Fewer Texas companies faced lawsuits last year than organizations reported at the national level — but those entities in the state that did get sued confronted more litigation, according to a new survey of in-house legal professionals.
That intensity may be easing, with Texas corporate counsel expecting more stability in the year to come in key litigation areas including regulatory and employment and labor disputes. What’s more, in-house lawyers in the state feel less exposed than their national counterparts to litigation around diversity, equity and inclusion (DEI) and social justice, a trend they expect to hold steady in 2023. And while some Texas corporate counsel express concern about litigation in the coming year, 80 percent feel somewhat or very prepared to addressed it.
Those are some of the topline findings from global law firm Norton Rose Fulbright’s 18th Annual Litigation Trends Survey, which gathered insights from more than 430 general counsel and in-house litigation leaders based in the US and Canada. In what follows, we’ll dive deeper into what the data revealed about the Texas litigation landscape and how that compares with national trends.
Lawsuit volumes decreased last year
This year’s research found that the incidence rate of lawsuits was lower for Texas respondents—75 percent compared to 82 percent for US respondents. However, the median number of lawsuits brought against companies based in Texas eclipsed the national benchmark. Texas corporate counsel reported a median of six lawsuits brought against their organizations in 2022, down from seven the previous year. The median number of lawsuits against the broader group of US respondents, while lower, also declined year-over-year to five in 2022.
Those results follow a year in which Texas companies contended with costly matters from shareholder litigation to greenwashing lawsuits, as well as multimillion-dollar losses in cases spanning employment discrimination, negligence and more.
Texas companies also sued entities more often than their US counterparts, bringing a median of 1.5 lawsuits compared to the median of one reported nationally. Texas corporate plaintiffs included, for instance, the notable case of land bank Texas Pacific Land Corp. suing its own shareholders in a dispute over the company’s plans to issue new stock.
Such disputes took place against a national backdrop of stepped-up regulatory enforcement in 2022, in areas from cybersecurity to compliance with workforce and healthcare rules. However, Texas in-house counsel reported fewer regulatory proceedings than were seen at the national level, with an average of three cases commenced against them compared to 3.8 among the broader US respondent pool. In fact, some of the most notable Texas-related regulatory actions last year involved lawsuits that Texas Attorney General Ken Paxton filed against big technology companies based elsewhere – such as Facebook parent Meta Platforms and Alphabet’s Google – over alleged violations of state data privacy protections around biometric data.
Focus on energy and IP litigation
Norton Rose Fulbright’s research found that Texas companies bore a greater burden around disputes tied to energy and intellectual property (IP). That’s not surprising, given the state’s role as an oil and gas industry hub and the popularity of Texas federal district courts as venues for patent infringement cases.
The proportion of Texas respondents who said their organization experienced energy litigation in the past year was more than three times higher than that of the national group (16 percent, vs. 5 percent of U.S. respondents overall). And 21 percent of corporate counsel in the state identified energy as one of the most concerning litigation areas for their organizations in the coming year, compared to 14 percent nationally.
Land tenure disputes also loomed larger in Texas. Fourteen percent of corporate counsel in the state said they experienced that type of litigation last year, and nine percent cited it as an area of high concern in 2023—compared to five percent and two percent of national respondents, respectively.
When it comes to IP and patent disputes, nearly one-quarter of Texas in-house lawyers (23 percent) reported experiencing such litigation in 2022, and 19 percent say it is an area of concern in the coming year. By contrast, 19 percent of national respondents experienced IP and patent disputes, and a smaller share cited it as a future area of concern (16 percent).
Texas corporate counsel more optimistic about future exposure to workplace and DEI-related litigation
Workplace-related disputes were top of mind for both US and Texas respondents last year, the Norton Rose Fulbright Litigation Trends Survey found. Over half reported increased exposure to employment and labor litigation (51 percent nationally and 53 percent of Texas corporate counsel). However, while 35 percent of US in-house lawyers expect exposure in that area to deepen in the coming year, less than one-quarter (23 percent) of their Texas counterparts feel that way—and 60 percent of respondents in the state expect exposure to remain the same, versus 48 percent nationally.
