American Bar Association
Forum on the Construction Industry
Walking the High Wire While Juggling: Strategies to Manage Litigation Costs and Meet Client Expectations
Richard L. Reed, Esq.
Coats, Rose, Yale, Ryman & Lee, P.C.
San Antonio, Texas
Presented at the 2010 Annual Meeting
The Age of Turbulence: Managing Money Issues in Construction
April 22 – 24, 2010
Hilton Austin, Austin, Texas
This paper focuses on the practical aspects of litigation cost management in the context of the ever-evolving relationship between outside litigation counsel and in-house counsel for the corporate or institutional client. The authors have tried to envision how relationships between construction litigation lawyers and their clients have evolved and provide suggested processes for managing the value of their relationships in the future.
It is not business as usual for the engagement of legal services. In-house counsel and litigation counsel relationships are being redefined, at the insistence of the clients they serve:
a) The litigation counsel selection (and retention) process is becoming more value driven than relationship driven. (Translation: The good ole’ boy system is history – what have you done for me lately?) Lawyers are now viewed by clients much the same as any other entity in the “food chain”. Competition and value are the keys to success.
b) Increased accountability will be the focus, in terms of cost control and delivering value for the cost the client must bear. Corporate counsel expects litigation counsel to share in their accountability to management. Good results are not enough, good results must come at reasonable cost. Budgets will more likely be determined with greater definition of tasks included, and limits on the fees to be charged for defined portions of the work.
Effective cost management requires a team effort. In-house counsel and litigation counsel will be most successful in their relationship with their corporate client if each defines the goals and expectations that will make the handling of each case the most cost effective. In-house counsel will be motivated to help litigation counsel be the most efficient possible. Litigation counsel should likewise be motivated to help in-house counsel be the most efficient client possible. Collaboration will foster good relationships.
II. PRE-ENGAGEMENT ISSUES
Before engagement terms and fee arrangements are discussed and established, a candidate for litigation counsel should be informed about the client’s selection criteria or processes. How was the candidate identified? What special skills or experience is the client seeking? How does the client see the particular case or categories of cases fitting with the candidate’s profile of experience? What is the interview process and how will the candidate be evaluated? A forthright dialogue will enable both in-house counsel and litigation counsel to achieve a greater level of knowledge of each other’s expectations and the likelihood that a good “fit” will exist if the client ultimately selects the candidate.
The requirement of a retainer is also discussed prior to the engagement of litigation counsel. Initially, the retainer may be considered unnecessary for larger corporate clients, with a general right to require a reasonable retainer in the future. (For example, a retainer may be established for the trial of the case.) A retainer may be only an initial advance, or may be replenishable on a monthly basis.
Conflicts of interest must be identified early and thoroughly. In-house counsel must protect the client from the risk of having to replace litigation counsel due to a disqualification motion over a conflict of interest. Disqualification of litigation counsel who has gotten well into a matter presents not only a risk of delay, but also a risk of significant added cost to “start all over again.”
It is possible to bind a candidate for litigation counsel with a duty to preserve the confidences of the client prior to engagement. However, unless such duty is clearly established, both in-house counsel and litigation counsel should be careful not to discuss details of the matter until a proper conflicts check has been done. If either seeks to discuss the dispute in too much detail, the other should call a halt to the discussion pending the outcome of the conflicts check. Query: In the absence of litigation counsel’s agreement to hold in-confidence pre-engagement discussions, does litigation counsel have a duty to tell an existing client of a conversation with an adverse party who has sought to engage the litigation counsel? The ABA Model Rules for Professional Conduct and the Texas Disciplinary Rules for Professional Conduct are not clear on the point. Limited research on the point reveals that information that is already a matter of public record may be disclosed by a lawyer even though this was revealed to the lawyer in the course of being considered for engagement.
In-house counsel must provide litigation counsel with the correct names of all parties having any relation to the matter. A careful check must be done to ensure that no conflict exists. This is, for obvious reasons, especially important in large firms with dozens of lawyers working in multiple locations.
