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Where there’s much smoke from litigation there’s probably fiery profits, growth and change

Several times I have ventured that total legal spending correlates positively with the profitability of a business sector. When margins are generous, it seems quite likely they justify legal investments to create intellectual property, build corporate infrastructure (new initiatives, evolving law, global spread), and consummate corporate transactions (M&A, equity and debt offerings, joint ventures). Counsel costs match profitability.

Drilling down a level, it may be that litigation happens more commonly when companies spar over their respective slices of the profit pie. In a burgeoning industrial niche, companies may not sue each other as much. With plenty to go around, why fight?

On the other hand, when the standards and operating procedures of a segment are in flux, when competitive juices run high, the duels might break out more. Or when fundamental platforms shift, such as the struggle between online search and online networks, the legal gladiators trot out. Since I view corporate litigation as business by other means, I suspect that fast-moving, exploding sectors see more of it.