Texas corporate counsel were also more upbeat than national survey respondents about risk tied to DEI and social justice issues, which have taken on heightened focus in recent years and can fuel workplace litigation. Just 23 percent expect increased exposure in this area in 2023, compared to 31 percent of national respondents. Last year, 30 percent of Texas in-house lawyers said their organization’s exposure to DEI and social justice disputes deepened, versus more than one-third of US corporate counsel (34 percent).
However, when it comes to the broader economic picture, Texas corporate counsel may be somewhat more focused on risk than their national counterparts. Asked to select macroeconomic factors (impending recession, rising interest rates, heightened inflation, tight labor market and market volatility) that give their organization cause for concern with regard to litigation, only 2 percent of Texas respondents selected “none of the above,” compared with 10 percent nationally. Results among both groups were generally on par for each of the factors with the exception of market volatility, which one-third of Texas respondents selected as a cause for concern, vs. 24 percent of US corporate counsel.
Staffing and litigation preparedness
Texas in-house lawyers feel equipped to handle the bevy of dispute-related risks that lie ahead, Norton Rose Fulbright’s research found. Eighty percent of respondents in the state said they are somewhat or very prepared (40 percent in each category) to address litigation in the coming year, compared to 83 percent of general counsel nationally. Among those who didn’t select “very prepared,” economic concerns appeared to loom larger for Texas respondents, with more than one in four (28 percent) of that group selecting “uncertainty of macroeconomic factors” as a reason, vs. 20 percent of US corporate counsel.
Texas in-house legal departments and the broader respondent pool are also employing similar strategies to help curb litigation. Those include bolstering and tightening contracts, training employees on litigation risks and prevention, and embedding lawyers into business operations. In-house counsel are also tracking industry trends and bringing in outside help, such as contract lawyers and external advisors and consultants. Texas respondents appeared slightly behind the U.S. trend when it comes to use of litigation software, with 28 percent of state in-house lawyers saying they planned to use it and 30 percent saying they were already doing so. Thirty-eight percent of national corporate counsel are already using such software.
Interestingly, while Texas workers have returned to the office in greater numbers than other states, a greater share of corporate counsel there report that every employee is working remotely (7 percent vs. 3 percent of US respondents) and fewer say every employee is working in-person (26 percent, vs. 31 percent).
Texas legal departments also differed on staffing expectations for the coming year. While more than one-third of US corporate counsel (35 percent) expect to increase in-house lawyer headcount in the coming year, only 30 percent of Texas respondents said the same. What’s more, 19 percent said they expect that headcount to decrease, compared to 7 percent nationally.
Many of the above trends reflect increased pressure on in-house law departments to control costs and do more with less in an uncertain economic environment. For example, 81 percent of Texas corporate counsel said use of legal technology, which can both reduce costs and mitigate risk, was a medium or high priority in 2023, while 80 percent said the same of upskilling and new training for team members.
Our survey showed that organizations across the respondent pool spent more on personnel and other in-house costs in 2022 and allocated less for outside counsel than they did the previous year. As law firms push for additional rate increases in 2023, we expect corporate law departments in Texas and beyond will lean further on the resources they already have—namely, their existing staff—to navigate the legal shoals ahead.
Shauna Clark, Norton Rose Fulbright’s US chair and US head of employment and labor, contributed to this article
About the Authors
Steven Jansma is Norton Rose Fulbright’s head of litigation and disputes in the US. He has a national practice defending mass tort and complex product liability disputes, and has served as national and regional coordinating counsel and lead trial counsel for numerous Fortune 500 companies in multi-district litigation, class actions and product liability cases. Steve is based in San Antonio and Houston.
Richard Krumholz is Norton Rose Fulbright’s global head of litigation and disputes and serves on the firm’s management and global executive committees. A seasoned trial lawyer licensed in Texas and New York, he has represented clients in a broad range of cases, including complex business disputes, securities/merger litigation, multi-jurisdictional qui tam cases, bankruptcy adversary proceedings, energy litigation, and multi-district litigation. Richard is based in Dallas.
Shauna Clark is Norton Rose Fulbright’s US chair and head of employment and labor in the US. Nationally recognized in labor and employment law, she is a trusted advisor to clients in a wide variety of industries, from energy and utility entities to healthcare and consumer products providers to banking and finance. Shauna is based in Houston.
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