Reducing Litigation Costs And Improving Outcomes

Monday, April 5, 2010 - 01:00

Corporate counsel face growing pressure to reduce legal costs without sacrificing the quality of legal representation or the results. This challenge is particularly difficult to meet in the context of litigation, where costs are unpredictable and can vary substantially depending on court rulings and actions taken by opposing parties. However, inside and outside counsel can take certain steps to control the costs of various aspects of the litigation process. This article addresses some of the expert guidance for selecting and implementing strategies to manage corporate litigation costs contained in Successful Partnering Between Inside and Outside Counsel .

Successful Partnering is a four-volume, 7,000-page, critically acclaimed treatise that is a joint project of West and the Association of Corporate Counsel (ACC). The 275 authors include the General Counsel of more than 80 Fortune 500 companies and the senior partners of many major law firms. The Editor-in-Chief is Robert L. Haig, a litigation partner at Kelley Drye & Warren LLP in New York.

The 85 chapters in the treatise cover all aspects of corporate law department operations and management, 30 substantive law subjects, and all aspects of the relationships between inside and outside counsel. In March 2010, a number of new chapters were published that provide additional valuable advice about managing litigation costs. This article discusses innovative ideas contained in four of those new chapters:

Billing , written by Brackett B. Denniston III, Senior Vice President and General Counsel, General Electric Corporation, and Alexander Dimitrief, Vice President and Senior Counsel for Litigation and Legal Policy, General Electric Corporation.

Class Actions , written by David G. Leitch, Group Vice President and General Counsel, Ford Motor Company, and Gary L. Sasso and D. Matthew Allen, Carlton Fields.

Expert Witnesses , written by Charles D. Gill, Senior Vice President and General Counsel, United Technologies Corporation, Joseph A. Santos, Vice President and General Counsel, Hamilton Sundstrand Corporation, and Jason L. Peltz and Jeffrey A. Mandell, Bartlit Beck Herman Palenchar & Scott LLP.

Appeals , written by Marschall I. Smith, Senior Vice President, Legal Affairs and General Counsel, 3M Company, Thomas A. Boardman, Vice President and Deputy General Counsel, 3M Company, and David F. Herr, Maslon Edelman Borman & Brand LLP.

In addition to these four new chapters, Successful Partnering Between Inside and Outside Counsel contains separate chapters on many other phases of the litigation process (for example, Determination of Litigation Forum; Pleadings and Pre-Trial Motions in Complex Commercial Cases; Discovery and Information Gathering; Trial Preparation and Presentation; Use of Jury Consultants; High Profile Litigation; and Settlement). These chapters provide comprehensive discussion of numerous strategies to manage and control costs in all phases of corporate litigation.

Billing

Traditionally, billing for legal services has been viewed as a necessary but aggravating element in the relationship between inside and outside counsel. Disputes and concerns over billing can lead to a deterioration of an otherwise profitable relationship. The authors of this chapter suggest innovative and practical ways for inside and outside counsel to use both the standard hourly billing method and alternative fee arrangements to manage and reduce litigation costs. The chapter explains the shortcomings of the hourly billing method and discusses concrete steps that can be taken by hourly billers to avoid those pitfalls. For example, the authors advise that litigation costs can be reduced when outside counsel proposes, and the client accepts, certain calculated risks such as not deposing every person involved in a dispute. The chapter also addresses the growing use of task-based billing and notes that, because the litigation process is fairly standardized, litigation is a suitable practice area for using the activity-based costing approach to streamline and control costs.

Recognizing the considerable amount of time that in-house counsel can spend reviewing a law firm's bills, the authors identify the benefits of using an electronic billing system not only to simplify the review and payment process, but to allow in-house counsel to make more meaningful use of billing data. The authors also include an example of a summary statement that in-house counsel can request law firms provide with each bill, showing where each stage of the litigation stands vis-à-vis the overall budget.

In addition, the authors note that budgets can be effective at controlling costs when they are approached as a strategic plan for handling a litigation. A sample litigation budget is included in the chapter, and the authors discuss how well-drafted, detailed budgets can equip both the firm and the client with a real sense of how much a case should cost to pursue or defend. As the authors point out, this provides outside counsel with opportunities to propose litigation cost savings that can be accepted or rejected by the client, depending on the risk associated with the cost savings.

