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Corporate Litigation

April 11, 2008

Filed under: legal,manufacturing,money — Terry Wohlers @ 13:12

Can you believe it? Ninety-one percent of our nation’s manufacturing companies were involved in one or more new lawsuits in 2007, according to Fulbright & Jaworski LLP, a law firm in Houston, Texas. The report, published in the January 2008 issue of Manufacturing Engineering, went on to say that 56% of these companies encountered more than 20 new lawsuits in 2007. A depressing 70% of them spend $1 million or more per year on business disputes.

I am in full support of protecting intellectual property and upholding legal contracts. However, many companies have developed a culture of litigation. Rather than considering every possible alternative, companies are quick to throw a team of lawyers at the problem. Once that happens, costs skyrocket and there’s often no end in sight.

What’s it going to take to ease this problem? The money and other company resources that are spent on litigation could be used to design and manufacture better products and improve customer support. If you have ideas, I’d like to hear from you.

1 Comment

  1. The cost of a couple pairs of in-house lawyers and a quality firm is, perhaps, two- to five-million per year. The cost of a robust R&D department, by contrast, runs in the tens of millions of dollars. Therefore, the wiser investment for securing streams of revenue isn’t to create new ones (via new innovations from R&D), rather, it’s to sit back and lock in revenue streams from decades-old products.

    It’s the American way.

    Quick story: An American company was being out-innovated by a dynamic young European company (I’ll withhold their names). The American company organized a meeting with the European company and said [I’m paraphrasing from hearsay here] “We have more lawyers then you and more contacts in the courthouses. We are going to sue you and you’re going to be bankrupt in a year.”

    Their goal, obviously, was to get the European company to sell out to them, but, thankfully they did not and their industry – and I’d say the world – is better off because they stood their ground.

    But that’s the American way. I mean, we denigrate women who sue their doctors after they’ve had a massectomy when they were supposed to be getting hip surgery, but where there’s a culture of litigation – which is necessarily constricting and stunting to innovation – we applaud it as good business.

    Just as we’ve outsourced our manhood to the government and Pfizer, we’ve also lost our ability to innovate so we’ve outsourced our revenue streams to tired patents and inane (but effective) marketing and advertising schemes.

    [i]”Sometime in the 1970’s, the American pioneering spirit simply pooped out. We had our few centuries of westward ho, outward bound adventures. We pushed the envelope as far as we could. Now we’re just going to lie dowin in it for a little nap. You Chinese and Russians and Arab Emirates and all the rest of you go ahead without us. We’ll catch up later.” — John Strausbaugh[/i]

    Comment by David_Brennan — April 20, 2008 @ 14:47