A conflicts check is only as good as the conflicts database, and in-house counsel would be wise to inquire about how carefully the litigation counsel’s firm maintains and updates its conflicts data base. Formal, separate engagements should be established by litigation counsel for each litigation matter to be handled for the client, and all attorneys in the firm should continually update the firm’s conflicts database with the names of all adverse and potentially adverse parties who are or may become involved in the matter. As each matter is completed for a client, the closing of the file and the engagement should be confirmed to the client in writing, and the conflicts database should be promptly updated to indicate the date the matter is closed. Again, an accurate conflicts check is a major first step to avoiding unnecessary litigation cost, particularly costs in regard to a motion to disqualify counsel.
Litigation counsel must consider whether past representation of a former client, who would now be adverse to a potential new client, should be disclosed to the potential new client. Even though no present conflict exists, the nature of the past representation may be such that it could impair the client’s trust and confidence in the attorney-client relationship, or even require a motion in limine.
Because an existing relationship with litigation counsel may have already been established with an effective cost control “rhythm”, a corporate client may prefer to use litigation counsel on a new litigation matter even if a conflict exists within the Firm because another of the Firm’s attorneys has a conflicting client relationship. To start over with a new litigation counsel may require significant “start up” costs that may be avoided if the conflict can be overcome. Representation of both clients may be permitted if both clients expressly consent to the representation of both, according to the ABA Model Rules of Professional Conduct and Texas Disciplinary Rules of Professional Conduct. Consent must be based upon full disclosure of the risks of proceeding despite the conflict. The Texas Disciplinary Rules expressly prohibit representation of both clients if the matters are substantially related or the representation of the potential new client “reasonably appears to be or become adversely limited by the lawyers or law firm’s responsibilities to another client or to a third person or by the lawyers or law firms own interests.”
Conflict checks should be routinely updated as new developments occur. A new party who is joined in the litigation may not previously have been recognized to have had any involvement in the dispute. Also, a former client who seeks to renew a past attorney-client relationship with the litigation counsel’s firm may, in the meantime, have become adverse to a more recently engaged client.
III. ENGAGING LITIGATION COUNSEL
A. The Engagement Letter
The engagement letter is generated by litigation counsel. It should address a number of issues, and those related to cost are discussed in greater detail elsewhere in this paper. Otherwise, the form of the engagement letter goes beyond the scope of this paper. Before issuing the engagement letter, in-house counsel and litigation counsel generally will discuss and agree upon its terms. In doing so, litigation counsel should become familiar with the corporate client’s engagement guidelines and policies before issuing the engagement letter to determine the extent to which these may be inconsistent with litigation counsel’s engagement terms. Inconsistencies should be discussed and resolved. It may be possible to merge the client’s engagement terms with litigation counsel’s, or even incorporate them by reference or by way of attachment to the engagement letter.
B. Legal Fees and Expenses
Obviously, the single largest cost driver for litigation will be the legal fees of litigation counsel. Much attention is being focused on the fee arrangement. Fee arrangements can vary among the following:
- Hourly fee
- Contingency fee
- Flat fee (for all or part of the case)
- Alternative mixed fee arrangements
The hourly fee rate is time-honored (pardon the pun) and obviously involves the least amount of risk for litigation counsel, so long as total fees charged on the matter are reasonable and appropriate. Rate caps for some or all members of the Firm’s litigation team may be in order, subject to review on an annual basis or by agreement at any time. In-house counsel and litigation counsel should discuss the need to adjust hourly fee rates in the future.
The contingency fee is typically used in representation of a client in the role of a plaintiff who seeks to recover damages, but wants the legal fee to come only from the actual recovery. A contingency fee holds the most risk for litigation counsel in that it is totally dependent upon the outcome of the matter, which may be highly unpredictable. It also holds some risk for the client, in that it may result in significantly higher compensation than would have been paid under an hourly fee arrangement. Contingent fee arrangements seem to be more popular in litigation of commercial disputes, and in the current recession a contingent fee approach may be particularly attractive for some clients.
