Previously published in The National Law Journal
Too many cases settle because the client cannot afford
litigation. No doubt, settlement should always be explored, but
some disputes should be litigated and tried. This is why we have
courts. This is also what we are trained to do. Our clients may
have the stronger position, may want their day in court, and may
need the court to uphold their rights. We also enjoy this. As
advocates, we want to tell our client's story, execute cutting
cross-examination, and deliver a powerful closing argument when
litigation and trial are in our client's best interest. But
litigation is not cheap and our clients cannot write a "blank
check."
Not long ago, I handled a case for a friend's friend involving
rare baseball cards and five-figure damages. Meanwhile, I was
handling a case for an international energy company over a complex
asset sale involving eight-figure damages. While the cases were
completely different (one involved a few documents; the other a
potential terabyte of data), the emphasis on focused, creative ways
to control litigation costs remained the same. In all cases, our
clients will be happier when their most important decisions are
driven more by the merits than by the expense of litigation. So how
do you make litigation a cost-effective and winning proposition?
These tips and some discipline and creativity should help.
No. 1: Conduct targeted preservation and
collection. When a party reasonably anticipates litigation, it
must preserve potentially relevant documents and information. This
is not supposed to cause business operations to grind to a halt.
Rather than launch into overkill mode and broadly preserve every
company back-up tape, hard drive and document, the focus should be
on the specific subject matter, evidence and likely witnesses in
the case. In most cases, you will satisfy your obligation by
promptly investigating the case — finding out what is
likely discoverable, where it is stored and who the likely
witnesses are; ensuring with oral and written litigation hold
instructions that the documents and information are preserved and
not destroyed; and then collecting and copying the documents and
information so they are preserved. If the litigation does not
concern ongoing activities, the client may then be able to return
to its regular retention practices. An informed preservation plan
will save your clients money while protecting them from charges of
spoliation.
No. 2: Calibrate the budget to the amount and
importance of the case. There is no one-size-fits-all approach
to handling a particular type of case. A $250,000
breach-of-contract case and a $2.5 million breach-of-contract case
require different budgets. You must prepare to win, but must also
be prepared to litigate on a shoe-string when the amount in
controversy requires this. To be sure, there are times when the
client is prepared to spend more to avoid damage to reputation,
adverse precedent or other non-monetary concerns. Whether by
limiting motions practice, the scope of discovery, the number and
length of depositions, expert selection, trial preparation or trial
time, however, the lawyer needs to develop and implement a case
budget that takes into account the amount in controversy and the
importance of the case.
No. 3: File in a fast-moving court. A
quicker case is usually less expensive. For the plaintiff or
defendant who can remove or pursue transfer, you should examine
where you can proceed, what forum is most convenient and how
quickly the case will likely proceed in each potential forum. A
valuable resource is the federal court system's judicial caseload statistics Web page, which
provides the average time from filing to disposition for each of
the federal district courts. You also should consider whether the
court is familiar with the parties or issues in the case. For
instance, with patent cases, the litigation can be less expensive
if the court has local patent rules or a judge specially assigned
to patent cases.
No. 4: Know the court. You should either
know the court and its local rules and customs or retain local
counsel with this experience. This will avoid unnecessary time,
research and mistakes (e.g., idiosyncrasies in the local rules, how
to comply with filing requirements, how pretrial conferences or
jury trials are held). Knowing the judge's temperament, style
and reaction to certain issues will also help you to focus and
avoid unproductive effort.
No. 5: Have a key client liaison. The
more the client can do and do well, the less expensive the case
will be. By contrast, litigation is far more expensive when there
is poor client communication, the lawyer has trouble getting
information and no one at the client has responsibility for
assisting with the case. For case updates and strategic decisions,
a corporate client's officer or in-house counsel is usually the
primary contact. Additionally, you should have a client liaison who
can facilitate witness interviews, fact-gathering and document
collection, deposition scheduling and other day-to-day matters.
Given all the time and follow-up this entails, it is not always
practical for this person to be the client's officer or
in-house counsel. The ideal candidate will know the organization
well and have the authority, perseverance and communication skill
needed to get the attention of others.
No. 6: Select vendors and experts with
care. With electronic discovery vendors, you should always
obtain price estimates (comparing "apples to apples") for
collecting, processing and producing electronically stored
information. This includes examination of per gigabyte processing
charges, hosting fees and consulting fees. With court reporters,
you again should know the costs in advance. You can limit
transcript costs by not ordering an original, hard-copy (a
manuscript by e-mail should be fine) or copies of exhibits
(provided you identify them on the transcript and can keep them
organized). With experts, you should ensure that the testifying
expert's team is lean. Because it is the testifying expert who
ultimately will testify, it can be inefficient and expensive for
the expert to be supported by several subordinates. With
Fed.R.Civ.P 26(b)(4)(C), you may be able to avoid hiring a separate
consulting expert because the attorney and testifying expert's
communications are now generally protected from discovery.
No. 7: Try to get along with opposing
counsel. If you can get along and reach reasonable compromises
with opposing counsel, you will serve your client's interests
and help to keep litigation costs under control. The Fed.R.Civ.P.
