Many litigators have been taught to engage in trench warfare and to win at all costs in defending companies and corporations in litigation. In these tough economic times, it is more important than ever for in-house counsel to take a step back and make sure their outside attorneys and litigation teams are proactive, are efficient, and are looking for cost-effective solutions. This article suggests some practical tools you can use--or consider using--to decrease defense costs and to increase the chance of concluding a case sooner rather than later.
Tip #1: Create a Litigation Plan and Budget Up Front
"Being busy does not always mean real work. The object of all work is production or accomplishment and to either of these ends there must be forethought, system, planning, intelligence, and honest purpose, as well as perspiration. Seeming to do is not doing." – Thomas Edison
Insist that your outside counsel work with you on a brief, but focused, Litigation Case Budget and Management Plan prior to responding to the complaint. Depending on the complexity of the case, this plan can be two pages or less. The plan should include the case name, venue, indication if jury or non-jury, staffing, brief description of matter and anticipated defenses, upcoming deadlines, objectives/ strategy/tactical plan to implement strategy, and total estimated budget. The plan should be updated every three months.
Developing a solid base from which to make long-term strategic decisions at the beginning of the case allows the legal team to plan for, and focus on, those activities that will have the most influence over the outcome. If possible, interview fact witnesses and gather facts at the beginning of the case.
An early case assessment approach-- as opposed to a reactive, "plan-as-you go" approach-- will result in greater efficiencies, lower costs, better outcomes, and fewer surprises. It also ensures thatyou and your outside counsel are on the same page in terms of strategy, exposure, and costs.
Tip #2: Consider Early Case Settlement/Mediation
As part of the early assessment process, always discuss with your litigation team and outside counsel up front what options there are for settlement/mediation. Consider if your venue has a mediation program or whether private mediation is a viable option. Many trial and appellate level courts have implemented effective (sometimes cost-free) mediation programs. Also, state and federal judges generally are willing to conduct settlement negotiations or assign another judge or magistrate judge to do so.
A favorable defense verdict may be of little value if your company's business has been interrupted by the litigation, if your company's reputation is tarnished as a result of the litigation, or if the economic cost of the victory exceeds the settlement cost available at an earlier point in the litigation.
Even if you do not resolve the matter, the judge will appreciate your efforts to consider an early resolution and will get a glimpse of the strengths of your defense. This also may give you and your outside counsel an early opportunity to evaluate the skills of the assigned judge/court, the skills of your adversary, and the demeanor and credibility of the parties and fact witnesses. Early settlement evaluations/recommendations also will be useful tools down the road as you continue to assess your company's exposure, risks, and recommended courses of action.
Tip #3: Consider Alternate, Cost-Effective Venues
Consider up front whether you can get your company into a more convenient forum, a less expensive or less burdensome forum, a forum with higher quality judges, a forum with case management and required scheduling orders, or an otherwise more "friendly" forum (e.g, better jury pool, favorable prior rulings, etc.). Gather and review any contracts at issue to determine whether the contracts contain forum selection clauses or mandatory arbitration clauses. Also, ask outside counsel if there are any grounds for removal to federal court. Even if there does not seem to be a federal question or diversity of citizenship, there may be an argument that a non-diverse party has been fraudulently joined.
Also, have your litigation team and/or outside counsel consider whether there are any grounds for a motion to transfer venue to a more friendly or cost-effective forum. For example, a federal district court may transfer a civil action to another federal district "[f]or the convenience of parties and witnesses, in the interest of justice ...." 28 U.S.C. § 1404(a).
A change in venue can change the entire landscape of the case and may cause the adverse party to consider a reasonable resolution, may significantly decrease your company's exposure, or may increase the chance of a favorable outcome.
Tip #4: Consider Whether You Can Streamline the Issues by Stipulation or Consent Order
Before launching into motion practice, ask your outside counsel if she has considered creative ways to limit the issues in dispute. For instance, ask her whether she has considered requesting that the adverse party stipulate, or enter into a consent order, to resolve or limit contested issue(s). You may not always get consent, but at worst you will be told "no" and the court or other tribunal will appreciate the fact that your company tried to streamline or resolve issues without the need for court intervention.
For instance, if the complaint is deficient for failure to plead fraud with particularity, rather than immediately having your counsel file a motion, ask your outside counsel if the adversary will agree to amend the complaint to add specifics. If you believe certain claims are barred by a prior release, raise the issue and see if there can be an agreement to dismiss a portion of the claims governed by the release. If you believe state common law claims are preempted by federal law, consider having your outside counsel advise the adversary of the law and request that the adverse party consent to dismissal of the preempted claims.
If you cannot agree, consider available pre-trial motions to dismiss the complaint in part or in its entirety. However, always be sure that you and your outside counsel have evaluated whether winning the motion will be worthwhile. For instance, it may not be worth filing a motion to dismiss if you and your outside counsel know that the high exposure claim will survive the motion and only certain inconsequential claims will be dismissed. Also, consider whether there are risks to a pretrial motion in addition to the legal fees. Is there a risk that the plaintiff's lawyers will read your motion to dismiss, read the cited case law, and then amend the complaint to make it stronger?
Tip #5: Consider Bifurcation, Staggered Discovery or Limited Discovery
Assuming you company is lucky enough to be in a venue where case management is available, use the initial scheduling conference/case management conference as a case strategy/cost savings tool. This is an opportunity for you and your outside counsel to gain a strategic advantage and to save substantial costs down the road.
Make sure that your outside counsel does not think of the conference as a procedural formality and just goes through the motions.
Consider if your company can gain a strategic advantage and/or save costs by proposing bifurcation of liability and damages for discovery and/or trial or limiting discovery. For example, if the company has a strong case on the merits and the analysis of damages will be extremely costly to all parties in terms of experts and discovery, perhaps the parties can agree to conduct damages discovery after summary judgment motions have been filed.
Tip #6: Consider Indemnification, Liability Insurance Coverage, Fee Shifting Provisions, Limits on Damages or Third-Party Liability
Another effective cost savings tool is to consider if there is a way to shift the loss to another party or non-party or to limit exposure. Make sure you and your outside counsel know the company contracts!
Does your company have insurance coverage as an insured or an additional insured under a policy? Many insurance policies require the policyholder to give "prompt notice" or to notify the insurer of a loss "as soon as practicable."
Is there a contract out there that requires a party or non-party to indemnify your company? If so, when is the duty triggered and when and how is notice required?
Do any applicable contracts limit damages or contain fee shifting provisions?
Are there grounds for cross-claims, contribution, or a third-party action?
Tip #7: Dig Deep Early—Know the Judge, the Players and Your Adversary
Ensure that outside counsel "digs deep" early on and considers the backgrounds and demeanor of the judge, the significant witnesses, and the adversary in advising you regarding the case strategy plan. Analyzing the facts and law in a vacuum likely will result in wasted time, wasted money, and costly surprises.
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The common theme running through all of these tips is ensuring that your outside counsel engages in proactive and strategic planning up front. The goal of concluding litigation at the lowest cost is largely unattainable when the litigation approach is reactive. A reactive approach will result in your company's case being placed on the slow burner only to accrue large bills for discovery, for motion practice, and for settlement at a premium on the eve of trial.
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.