Class Actions

Successful Partnering includes a new chapter on Class Actions. Class actions may raise concerns that are present to a much greater degree than in a "typical" litigation such as exposure to potentially ruinous damages or harm to a wide variety of relationships including shareholders, customers and suppliers. The authors suggest steps that inside counsel can take, even before a class action is filed, to avoid such litigation altogether or to allow for a more effective defense. The chapter also discusses a wide array of cost-effective techniques for managing the litigation once the lawsuit is filed, including strategies for document retention and management, early case assessment and investigation, and selection of outside counsel.

Since the initial focus of a class action is on the named plaintiff(s), the authors present in-depth analysis of tactics that inside and outside counsel can use in order to gain the maximum benefits while managing costs. For example, the authors suggest that outside counsel seek bifurcation of discovery, which allows the company to avoid the cost and disruption of conducting discovery on the merits and causes the court to focus on the issue of class certification before addressing other aspects of the case. Another tactic suggested is to seek settlement with the named plaintiffs, which can nip the litigation (and litigation costs) in the bud. However, class action settlements require consideration of numerous factors because of the potential for other individual claims, and the authors of the chapter provide in-depth discussions of settlement issues and strategies unique to class action litigation. The chapter also includes a comprehensive practice checklist that can assist inside counsel in ensuring that all aspects of the class action are considered and addressed in an effective and efficient manner.

Expert Witnesses

One of the most expensive components of some litigations, and one of the most difficult to control, is expert witness fees. In addition to addressing the substantive role an expert will have, this chapter contains detailed discussions of the factors inside and outside counsel should take into account when selecting an expert. The authors provide valuable suggestions as to what inside counsel should consider when determining (1) if the case even requires an expert, and (2) what type of expert would be most appropriate, e.g. a generalist versus a specialist, or a testifying expert versus a consulting expert. The authors also discuss when in the litigation an expert should be retained in order for inside counsel to maximize the benefit while controlling costs. Different fee structures can be arranged with the expert, and the chapter provides suggestions as to how inside counsel can control costs by implementing various alternative fee arrangements.

Once the decision to retain an expert has been made, the chapter addresses the advantages and disadvantages of using an in-house professional as opposed to an outside consultant as an expert. Although using an in-house expert may cut litigation expenses since he or she is familiar with the key facts, documents and personnel, the authors caution that these benefits have to be weighed against potential risks such as the appearance of bias.

Another practical consideration addressed in this chapter is whether the expert uses a support team to perform certain work. Since the members of the expert's support team have lower hourly rates, the authors note that delegation of routine tasks or time-consuming calculations can save inside counsel significant costs.

In cases involving multiple defendants, the authors discuss the benefits and disadvantages of jointly hiring an expert. While sharing an expert can lower litigation costs, the chapter notes that inside and outside counsel should consider whether the jury will view a joint expert in a negative light or whether confidential or proprietary information will be compromised. The chapter also emphasizes the importance of controlling costs through constant and open communication between the expert and outside counsel. The authors advise outside counsel to avoid unexpected charges on the expert's invoice by being specific about the tasks required of the expert, only giving the expert work that is absolutely necessary to the case, and communicating often regarding the status of those tasks.

Appeals

The costs associated with preparing for, briefing and arguing an appeal can be substantial, and the authors of this chapter discuss how to manage the appeals process and achieve optimal results while controlling the costs. Of course, the first decision is whether or not to appeal. The chapter provides a sample grid that outlines factors that inside and outside counsel should take into account when considering whether to appeal, and what issues to appeal. Once the decision to appeal is made, inside counsel needs to determine whether hiring separate appellate counsel makes sense. The authors recognize that retaining new appellate counsel involves additional time and cost, but note that experienced appellate attorneys can often evaluate, research, brief and argue an appeal more efficiently and more successfully than trial counsel. The authors also discuss the various costs that will arise during the course of the appeals process and suggest that alternative fee arrangements are often well-suited for appeals because of the predictable nature of the proceedings and the relative certainty of the likely costs. Although many trial lawyers will view an appeal as a chance to take a "second bite at the apple," the authors caution against re-arguing every aspect of the case and suggest that counsel focus on one or two of the most convincing or disturbing errors. As the authors point out, this narrowed focus reduces litigation costs and avoids unproductive and potentially detrimental arguments on appeal.

More information about Successful Partnering Between Inside and Outside Counsel is available by calling West at 1-800-344-5009 or online at www.west.thomson.com.