A flat fee discards the hourly rate and caps the amount of the fee litigation counsel will charge for the matter or the applicable task. The flat fee can promote efficiency in that it motivates litigation counsel to complete the representation (or flat fee task) as soon as possible, and without investing excessive time. However, it is possible a flat fee can prove to be unfair to the client if the service is accomplished with far less effort than anticipated. Also, if the task cannot be completed within the fee, there is some risk that the flat fee will create a disincentive for litigation counsel to invest significant additional time if doing so is not clearly worthwhile to achieve the desired result.
Alternative mixed fee arrangements can be as creative as the client and litigation counsel want to make them. For example, a very low hourly rate (at cost or below cost) might be coupled with a contingent fee or bonus fee arrangement for achieving exemplary results, such as an early resolution of the matter, a good result, within a narrow time frame, at or below an overall targeted cost. Instead of putting litigation counsel in a position of taking the complete risk of zero compensation for the services performed, litigation counsel is incentivized to work efficiently, produce results earlier and at lower cost, which delivers a greater value that justifies greater compensation to reward the effort.
Typical categories of expense are:
- Court Reporter Fees
- Data Storage and Retrieval Services
- Expert Witness Fees
- Travel & Lodging
- Filing fees
- Delivery charges
- Other fees
Court reporter fees and data storage and retrieval services can be very significant, and may be managed by cooperative agreements with opposing counsel to use common service providers. These service providers should be asked to submit competitive bids to provide their services. Expert witness fees are a unique category of cost that is discussed further below.
Special attention should be given to ensure a clear understanding on charges for other expenses. For example, how will travel time be charged? Will litigation counsel charge for travel time portal to portal, or only for time traveling during the regular work day, or only for time traveling when actual work is performed on the matter? Should travel costs be charged by national counsel capturing work in many venues. Photocopying may be limited to routine copying, with larger copy jobs being sent out to a photocopy service provider.
C. Litigation Cost Estimating Methods
Whether it’s called a budget or an estimate, both in-house counsel and litigation counsel appreciate that the cost of litigation, by its very nature, is difficult to predict since no one party controls the “destiny” of the case. That said, something substantially more than a rough guess at litigation cost is usually in order. Corporate and institutional clients must budget the use of their resources at every level. Corporate legal departments are no exception. They are routinely required to prospectively budget the cost of litigation each fiscal year. Like their business colleagues, in-house lawyers are held accountable for unjustifiable budget overruns. By extension, the client is entitled to expect litigation counsel to exercise diligence to adhere to a pre-determined budget. This is especially true when the client is willing to pay for the time of litigation counsel to develop the budget.
Litigation counsel must realize that the corporate client usually considers legal costs a component of “overhead” which does not directly generate, but rather expends the revenues that are generated by the client’s operations. During the current recession, backlogs have eroded, competition has become fierce in those areas that have any construction work to pursue, and margins have been severely pinched. Saving a dollar of overhead is a huge benefit – compared to revenue that would be required to generate similar net earnings.
The most important part of the budgeting process is that it should be one of mutual and meaningful participation of both in-house counsel and litigation counsel. Doing the budget together, and periodically reviewing it together on a mutually acceptable frequency, ensures the greatest opportunity to avoid confusion and surprise in the accrual of litigation costs. Again, however, the client should be prepared and willing to pay for the time of litigation counsel to participate in this ongoing process.
The American Bar Association has developed a standardized set of codes for assessing and estimating costs, which can be used by litigation counsel to budget and track the cost of services by the type of service and specific activity.
