Litigation as a Growth Industry
American business, known the world over for its entrepreneurship, innovation and competitiveness, might just as easily be recognized for another attribute – its time spent on legal disputes. That’s the conclusion of a new survey of corporate counsel from international law firm Fulbright & Jaworski LLP.
In its third annual survey of corporate litigation trends, pulling data from 422 in-house law departments worldwide, Fulbright found that the average U.S. company faces 305 lawsuits. For large U.S. companies – those with $1 billion or more in annual gross revenue – the number of lawsuits soared to 556 cases, with an average of 50 new disputes emerging each year for nearly half of them.
The undisputed champion of disputes is the insurance industry, where the average company faces 1,696 lawsuits. Retailers and energy firms are also targeted heavily, reporting average caseloads exceeding 330 per company.
Seventy percent of the in-house attorneys surveyed confirmed that their companies initiated at least one new lawsuit in the past year as plaintiff. Half said their companies separately faced at least one new arbitration and one new regulatory proceeding in 2005-06, on top of their litigation caseload.
Nearly 40 percent of respondents reported at least one $20 million suit commenced against them in the past year, and 2 percent faced 50 new suits or more involving at least $20 million in claims. The good news for smaller companies is that firms with revenues under $100 million reported an average of only nine pending legal cases, and spent only $178,000 per year on disputes.
Own Your Own Cruise Ship
Most new cruise ships carry more than 3,000 passengers, and bigger ships are on the way. How big? Some now have their own zip codes. Cruise lines seeking economies of scale are retiring their mid-sized ships, and a company called Condo Cruise Lines International is buying them to turn them into floating luxury condo projects. The Florida-based company spends between $15 million and $20 million to refurbish each ship and convert its staterooms into luxury suites containing from one to three bedrooms.
More than 10 million people cruise each year and 80 percent of them are American. That makes owning a condo on a cruise ship an intriguing “real estate” deal, according to Condo Cruise Lines. Since most people can’t travel the world year-round, they can rent their condo and make nearly $4,000 per week when not using it. Other advantages of owning a cruise ship condo include avoiding monthly bills that home owners would normally pay, such as water, electric, phone/cable and property taxes.
How much does it cost to own a cruise ship condo? Units start at $382,000 and go as high as $1.3 million for a three-bedroom suite.
Cities Guardedly Optimistic About Fiscal Health
Like the millions of Americans they represent, U.S. cities were able to pay their bills this year, but are concerned about how rising costs will affect their long-term financial stability.
More than two in three city finance directors who responded to the City Fiscal Conditions Survey in 2006 said their cities were better able to meet financial needs during 2006 than in the previous year, yet many city officials cite numerous negative factors affecting the solvency of their budgets.
Fiscal conditions varied depending on revenue sources. Only one-third of cities that rely on income taxes saw improving conditions, compared to three of four cities that use sales taxes, and over one-half that rely on property taxes. Those cities that relied on property tax revenues in 2005 saw income increases of 2.2 percent (adjusting for inflationary factors).
Healthcare and pension costs are increasing at a faster rate than city revenues. The most common action to boost city revenues during 2006 was to increase fees and charges for services.
“Cities will need to remain cautious in the coming years, given looming federal deficits and other factors,” said Michael Kasperzak, councilman from Mountain View, Calif.
“Given that cities today receive approximately one in four dollars from federal and state sources compared to the one in three dollars they received 25 years ago, municipalities are finding they must also become more self-reliant in terms of funding,” said Brian Murphy, councilman from Cambridge, Mass.