Businesses in every industry defend against litigation, and manydo so routinely. As such, companies have well-traveled paths formanaging defense costs, which are often covered by insurance. Thesame cannot be said for affirmative litigation: Companies sometimesare reluctant to pursue it; insurance doesn't cover it; and whencompanies do pursue it, they are often forced to shouldersignificant cost and risk.

When companies bring legal claims, they create novel issues forCFOs, treasurers, and risk managers. Companies filing suit face therisk that their spending of, potentially, millions of dollars onlegal fees will not result in the desired judgment. In addition,because legal fees show up on corporate income statements, anexpensive case will place a notable drag on reported earnings. Andeven if the company seems likely to win a particular case, it willstill have difficulty predicting the tactics of its opponents andthe pace of judicial review. In a world that wants precisebudgeting of quarterly inflows and outflows, complex litigation cancreate frustration and doubt.