The Ins and Outs of Value: Strong relationships deliver litigation value and success

Monday, November 30, 2015 - 12:50

A successful relationship between in-house and outside counsel doesn’t just happen. It takes tenacity, it takes creativity and it takes confidence, according to two women who should know, Kathi Vidal (formerly Lutton) of Fish & Richardson and her client Cynthia Bright of HP Inc. In this joint interview, they discuss their successful partnership, which has bloomed in the hothouse of HP’s highest-stakes patent litigation, and the role value plays in their work together. Their remarks have been edited for length and style.

 

MCC: You both manage high-stakes, high-tech patent litigation. Cynthia, when HP is choosing a firm to handle a complex litigation matter, how do you define value?

Bright: For Hewlett Packard Company, I led the team managing all the company’s IP litigation, which comprised a docket of 50 to 70 IP cases, 90 percent of which were patent cases. Since Hewlett Packard Company recently separated into HP Inc. and Hewlett Packard Enterprise, I now oversee all U.S. litigation for HP Inc., and our docket is still dominated by patent cases. With such a busy docket, my time is limited. I want outside counsel to find and focus on the handful of things that change the potential exposure in a particular case by an order of magnitude or more, if not eliminate it altogether. In some cases, those levers may have nothing to do with the patents, the prior art or our products. In other cases, it may require careful diligence and spade work to confirm exactly how products are designed or made, even if that requires interviewing folks around the world. Value is finding just what’s required for that risk.

MCC: When you are convincing a client to hire you for a complex litigation matter, Kathi, how do you demonstrate value?

Vidal: Cynthia’s situation is the norm. Whether I am working for clients like her who have some of the largest patent litigation dockets in the world or for a busy CEO or general counsel, I always start out my pitch by getting to the point. Our multipage PowerPoint decks are great for showing that we’ve thought through the issues, but it is important to communicate what the case is really about and the cleanest and least expensive path to achieving the client’s objectives. For some of my clients, that means consistently delivering zero-dollar walkaways. For others, it means getting the case resolved within a week of being hired so that it doesn’t impact the business or, in my plaintiff’s cases, it knocks the competitor out of the market. What clients need is a clear path to whatever they perceive as a win.

MCC: Do you use alternative fees?

Bright: Hewlett Packard Company rarely used alternate fee arrangements for patent cases. We had a highly experienced team of litigation managers that partnered with outside counsel to ask at every turn, “Is this proposed expense a smart investment of HP’s money?” Done well, this created far more savings for the company than simple, flat-fee arrangements. It provided greater flexibility to manage a large population of cases, where the top risks could change overnight. This approach required creativity from counsel, but the results achieved also produced great client loyalty. On the plaintiff’s side, we used alternate fee arrangements, including fixed-fee and contingency arrangements, to great success. At HP Inc., we are continuing our historic approach, but we are always looking for smart ways to structure work and relationships to bring greater value for HP. 

Vidal: Since my days leading our litigation group, Fish & Richardson has been a leader in alternative fee arrangements. We offer fixed fees, blended rates, holdbacks with a success bonus and contingency fees. My job is to figure out the best solution for the client. In most cases, I find that unless there is a business need for expenses to be accrued in specific quarters, hourly fees or success-based fee structures work best. Those structures give us the flexibility to focus the client’s money strategically and to spend more only when it changes the likelihood of prevailing.

MCC: What is the biggest pitfall to using alternative fees effectively?

Bright: My greatest concern is that creating an alternate fee arrangement takes an incredible amount of time to do right in order to make sure neither side takes a bath. That need then changes the focus of the investigation to one about how to structure the fee and away from how to break apart the case. It also requires revisiting when things inevitably change. The risk-sharing aspect is also difficult. I can appreciate why law firms would want a success bonus, but they are unpopular internally and require socialization. All of the time spent on the fee distracts from focusing on the merits of the case. At that point, it doesn’t feel like a better approach.