The ABA cost codes are designed for the capture of costs in the following categories of service:
- Participants and Liaisons
The ABA Litigation Cost Codes are shown below:
- L100 Case Assessment, Development and Administration
- L110 Fact Investigation/Development
- L120 Analysis/Strategy
- L130 Experts/Consultants
- L140 Document/File Management
- L150 Budgeting
- L160 Settlement/Non-Binding ADR
- L190 Other Case Assessment, Development and Administration
- L200 Pre-Trial Pleadings and Motions
- L210 Pleadings
- L220 Preliminary Injunctions/Provisional Remedies
- L230 Court Mandated Conferences
- L240 Dispositive Motions
- L250 Other Written Motions and Submissions
- L260 Class Action Certification and Notice
- L300 Discovery
- L310 Written Discovery
- L320 Document Production
- L330 Depositions
- L340 Expert Discovery
- L350 Discovery Motions
- L390 Other Discovery
- L400 Trial Preparation and Trial
- L410 Fact Witnesses
- L420 Expert Witnesses
- L430 Written Motions and Submissions
- L440 Other Trial Preparation and Support
- L450 Trial and Hearing Attendance
- L460 Post-Trial Motions and Submissions
- L470 Enforcement
- L500 Appeal
- L510 Appellate Motions and Submissions
- L520 Appellate Briefs
- L530 Oral Argument
Each Litigation Cost Code must also be used in conjunction with the appropriate corresponding activity code:
- A100 Activities
- A101 Plan and prepare for
- A102 Research
- A103 Draft/revise
- A104 Review/analyze
- A105 Communicate (in firm)
- A106 Communicate (with client)
- A107 Communicate (other outside counsel)
- A108 Communicate (other external)
- A109 Appear for/attend
- A110 Manage data/files
- A111 Other
Thus, if litigation counsel reviews a deposition of one fact witness to prepare for the deposition of another fact witness, the time for this service could be coded with litigation code L410 (Fact Witness) and also with either activity code A101 (Plan and prepare for) or A104 (Review/analyze), and if the review was in preparation for the deposition of an expert witness, the litigation code would be L420 instead of L410. Obviously, a certain amount of subjectivity goes into the selection of codes. A variety of electronic billing system service providers use the ABA system to provide litigation cost tracking services. However, in-house counsel should be sensitive to the fact that these cost tracking services are sometimes used to reject billings systematically and automatically, and questions about systematic rejections need to be open for prompt review and resolution by in-house counsel.
In-house and litigation counsel should discuss whether and how to use such codes to allocate the budgeted dollars to the various litigation functions and activities, and to track litigation costs to monitor performance according to the budget. The budget for the case should be established as early as practicably possible, and reviewed periodically for adjustment as needed to recognize the progress or lack thereof in the case, and the occurrence of unexpected developments affecting the cost of litigation. To the extent that past coding data exists for the attorneys who are to become involved in the litigation, such data may be a useful resource to litigation counsel to predict costs and set fees for discreet tasks and activities.
Other techniques exist to budget a case with or without the detailed coding of each service and activity. It is possible to envision categories of activities to be undertaken, and the amount of service hours expected to accomplish the work within each category. Examples of these may be found in Appendix A.
D. Staffing the Case
Staffing the case basically means determining the extent to which litigation counsel will delegate to others the performance of the necessary legal services. For some cases, clients prefer the litigation counsel be a fully experienced partner in the firm, who is able to handle the case in its entirety, with little or no involvement from subordinates. Other clients prefer the litigation counsel to be a partner in charge of the matter, but to delegate as much of the services to lower cost associates and paralegals.
In-house counsel and litigation counsel should discuss the proper balance for allocating the work load. Billings routinely reflect how much time is charged to the matter by each person in the litigation counsel’s firm, so in-house counsel may use the billings to monitor the level of involvement by the litigation counsel who is in charge of the matter for the firm. It is possible to set parameters on the expected level of the litigation partner’s time in the matter. For example, the client could expect the primary litigation counsel to drive 20-25%, or 50-60%, or even over 80%, of the total legal fees, depending on how much the client wants the primary litigation counsel to be “hands-on” in running the case. Also, the client may want to wait until completing the initial phase of the case (e.g. interviews of certain key witnesses, review of certain key documents, and drafting of initial pleadings) to set such parameters.
