DuPont’s spending on settlements and judgments – around $800 million in the past three years

A puzzle of metrics regarding DuPont’s legal spend now fits together. ACC Docket, Vol. 26, Jan./Feb. 2008 at 72, shows a chart prepared by DuPont that has three columns for each of the years 2002 through 2006. The columns depict DuPont spending on “settlements and judgments,” “outside costs,” and “recoveries.” The left axis, however, has no scale of dollars, so all you can tell from the height of the columns are relative ratios.

Ah, but hold on! Others have reported (Inside Litigation, Winter 2006 at 8) that DuPont’s legal department obtained recoveries of $108 million in 2004 and an additional $100 million plus by the fall of 2005. DuPont’s recovery efforts have been much publicized (See my posts of Feb. 6, 2006; Dec. 10, 2007: recoveries of class action settlements; and June 15, 2006 and references cited.). So, the column on recoveries for 2004 stands at $108 million.

Another piece of the puzzle comes from Corp. Counsel, Vol.15, Jan. 2008, at 111, which states that DuPont's "legal team has an annual global legal budget of around $230 million." If DuPont has a typical distribution of 60 percent of that spend going to outside counsel, it spends in the vicinity of $140 million a year. Applying the recovery numbers together with this outside cost estimate to the columns of the chart, it is clear that the axis on the left is marked in multiples of $50 million.

Further interlocking proof comes from Corp. Counsel, Vol.15, Jan. 2008 at 111, which notes that DuPont’s legal department “estimates that it has generated $630 million of revenue in the past three-and-a-half-year period” since the start of 2004.” Using $50 million as grid lines on the chart, the recovery columns do in fact equal about $630 million for 2004, 2005 and 2006.

In four of the five years, the settlements and judgments exceed outside costs (See my post of July 16, 2005 with some data about those payments equaling about three-quarters of outside counsel spend.). It is staggering to realize that DuPont, despite all its vaunted initiatives for cost control, spent on the order of $800 million since 2004 to settle litigation or pay judgments (See my post of March 15, 2006: DuPont savings from early case assessment; and Sept. 8, 2006: DuPont’s major investment in offshore resources.).