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Total cost of litigation of Fortune 500 in 2006: $210 billion

This stunning estimate comes from eLawForum; even more dramatic, the article notes that $210 billion is one-third of the after-tax profits of the Fortune 500. The article in Met. Corp. Counsel, Vol. 16, Feb. 2008 at 28, explains that the estimate includes defense costs – certainly outside counsel but possibly also the costs of inside counsel and clients – as well as liability costs – settlements and judgments. The data set includes total litigation costs for more than 20,000 cases in twenty practice areas so the $210 billion figure must be an extrapolation.

What the right number is has not been decided. Others have estimated the size of the legal industry in the United States, pronouncing figures such as $200 billion (See my post of Nov. 27, 2007; but see my post of Jan. 18, 2008 and its rationale for $200 billion on outside counsel from only the Fortune 500.). According to the Economist, Dec. 17, 2005 at 57, “about $250 billion is spent on legal services world-wide, about two-thirds of it in America.” That means about $165 billion in the US for all legal services, but query whether that estimate includes the costs of inside lawyers (See my post of Jan. 10, 2006: the citation.).

Other estimates of the costs of US litigation vary widely (See my posts of July 16, 2005: “of the $260 billion spent in 1999 on litigation, over $20 billion was spent on support services that include processing, delivering and filing legal documents.”; April 27, 2006: plaintiff contingency lawyers estimated to receive upwards of $22 billion in 2003.).