The most effective use of associates depends upon the level of experience of each associate. The use of an associate must be weighed in light of the hourly rate to be applied for the associate’s time. Prior to the recession, associate salaries rose significantly, particularly among associates in large firms in major metropolitan areas, so much so that many general counsels have expressed a preference to spend their legal service budgets on the services of smaller boutique firms in smaller towns nearby large metropolitan areas. Indeed, many clients are prohibiting the use of first year associates and will absolutely disapprove of any associate working on the matter without prior approval.
While associates with 1 to 3 years experience may be the least experienced, there are many bright young lawyers who have lot to offer, and there are tasks they can perform that will render significant value to the client. Such discreet tasks may include performing narrowly focused legal research, drafting pre-trial discovery and discovery related motions, and performing focused reviews of documents produced in discovery, i.e. looking for documents that address the issues in a subtle way that are best discerned by a legal mind. For some corporate clients, it may be appropriate to consider the use of domestic or offshore outsourcing for discrete research and document review tasks. The opportunity for cost savings through use of associates must, however, be discussed openly between in-house counsel and litigation counsel. In-house counsel should know and approve of each associate who works on the matter, as well as the tasks assigned.
The use of paralegals or legal assistants (collectively “paraprofessionals”) can also promote efficiency. The rates for a certified paraprofessional may be significantly higher than those for non-certified paraprofessionals, but each has an appropriate application for managing litigation costs. Certified paraprofessionals can draft routine and even some non-routine documents. Consider, for example, such documents as first drafts of motions and orders, deposition notices, fiats setting motions for hearing. Certified paraprofessionals, by virtue of their education, may be more likely to be able to perform legal research, prepare deposition summaries, summaries of evidence, litigation calendars, and preliminary drafts of status reports for the client. Non-certified paraprofessionals, by virtue of their training and experience, may be able to do certain discreet research tasks for the case (such as preliminary legal research or internet based research), draft routine motions and orders, monitor the proper coding and reporting of litigation costs, and develop demonstrative aids and exhibits for use in mediation or client briefings (such as PowerPoint presentations and Excel Spreadsheets that enable counsel to see trends in the evidence or litigation costs).
Non-testifying consultants and testifying experts should be selected with input and participation from the client. Often, the client can be the best source of subject matter experts, although such experts should, of course, never come from the client’s own payroll. Define the opinion(s) to be sought from the consultant, and from this determine what credentials and expertise the consultant must have to withstand a Daubert challenge. Consider local law requirements for filing of a certificate of merit. For example, in Texas the statute that requires certificates of merit in actions against design professionals has been modified to require a certificate of merit as to each claim, and it must be included with the claim at the time of filing or the claim will be dismissed with prejudice. Tex. Civ. Prac. & Rem. Code Ann. §150.002(b) (Vernon’s Supp. 2009).
As with legal fees, expert fees can mount up quickly. In-house counsel will depend on litigation counsel to help keep a careful reign on expert fees. Decide whether such fees will be paid directly by the client, or run through the law firm’s books. Define the scope of the expert’s services with as much precision as possible. Litigation counsel must monitor the consultant’s progress closely to ensure that services (and fees) are as expected. The consultant must be engaged under an express expectation of confidentiality. Determine how the consultant’s findings will be drafted and finalized without creating a lot of unnecessary and potentially damaging drafts.