26(f) conference should be in-person, over lunch, and should
thoroughly address discovery limits, form of production, privilege
and other issues in a cooperative way. When your client will not be
prejudiced and the favor may be returned, you should agree to
reasonable requests for time extensions. Although you must be
aggressive in advancing your client's position, being civil as
well as personable will help limit unnecessary discovery disputes,
extensive letter-writing campaigns and other time-wasting
skirmishes.
No. 8: Allow opposing counsel to inspect and
copy documents at their expense. The production of documents
and electronically stored information is often the most expensive
part of any litigation. Yet, in many cases, less than 1 percent of
the production will ever be admitted at trial. When you anticipate
this and there is asymmetry with the parties' resources or
anticipated production, you should consider making voluminous
hard-copy documents available for inspection and copying by the
other side at their expense. This is most appropriate when the
documents are covered by a strict protective order, are not
controversial and are known to not contain privileged material. For
example, in a patent infringement case involving years of research
and development, this could be appropriate with lab notebooks or
testing documents. In a case over a troubled merger or asset sale,
this could be appropriate with due diligence documents shared with
the other side before the transaction. Your client will save a
small fortune if the other side pays for its own copying and you
review just what the other side has selected.
No. 9: Limit e-mail production by custodians,
search terms and date range. In all cases, you should limit
the scope of e-mail discovery to certain custodians, by identified
search terms and by date range. There is growing legal support for
limiting the scope and costs of electronic discovery. Under
Fed.R.Civ.P. 26(b)(2)(C), the court must limit the scope of
proposed discovery if "the burden or expense of the proposed
discovery outweighs its likely benefit, considering the needs of
the case, the amount in controversy, the parties' resources,
the importance of the issues at stake in the action, and the
importance of the discovery in resolving the issues." The
Model Order Regarding E-Discovery In Patent Cases, endorsed by
Federal Circuit Chief Judge Randall Rader and now entered by many
district courts, is also very helpful. Absent leave of court or
party agreement, a requesting party may seek e-mail only from five
custodians per producing party and is limited to five search terms
per custodian, with the terms "narrowly tailored to particular
issues" and "combined with narrowing search criteria that
sufficiently reduces the risk of overproduction." This is the
right approach in many cases.
No. 10: Seek agreement on a narrowed
privilege log and a no-waiver order. Even with the best review
tools, the creation of a privilege log can require countless hours
in reviewing and describing all the documents being withheld for
privilege. Most of the time, the log does not advance the
litigation and merely reflects dozens of documents that actually
are privileged. To reduce or eliminate this cost, you should ask
the other side to agree that the log need not include privileged
documents generated after the lawsuit was filed; need not include
litigation counsel's correspondence with the client; or, with
some cases, need not be created at all. For protection of all
parties and again to reduce costs, it is also wise to enter into a
no-waiver order, as contemplated by Fed.R.Civ.P. 26(b)(5)(B) and
Fed.R.Evid. 502. With a no-waiver order, the parties agree that,
when a producing party notifies the receiving party that a document
is privileged and was inadvertently produced, there has been no
waiver and the document will be promptly returned or
destroyed.
No. 11: Pursue cost-shifting for
discovery. This is also appropriate when there is asymmetry
between the parties' resources and anticipated production. When
the requesting party expects the producing party to pay for the
production, there is little incentive to serve targeted discovery
requests. By contrast, when the requesting party is required to
pay, the requests can suddenly become far more reasonable. To
pursue cost-shifting, you should rely on Fed.R.Civ.P. 26(b)(2)(C)
as well as Fed.R.Civ.P. 26(b)(2)(B), which provides that a party
need not produce "electronically stored information from
sources that the party identifies as not reasonably accessible
because of undue burden or cost." Again, the Model Order
Regarding E-Discovery In Patent Cases is helpful. Should a party
seek e-mail from more than five custodians or the number agreed by
the parties or the court, "the requesting party shall bear all
reasonable costs caused by such additional discovery." When
the requesting party refuses to pay the costs of far-reaching
discovery, this can be a tell-tale sign to the court that the
discovery is in fact overbroad and unduly burdensome, and should be
restricted.
No. 12: Stipulate to facts not in
dispute. It is never a bad idea to ask opposing counsel what
they seek from a deposition or a broad discovery request and to
then consider whether you can save money and short-circuit matters
by stipulating to basic facts not in dispute. When the facts are
clear, the early use of stipulations can avoid costly discovery and
testimony about corporate hierarchy and organization issues,
communications and conduct between the parties or other matters
that otherwise would require discovery and trial testimony. For
example, if representing the customer of an alleged patent
infringer, you may be able to avoid exorbitant document and
deposition discovery into years of sales and financial records by
stipulating under oath that it sold the alleged infringing product
and generated certain revenue over the relevant period. If
presented with a motion to compel or your motion for a protective
order, the court may limit broad discovery when it understands you
have clearly offered to stipulate under oath to the very facts at
issue.
When our clients have a dispute, we want them to have the
opportunity to have a judge or jury decide the merits. Without
creativity and discipline, however, it is very easy for a zealous,
well-intended counsel to over-lawyer a case such that the client
can no longer afford it. This can also happen simply because
litigation can be very expensive. For the good of our justice
system, our clients and our own professional fulfillment, we should
push back and look for efficiencies to streamline every case.
Settle where appropriate, and smartly litigate the rest.
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.