Companies pursue profits through plaintiff recovery lawsuits

Tactic can generate significant revenue, but pitfalls abound.

Any American with a job is familiar with one of the more unpleasant side effects of the economic slump’s aftermath: increased pressure from the boss. Facing bigger demands, extra responsibilities and fewer financial resources, employees at most companies are expected to do more with less while proving their worth.

Undoubtedly, in-house lawyers are confronting the same pressures. It is especially tricky to transform a corporate legal department from a cost center into a profit center. But some attorneys are rising to the challenge by exploring new litigation opportunities in which they play offense instead of defense.

Adding Up 

Law departments that have successfully implemented plaintiff recovery programs have taken a cue from companies that have excelled in the IP arena during the past decade.

Taking a Gamble

There is always inherent risk in filing a lawsuit, and plaintiff recovery suits can present unique pitfalls to companies. The biggest danger is that such suits can destroy valuable relationships. After all, companies have reason to be hesitant to file a lawsuit against a major supplier or business partner that could possibly shut down their entire business. Nonetheless, some companies are adhering to the motto, “Desperate times call for desperate measures.”

Handling Logistics

Experts suggest that legal departments make themselves aware of all the possible drawbacks to plaintiff recovery actions before deciding to embark on them. The first step in creating a recoveries focus center is to discuss the idea with management—especially the CFO, who should understand the financial incentives—and the board.

Sidebar: Crossing Borders

DuPont Co. has generated significant revenue from plaintiff recovery actions in the past few years, and it expects to win more cases as it expands its efforts abroad in China and Russia. In the past year, Ford Motor Co. also has expanded its recoveries program into Europe, China and India.

Ashley Post

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