Other personnel may be brought to bear on the case. It may be possible to use independent contractors to perform document reviews or other discreet tasks, often at a considerable savings. The client’s in-house personnel may have useful knowledge and talents to assist in the litigation. For a dispute involving a construction project, it may be very worthwhile to have the litigation team assisted by the project manager, project engineer, or other managerial representative involved in the project prior to the litigation. This could be the best “go to” person to help find key documents, coordinate meetings with client personnel, evaluate documents obtained in discovery, etc. Perhaps one of the lawyers on the in-house counsel’s staff can participate in the litigation effort, taking depositions, and perhaps even presenting certain witnesses. This clearly raises a question, however, as to the extent to which the client is willing to take responsibility for affecting the outcome of the case, as litigation counsel would in this case be sharing the responsibility for the case to some degree. Also, certain aspects of the litigation may be reserved by in-house counsel to manage independently of the litigation counsel. For example, in-house counsel may prefer to do certain legal research internally, or run all settlement discussions, thereby limiting the time and expense of litigation counsel.
E. Processing of Billings and Payments
A billing statement will always be the most important part of establishing what value has been rendered by litigation counsel. Some simple practices relating to the processing of billings and payments can help manage the client’s expectations of cost and develop an appreciation for what litigation counsel is doing on behalf of the client. Determine early on whether you will grant the client early payment discounts; whether the client desires advance notice if any billing cycle may include an unusually large bill, whether the client requires that billings track budgeted codes, and the requirements of any third party bill reviewers including e-billing filters.
Litigation counsel should follow the client’s billing requirements, including any coding requirements, and describe the legal services rendered with the desired level of detail in each billing entry. (See discussion at Page 9.) Litigation counsel and in-house counsel should discuss how much detail is preferred, and how codes should be applied in practice. One way to accomplish this is to agree up front to review the first few billings together until both are comfortable that coding and billing entries are being done appropriately and consistently.
Meetings of attorneys in litigation counsel’s firm are often frowned upon as unnecessary cost drivers. However, some thoughtful consideration should be given to the value of such conferences. Delegation of tasks cannot occur without communication. Rather than make a billing entry for “conferring”, state in the billing entry what was accomplished by conferring. Also, when making an entry for time spent carrying on a task begun by another attorney, identify the other attorney effort in such regard, so the client can see and appreciate how one attorney’s service provides efficiency in the other’s performance of service.
The invoice transmittal letter can include a summary that briefly reports on what has been accomplished, significant recent activity, and new developments that may lead to increased future activity, and future action items. Such summaries are a real value to in-house counsel. It helps litigation counsel focus on what has been done of real value. It helps in-house counsel to commence review of the invoice with upfront awareness of the major cost drivers, and it also draws attention to possible future cost drivers not previously anticipated, for which a budget adjustment may be in order. Depending on how the case is budgeted, the invoice transmittal letter can also be used to regularly indicate what percentage of the budget for the matter, or task, as applicable, has been consumed, and how much is left in the budget. Also, in-house counsel should consider commenting favorably on the invoice when it is found to be satisfactory. As opposed to letting fair and reasonable billings just move on to accounting to be processed for payment, complimenting litigation counsel’s efforts to control cost control can really instill a desire to keep up the effort.
IV. CASE MANAGEMENT
Case management is the most fertile ground for cost savings and requires a high degree of communication and collaboration between in-house and litigation counsel. Depending upon the size and complexity of the corporate client and the role that its legal department and in-house litigation counsel play, development of close working relationships between litigation counsel and in-house counsel and key principles of the corporate client can foster better delivery of true value and enable both counsel and corporate client to move beyond the treatment of legal services as just another “commodity.” Litigation counsel should also help in-house counsel and the corporate client capture the knowledge of lessons learned from litigation of a dispute, and add value by assisting the client to take appropriate action to improve its operations and procedures to eliminate prospective risk.
A. Some Useful Tools for Getting Started
One of the most effective ways to contain cost is to take steps to ensure that litigation counsel is well-informed about the matter very early, at or soon after the time of engagement. Providing critical information is the duty of in-house counsel, but it is also the duty of litigation counsel to ask for it if it is not routinely provided. Shown below are a number of important and useful information sources and tools that can be prepared by in-house counsel or litigation counsel (or both), all of which should, of course, be treated as privileged and confidential information, and all of which should be provided in electronic format so they can be updated to include new information as more information comes to light during the litigation:
Pre-litigation evaluations are often performed by management or experts at the request of the client prior to engagement (hopefully under the auspices of attorney-client privilege and work product privilege preserved by in-house counsel). Such early evaluations should be furnished to litigation counsel and consideration should be given to whether any circumstances have arisen that could lead to waiver of the privilege of such evaluations.
