Canada: 10 Ways To Control Litigation Costs In Challenging Economic Times

Litigation costs management has become a significant concern to corporations, particularly in this challenging economic environment. Effective litigation management is not only key to reducing costs but to achieving timely and desirable results. The following are some ideas for achieving efficient litigation management:

  1. Aggressive initial case evaluation: A detailed analysis of the merits of a case should be undertaken at the front-end. While this amounts to a material investment at the initial stages of litigation, it saves significant resources in the long-term and assists in early risk assessment and settlement. If a defendant's assessment is that their case is weak, early settlement avoids the opposing side learning of supporting facts that may later be disclosed in discovery. If an early assessment reveals a winning case, it often identifies strategies to employ early to assist in winning the case or getting a quick and favourable settlement. An early assessment of the case also streamlines and assists in the progressive and orderly handling of the matter. Key to the initial case evaluation is some form of basic probability analysis or "risk tree", which determines likely outcomes and, typically, places some dollar values around the claim for working purposes. Another key element of the initial case evaluation will be the identification of whether there are important public relations issues, corporate policies or business relationships at stake, including those that may pertain to the reputation of company representatives and whether directors and officers insurance might be involved. All of these elements will inform the settlement strategy adopted at the outset.
  2. Decide your litigation goals: Not all litigation is bet-the-company litigation, where a full panoply of resources needs to be expended. Sometimes a small payment and confidentiality agreement early in a process may prevent an aggrieved and otherwise resourceful plaintiff from becoming a representative plaintiff in a class action. The point is that all litigation should not be treated as equal and a triage approach should be adopted to ensure the proper resources are allocated. Innovative and unconventional approaches to resolution should always be assessed through well-considered litigation goals instead of adopting a "we're going to show them" response in all cases.
  3. Use of a litigation plan: After conducting an early evaluation and if the case cannot be settled, some type of litigation plan should be prepared. It should include a plan of how the issues will be attacked, what discovery needs exist, investigative requirements and specific steps required to be completed. Not all eventualities in litigation are predictable so the litigation plan will occasionally have to be revised. Not having a plan can create significant inefficiencies.
  4. Budgets: An essential element of any litigation plan is some form of budgeting process. Again, given the vagaries and uncertainties of litigation, forward looking budgeting may be difficult in many cases, however, doing so adds some discipline to the process, especially if costs and expectations diverge. Re evaluation and updating the budget is often a beneficial process. A budget also forces counsel to consider what steps need to be taken and the costs and risks involved.
  5. Billable rates do not tell the whole story: Too often, the costs of litigation are assessed based on an initial reaction to the billable rates of the responsible lawyers. Obviously, a number of factors come into play to the overall cost of litigation and focussing on billable rates alone as the only factor can prove very costly. Having a highly experienced lawyer undertake or at least supervise work can often save thousands of dollars and create better results than retaining a less expensive lawyer who spends much more time learning at a client's expense or fails to recognize efficient ways to resolve a dispute.
  6. Procedural applications that save money: Procedural applications that have little or no impact on the ultimate result occur too frequently in litigation. Other applications are relatively inexpensive compared to the potential cost savings. For example, all of the common-law provinces recognize the inherent jurisdiction of the court to make orders for security for costs where deemed necessary in the circumstances. Forcing a plaintiff to post security for costs avoids the "free-option" to pursue litigation and may force a litigant to be more compelled to accept a reasonable settlement offer or adopt a more realistic approach to the litigation. In some cases, failing to post security when ordered to do so will result in the action being dismissed. A further example to save costs is demanding particulars of a claim or employing notices to admit facts, both of which may not only limit the generality of a claim but dramatically reduce the document discovery obligations and related costs of a defendant.
  7. Effectively managing staff: Having the wrong staff person at the point of contact with a potential plaintiff or class of plaintiffs can be disastrous. It is often the case that the person most deeply involved in the background to a dispute may not be the right person to attempt resolution once litigation begins to loom, despite their background knowledge. The involved person often feels the need to vindicate prior actions and this can restrict their effectiveness in dispute resolution prior to or during litigation. Spending time on identifying the right individuals to deal with a dispute is critical and results in greater efficiencies and prospects of a favourable settlement.
  8. Use of paralegals/consultants: Depending on the nature of the dispute, significant cost-savings can be secured through the effective use of paralegals and/or consultants. In particular, certain tasks that do not involve the provision of legal advice (document management, corporate searches, etc.) can be completed more efficiently and at a lower hourly rate, by paralegals or consultants. Effective division of labour, which matches tasks to individuals who are both competent to complete them and able to do so for good value, is a critical component of efficient litigation management.
  9. Formal settlement offers: Many common law jurisdictions in Canada include procedures whereby a party can make a formal settlement offer without prejudice, which if not accepted, can have increased cost consequences for the party not accepting the offer if the offer is beat at trial. On large litigation matters, those potential cost consequences can have a positive and material impact on the potential for the opposing side to accept a settlement offer.
  10. Focus on results: Process driven litigation can often add to costs and divert focus from obtaining results. Aside from budgeting, use of litigation plans and the other methods described above, there should be an ongoing assessment of whether litigation goals and results are being achieved in a cost effective fashion. Obviously, there is far more satisfaction in obtaining a cost efficient win than a cost efficient loss. Achieving success and cost effectiveness are not mutually exclusive concepts and both can be achieved through careful management and the use of experienced and skilled counsel.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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