Praising LCJ's Efforts - A Commercial Litigator's Perspective

Saturday, November 1, 2008 - 01:00

Editor: On the basis of your long experience as a litigator involved in difficult antitrust and other commercial cases, how important were LCJ's efforts with respect to Federal Rule of Evidence 502, which culminated in its enactment?

Donovan: Rule 502 solves a major problem, and LCJ deserves the highest compliments for its efforts to achieve its passage. Inadvertent waiver with respect to documents covered by the attorney-client privilege and the work-product rule has been one of the greatest threats out there. To find that you inadvertently gave the other side your privileged documents can be one of the worst things that could happen in litigation. Waiver can seriously undermine the strength of a particular case, change the settlement value of a case and expose counsel to liability. With the explosion of electronically stored information (ESI), it has become more difficult and expensive to economically do a thorough privilege review.

Counsel were in some cases able to negotiate stipulations, claw-back provisions, and so on - which lessened the risk. Even if you had a stipulation, there was always some uncertainty as to whether the other side would honor it. Another angle is cost savings. Previously, if companies and law firms wanted to be absolutely sure that they weren't turning over privileged materials, many felt compelled to spend time and effort in their review that went far beyond a "reasonable review." With electronic material, you have to do more quality control and checking, even though the search load might be somewhat relieved by technology. Rule 502 now makes things easier and less expensive. It preserves overall accountability but makes things work more efficiently.

Editor: An employee or a non-party who is not a specially retained expert, such as a treating physician or an investigating officer who gives expert testimony, now has to prepare an expert report. LCJ supports a proposed amendment to Rule 26 that provides that a formal written report is required only for an expert who has been specially retained. What is your reaction?

Donovan: It may not be as common an issue in commercial cases and therefore not have as universal an impact as Rule 502, but I think it is certainly helpful to corporations, and similar to 502, it reduces litigation cost and contributes to a fair result. It clarifies the Rule by providing that, if a witness is not a specially retained expert, the lawyer can do a summary report, which involves less time and effort yet still provides sufficient disclosure so the other side can fairly prepare.

Editor: The amendments advocated by LCJ would also change Rule 26, which now permits discovery of written communication between lawyers and expert witnesses. How do these changes benefit corporate clients?

Donovan: This is an even more significant change in Rule 26. Because communications with expert witnesses were discoverable, lawyers on both the defense and plaintiffs' sides started dealing with this issue by informal means such as stipulations to carve out such communications from discovery. The proposed amendment would be a great improvement. It eliminates the expensive hoops that lawyers have to jump through to avoid the discovery. You don't have to try to do everything orally. You don't have to hire a separate consulting expert who was not going to testify in order to have someone you could talk to who could look at all the discovery materials and help the lawyers work through the issues that were in his or her area of expertise.

Editor: Let me ask you about some features of the draft Federal Courts Jurisdiction and Venue Clarification Act of 2008 that are supported by defense counsel organizations. One addresses the inability to get a case removed to some federal courts where the plaintiff does not allege the amount in controversy. I understand that the rules in some states do not permit you to include the amount in controversy and that in other states, the plaintiff can elect not to include it. Is this a serious problem?

Donovan: Although I haven't run into this issue personally, the draft Act makes a lot of sense. Removal can be a key strategic move, but it has been a tricky thing for this and other reasons. I don't know how many cases it affects in terms of numbers, but it is an issue. What I particularly like about it is that it reduces litigation over what is essentially an ancillary matter. You could spend a fair amount of money just litigating that issue.

Editor: A major LCJ activity that is a work in progress is its effort to convince the states to adopt counterparts of the federal rules with respect to e-discovery. What is your perspective?

Donovan: Because we litigate in states throughout the country, we experience a mixed bag. Some states have already adopted counterparts of the federal rules. Others seem to be lagging. In some of the states there's just not a lot of guidance about e-discovery and the judges don't seem that well educated about it. In other states and with other judges, it's a lot better. The payback to our corporate clients in having reasonable rules with respect to e-discovery is immense. Uncertainty about e-discovery costs can be so significant that even unmeritorious cases may be settled to avoid that cost. The process mapped out in the federal rules goes a long way toward limiting the extent to which e-discovery can be abused. The efforts of LCJ to get reasonable rules at a state level are a great help to corporate defendants, both in terms of cost and outcome.

Editor: One of the issues that LCJ has been pursuing over the years is to gain general acceptance of the principles in the Daubert case at a federal level and also to persuade the states to adopt Daubert- like procedures . How beneficial are these efforts from the perspective of the corporate client?

Donovan: They are tremendously important. The types of litigation I handle frequently involve experts on both sides. For example, I do a fair amount of antitrust-related litigation in which economic, industry, and/or marketing experts are frequently used. The Daubert movement, if you can call it that, is a positive thing. It has given advocates a way to get the court to look at the qualifications of witnesses and to make more careful decisions about what is a proper subject of expert testimony. It's an initiative that benefits clients in a major way.

Editor: I have been told that because so many court systems are underfunded, the dockets in a number of states are so full that, whether it's a motion for summary judgment or a Daubert proceeding, the court just can't take the time to consider the issues and may just disregard at least the spirit of the rules. Have you run into that problem?

Donovan: Yes, for sure. Sometimes even in the federal courts you get judges who don't manage their dockets as well. It can be very frustrating. Either you increase the number of judges, find ways to weed out frivolous cases or use more active case management. In the federal courts today, the magistrate judges have taken on a lot of that work. They'll get involved in settlement conferences and case-management conferences up front to narrow a case down or move it along faster. A lot of the state courts are so underfunded that they can't afford to hire additional judges or the equivalent of a federal magistrate, so the dockets become hopelessly cluttered. That's an area that certainly could use attention.

Editor: Speaking of underfunded courts, LCJ and national, state and local organizations of defense counsel have put a top priority on improving the compensation of federal and state judges. Is that effort worthwhile?

Donovan: Absolutely. It's hard to address it because you don't want to appear critical of the many fine judges who are sitting. Most judges nowadays are making an economic sacrifice to serve, though there are obviously other benefits to being a judge. But a number of lawyers who would be very good judges do not consider it because of the financial sacrifice. It's a tough time to be calling for more money, but people have been talking about this for years, long before our latest economic difficulties.

Our corporate clients have an immense stake in this issue. Obviously, someone's going to win and someone's going to lose in any lawsuit, but even if you lose you want to feel that you have been treated fairly. There is also efficiency. The better judges are better at moving the cases and giving you a fair shot - and they cut out a lot of the nonsense that goes on. The higher the quality of judges you can attract, the better the whole system is going to work, and corporate America has a great stake in that.

Editor: How would you sum up?

Donovan: By harnessing the credibility of litigators who are in court every day, LCJ plays an important role in convincing judicial rules committees and legislators to improve rules that don't make sense or that are unfair and to adopt new rules that reflect changing circumstances. Lawyers who make this kind of pro bono effort to improve the court system confer an immense benefit on all of our corporate clients.

Richard Donovan is Co-Chair of the Litigation and Antitrust Practice Groups of Kelley Drye & Warren LLP in New York City. His practice focuses on commercial litigation, including trials, arbitrations and appeals.

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