An organizational diagram of party/witness relationships can be extremely useful to help litigation counsel get comfortable with the facts and the witnesses in a very efficient manner. Consider loading the diagram with the title, contact information, and even photographs of key witnesses. This diagram should also confirm who is authorized to receive reports from litigation counsel and how in-house counsel fits into the client’s organization. The diagram, or a supplemental diagram, should also show the organizational structure of the client’s corporation and its affiliates.
A written fact summary of the dispute is an absolute must. Consider annotating it with references to key documents and key clauses in the contract. Attach and index the most significant documents relevant to the issues in controversy. While much of this is work that a client could expect litigation counsel to perform, significant savings may be achieved if this is done by in-house counsel and the in-house counsel’s staff. A timeline of significant events should be appended to the written fact summary.
A list of key witnesses showing the name (correctly spelled), title, contact details, role, and likely extent of the knowledge of each key material witness should be provided to litigation counsel. Special details concerning such witnesses is appropriate, e.g. health conditions, prior testifying experience, circumstances concerning the witness’ current or past employment status.
An early case assessment should be prepared to educate litigation counsel on the client’s view (or preliminary views) of the strengths and weaknesses of the client’s position in the litigation. This tool will help to define what legal research has been and still must be done to prepare to litigate the case, and to evaluate the potential for early use of alternative dispute resolution methods and other early settlement strategies. The assessment should also outline the information required by Rule 26(a) of the Federal Rules of Civil Procedure, including information on individuals likely to have discoverable information (in addition to those identified on the list of key witnesses), a description by category and location of all documents, electronically stored information and tangible things in the client’s possession that may be used to support its position, a preliminary computation of damages to be claimed, and the policies of insurance that may be relevant to the litigation.
Another way to promote efficiency is to establish a common protocol for the organization and storing of emails and documents related to the litigation. This can maximize consistency and efficiency in how both in-house counsel and litigation counsel identify and store emails, to facilitate ease of location and reference. For example, for each litigation matter consider the adopting a standardized and common organizational layout for both hard-copy and e-mail files like that included in Appendix B.
All of the above tools should be clearly marked “ATTORNEY CLIENT PRIVILEGE/WORK PRODUCT PRIVILEGE.” Client representatives who have access to or possession of a copy of these tools should be advised on the importance of preserving their confidentiality so as not to waive a privilege.
B. Moving Forward with the Case
Once litigation counsel has had an opportunity to absorb the above information, litigation counsel and in-house counsel should talk about the matter openly and frankly. This discussion might be thought of as an informal cost-benefit analysis. How will success be defined? What are the perceived chances of success? What is the appropriate strategy for alternative dispute resolution? Should the case be in federal or state court? How will the judge handle the case? Should the case be tried to a jury or to the bench? Are the perceived benefits of litigating reasonable? Are there any “smoking guns” in the file or any internal convoluted manuals of procedures and practices that may be used against the client?
The trial calendar should be considered early in the discovery process, because this enables more effective planning for cost control purposes. Consideration should be given to the local court docketing system, and whether the case can be expedited or run more efficiently by having it declared complex or by seeking appointment of a master to handle discovery and pre-trial motions.
In-house counsel and litigation counsel should also agree on a method and frequency for reporting on the status of the case. As noted above, reports can be given with monthly billings. Or, the client may prefer to have such reports less frequently, or in writing or only verbally, with in-house counsel taking notes for and developing the status report internally, or not-at-all, if in-house counsel is directly and intimately involved in the handling of the case. Consideration should also be given to whether or to what extent reports will be provided to client representatives. To preserve privilege, it is recommended that status reports to insurers and auditors be prepared by litigation counsel in summary form only using general observations that will not be admissible in evidence should they be required to be produced.
