of employment cases result in a judgment of $500,000.00 or more.

According to the same employment litigation study, U.S. companies have an 11% chance of having a claim filed against them by an employee. But, per the study, some states have even higher chances of employee litigation. For example, New Mexico has the highest chance at 66%. And, the Southeast, as a region, has high chances with Alabama at 41%, Mississippi at 39%, Tennessee at 20%, and Georgia at 19%.

  • Securities Class Actions

Case records show that there was a significant uptick in securities class actions. According to one study, in 2016, plaintiffs filed 270 federal securities cases, which was a 44% increase over the prior year. The same study reported that a record 3.9% of U.S. exchange-listed companies were subject to class action filings in 2016, which was above the historic average of 2.8%.

A midyear assessment found that for the first six months of 2017, plaintiffs filed a record 226 new federal class action securities cases. This was 135% above the 1997-2016 historical semiannual average of 96 filings and the highest filing rate since the Securities Clearinghouse began tracking such data. This same assessment reported that 4.7% of U.S. exchange-listed companies were sued in federal securities class actions in the first half of 2017, which was an increase over the percentage of companies sued in 2016. This is an unprecedented spike in securities litigation activity.

Bottom Line

For better or worse, commercial disputes among or involving companies are a reality in today’s business environment. Because business disputes can quickly explode, it is important to map out a strategy at the outset with specific goals in mind. In doing so, it is necessary to understand the different possible outcomes and probabilities of success. The definition of a successful outcome, of course, varies from situation to situation and company to company, depending on the company’s business objectives.

When a business faces litigation or the threat of a lawsuit, involving an experienced commercial litigation attorney early in the process is critical. Having a commercial litigator coordinate and oversee the gathering of evidence, the retaining of appropriate experts, and the preserving of relevant electronically stored information, among other things, is often the key to a successful outcome. If you would like further information on any type of commercial litigation, please do not hesitate to reach out to any of the litigation attorneys at Smith, Gambrell & Russell, LLP.

This blog is intended to inform clients and other interested parties about legal matters of current interest and is not intended as legal advice. For further information on the matter discussed in this blog, contact Marcia M. Ernst or any attorney in the Litigation/Trial Practice of Smith, Gambrell & Russell, LLP.

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