Vidal: Cynthia’s comments are salient. Things change. Alternative pricing only works if you have a firm that can adjust with you. Every time I’ve used alternative pricing, I’ve had to adjust the pricing structure midstream based on the needs of the case or client. And at the end of the day, you want your client to be happy. There have been times when the alternative fee structure created what I thought was too much of a windfall for my firm. In those cases, I informed the client they would have paid less under hourly billing and reissued their bill.

MCC: How has legal project management (LPM) benefited your work?

Bright: We effectively use legal project management for a wide variety of matters. We do it formally for short-term matters, such as an eight-week deep dive on a particular business risk, and for long-term strategic projects, such deploying new software for contract review to improve the way we deliver service to the business. We do it more informally in litigation through our in-house litigation managers, who are always tending our matters. The cases we handle are big, and there are many moving parts.

Vidal: Over the past several years, Fish has reengineered our litigation processes to be more efficient. All of our paralegals are certified in LPM, and all Fish litigation attorneys receive LPM training. Comprehensive project plans, coupled with detailed budgets, provide our clients with as much predictability as possible in the unpredictable world of high-stakes litigation. But being efficient doesn’t stop at LPM. Since 2008, we have reduced the size of our core litigation teams by nearly 40 percent, and we made significant investments in technology and analytics tools, as well as hired certified specialists in-house. As a result, we have reduced our clients’ average discovery spend by nearly 60 percent.

MCC: The America Invents Act intended post-grant review, including IPRs and CBMs, to be a faster and more economical way to resolve patent disputes. How has post-grant review impacted your work?

Bright: Post-grant review is an essential tool in the toolbox. We expect our outside counsel to assess whether post-grant review would be a smart play for each case. We expect them to brief us on the potential benefits and the risks. Of course, that does not mean we file in every case, as it may not make sense – you don’t use a hammer to saw a board. That said, post-grant review has been a particularly helpful tool to address cases brought by nonpracticing entities looking to drive settlements related to the cost of litigation, not based on the value of their invention. Sadly, many have attacked the AIA’s post-grant review process and its results for doing exactly what the procedure should do: invaliding patents that should have never issued in the first place. That’s exactly what Congress intended, and it makes sense in a rational patent system. 

Vidal: Like any tool in the tool kit, you need to know when to use it and how to use it correctly. Success rates both on institution and cancellation have fallen, and some at the PTO have publicly attributed that fall in part to the overuse of the procedure or to attorneys making perfunctory filings. At bottom, the process is valuable only if one exercises good judgment and advocacy.

MCC: What is the key to a successful attorney-client relationship?

Bright: Tenacity, creativity and confidence. I am tenacious and committed to HP, and I expect outside counsel to be the same. As noted earlier, counsel should be creative; they can’t bring the same old answers to every new problem. Finally, they need to have the confidence to know that if they break apart a case and make it disappear in six weeks, we will be happy and call them back. While everyone focuses on communication – and that’s essential – that’s the minimum necessary to do the job.

Vidal: Tenacity, creativity and confidence, i.e., listen to your clients and deliver. In addition, I see my relationships with clients as broader than the work I get paid for. My job in my attorney-client relationship is the same as in any other relationship that is meaningful to me. I want to support them in all ways to help them achieve their goals.

MCC: You are both successful women in a field that is overwhelmingly male, and you have both spent considerable time mentoring other women. What advice do you give young lawyers about how to be successful in the field of IP litigation?

Bright: Be fearless. This advice works on several levels. Sometimes it’s just about having the courage to go for it and to ask for what you want. Sometimes it’s about asking the questions that no one seems to be asking, even the most basic ones – that’s what really good leaders do. The exciting news is while the profession has work to do, lots of women and men are focused on making it better.

Vidal: Call me. Call Cynthia. Come to one of our talks or sessions. Seek out women in the field who are successful, in whatever way you define success, and happy. Then figure out what it is that they do that would work for you so that you can be your most authentic and successful self.

 

Cynthia Bright, VP & Associate GeneralCounsel, U.S. Litigation & Government Investigations at HP Inccynthia.bright@hp.com

Kathi Vidal, Principal at Fish & Richardsonvidal@fr.com