Develop the theme for the case and the legal theories that will support the desired outcome. This will guide the development of the case much like the client’s mission statement guides its operations. The theme for the case can begin with a single “mission statement” that captures the client’s reasons and/or objectives for pursuing or defending the claims. It can also be the vision for the opening statement to the court or jury. (We are here because . . . “)
The deposition strategy must be established early. Identify the key deponents. It is imperative that in-house counsel and litigation counsel determine early whether to focus on just key deponents who are the most likely sources of testimony that will govern the outcome of the case, or engage in a “scorched earth” approach to discovery, deposing virtually every witness having any relationship to the matters in dispute.
The strategy for alternative dispute resolution should focus on the options available by way of contract and otherwise, and whether it makes sense to employ any available ADR method. For example, a contract may call for arbitration, but if given the chance, both parties might choose to ignore arbitration.
Early preparation of the jury charge ensures proper focus on the legal theories and elements of proof. It will also help determine what legal research must be done to develop the case. Developing the jury charge goes hand in hand with preparation of a mediation position paper, if applicable.
C. Other Case Management Considerations
Meetings: The amount of time clients and lawyers spend communicating with each other in meetings and in writing is enormous. Construction industry corporate managers are said to spend over 70% of their time in meetings, and litigation counsel must be cautious about adding to that burden. However, the nature of litigation requires constant communication among many individuals and stakeholders. Any steps that can ensure effective and efficient communication will help to reduce cost.
Meetings between litigation counsel, in-house counsel and client representatives should be efficient. Meetings should be calendared using common calendaring software. Consider the use of regularly scheduled meetings, for which various issues can be accumulated over time, thereby avoiding a rampant, endless stream of instantaneous communication over issues that can wait for when the team is assembled. Establish/adopt meeting guidelines that ensure all participants will respect the time allotted for the meeting, come prepared, avoid divergence, and work together collaboratively. Every meeting should be run according to an agenda that establishes not only the time for each important topic to be covered, but requires agreement on action items to carry the matter on further. Each action item should designate the person responsible for implementation, follow up and follow through to complete the task before the allotted time expires.
There seems to be a growing trend to shift away from face to face meetings. While certain meetings really need to be face-to-face, and direct team interaction helps to build the relationships of the litigation team members, and clarify any questions that may otherwise arise, many meetings do not require direct interaction. Good judgment must be used to determine whether issues are best addressed by a telephone call, email, or even video conferencing. Video conferencing, while not the predominant approach, may grow in popularity as web-based collaboration tools (e.g. “Go to Meeting” and desktop camera technology) have become more universally available, and travel budgets are tightened in the wake of the recession.
Affirmative Discovery: In-house counsel and litigation counsel should agree early on an affirmative discovery plan that is tailored to the case. This will require focus on issues that are important to being able to obtain relief on affirmative claims and the viability of motions for summary judgment.
Litigation counsel should also seek to enter into agreements as soon as possible with opposing counsel on the scope and format of electronic discovery. Find out whether documents are available in electronic form and if so, the software format (.tif, .gif, .pdf, etc.). Each party will also need to consider whether it has the necessary software and software licenses to be able to read the documents to be produced.
As noted earlier, up front cooperative agreements with opposing counsel are appropriate to pursue competitive pricing for services of court reporters and data storage and retrieval services to manage the cost of these services. With regard to data services, in-house counsel and litigation counsel should agree on the search capabilities (and search terms) that should be applicable for working with electronically stored documents.
Effective management of litigation costs is both a responsibility and an opportunity for in-house counsel and litigation counsel. No greater motivator exists for a client to give litigation counsel repeat business that the feeling that good service was rendered for good value. Hopefully, the suggestions in this paper will enable more open and collaborative approaches that will give proper balance to service and cost on the tight rope walk that is litigation.