Rules of Thumb to Rein in Litigation Costs and Optimize Results

This is the fifth and final entry in a series of articles discussing how in-house counsel can better manage litigation matters.

Now the hard part ' when the rubber meets the road and you actually litigate the case. This article attempts to provide you with some practical rule of thumb suggestions on how to rein in costs and optimize results. The more experienced the person monitoring your litigation, the more effective these rules will be when applied.

Motion Practice: Hold Your Fire Until You See the Whites Of Their Eyes

Many defense teams routinely try to win at every case endpoint regardless of the prospects of prevailing ' with each plan including in its budget motions to dismiss, motions to block discovery, motions for summary judgment and so on. This is bad strategy and increases costs. Choose your battles wisely and don't shoot unless you have a good shot at prevailing.

For example, while the majority of defense teams routinely file motions to dismiss, in many instances this can seriously, yes seriously, harm your chances of prevailing. Rule of thumb: Do not initiate the motion to dismiss procedure unless there is a reasonable likelihood that the plaintiff's complaint will ultimately be dismissed with prejudice.

If all that results is that you are likely to force the plaintiff to amend her complaint until she gets it right, you have done the plaintiff a great favor, yourself a disservice, and paid for it to boot. Motions to dismiss that do not result in a dismissal with prejudice, educate the plaintiff about the weaknesses in their case, give them a preview of how you intend to attack their case, and allow them to correct them from the outset. This, in turn, inevitably undercuts your ability to get the case terminated at the summary judgment stage.

In this regard, while better opportunities may present themselves to terminate cases at the summary judgment stage, the same principles apply. You should have a reasonable expectation of prevailing or you have just helped your opponent prepare for trial.

Shoot with a Rifle

Rein in your outside's counsel's tendency to leave no stone unturned, and make every argument under the sun. While such endeavors allow you to pay for the post-graduate education of your outside counsel's highly paid young associates, it does nothing for you. With regard to every motion, you should require your counsel to list the issues that they intend to raise, what the legal support is for that position, why they think it is a winning position, and what they think are the prospects for prevailing. Are they well within the pocket of the law or are they cutting edge? Remember, now that you have a best-case story, you can and should ask how a particular argument or position interfaces with your best case story. Rule of thumb: unless you are angling for the appellate court, urging a losing position in the lower court is a bad practice that uses up the limited chips that each side has before a court.

Discovery with a View

Discovery can make or break a case. It can also break the bank. So the question becomes how to manage and conduct your discovery so it doesn't become a black hole? First rule of thumb: Avoid discovery disputes ' they are costly and courts hate them.

The problem is that most litigation teams still employ a thread the needle approach to what they are willing to produce and a blunderbuss approach to what they demand ' approaches that both inherently create discovery disputes. You should do the exact opposite.

Your Document Production

Engaging in trench warfare over every inch of discovery you provide can be one of the most expensive and, as recent discovery sanction decisions demonstrate, dangerous gambits to take. Strategically and cost-wise, the better tack is to expansively produce all documents and other information that possibly relates to the issues in the case ' regardless of whether you think it may or may not have been precisely requested. The days of playing cat and mouse over discovery production are over.

With the size of document productions these days due to electronic documents, you only want to do one production if possible. Moreover, while you may have every reason to believe that your limiting interpretation of your opponent's request is reasonable, the risk of a court later finding that you withheld relevant documents is just not worth it.

Software programs that purport to help you winnow down the documents you need to produce to comply with discovery requests are getting heavily marketed of late. Relying on such programs is a risky practice and you should approach these programs with a high degree of skepticism. The only purpose of such expensive programs is to winnow down your production based upon criteria fed into the software, violating the above described expansive production rule. And until they create a program like “HAL” from the movie “2001,” this is even more risky than having a horde of inexperienced lawyers making these decisions.

Rule of thumb: Don't be parsimonious in your document production. Produce more rather than less and demand a protective order with a good “clawback” provision for any privileged documents that might be accidentally produced. They are SOP these days. If you follow this approach, you will no longer need to pay for an army of lower level lawyers parsing through the documents with a microscope and making potentially case threatening relevancy determinations that you don't know about until they blow up in your face.

Cost-Effective Suggestions for the Discovery You Seek

With regard to the discovery that you seek, here is the first rule of thumb: Don't let your counsel waste time crafting clever and elaborate interrogatories. They are worthless and expensive. All you get back are useless lawyer crafted responses that artfully dodge the questions posed, whereupon each side their associates into do battle over.

Instead, demand a “Dragnet” approach to interrogatories ' “just the facts” regarding names and location of persons with knowledge, location or existence of documents, and if needed a simple interrogatory requesting your opponent provide an explanation of their basic contentions and what support they have for those contentions.

Document requests should be more expansive but calculated to seek only those types of documents that you need to fill in the gaps in your best case story. Unfortunately, depending on the type of case and its scope, the documents that you may have to seek and thus review, even if you shoot with a rifle, could be voluminous. But this is an area where penny wise can be pound foolish. Documents are the heart of virtually every major litigation matter.

So what do you do? Before plunging in you should do a cost benefit analysis ' how much is at stake should be the driver behind the scope and effort you put into any document review. You and your outside counsel should discuss this upfront because not every case should be litigated in First Class. With skilled counsel you can still get to your destination flying coach for those cases that do not merit First Class treatment. For instance, rather than having eyes review every page of every document, unlike when you are producing documents, you can use search software to find useful documents.

Depositions: Conduct NoExamination Before It's Time

Perhaps the mother of all litigation costs black holes is taking needless depositions and then dragging them out by asking worthless questions. Most litigation teams take the approach that if a person might have some knowledge of the facts, they must be deposed ' and thoroughly. Wrong. Rule of thumb: Operate with the presumption that any given deposition does not need to be taken and require convincing proof that it does.

In addition to what the witness might know or say, there are numerous other factors that must be taken into consideration in deciding whether to depose a witness ' whether the witness is hostile, friendly, within the subpoena jurisdiction of the trial court etc. The key question always should be how will this deposition either further development of your best case story or allow you to better learn about the other side's best case story? For instance there is no reason to take a hostile witness' deposition and then waste your best cross-examination during the deposition on the belief that you will surprise them ' there are rarely Perry Mason moments ever, let alone during depositions, and wasting your best shots at a deposition merely gives them pre-trial training on fending off cross-examination during trial. Better to merely ask such a witness what they have to say about the other side's case ' giving them the opportunity to exhaust their memory. Now you can go back and prepare to tear this story apart at trial.

I once deposed two key employees of an opponent in a substantial seven figure case for a combined 2' hours where all I asked about was their side of the story. I then drilled them each on cross-exam at trial to achieve a successful verdict for my clients. I didn't invent this approach, It is what the best litigators do for all depositions other than those where a witness may be unavailable at trial and you obtain their testimony for presentation at trial.

Rule of thumb: In-house counsel must become actively involved in what is going to be asked of each deponent ' if possible on a question by question document-by-document basis ' in order to reach a conclusion as to why and whether the deposition need be taken.

E-Discovery: Hysteria in a Bottle

Let's talk about electronic discovery and the new federal rules. Many laws firms continue to whip up hysteria about how it is a scary new world and that every company desperately needs the assistance of their firm's newly created e-discovery litigation practice group. The frenzy has been further fueled by certain recent high profile cases in which companies and their lawyers (both inside and outside counsel) were sanctioned for failing to produce key documents.

Here is the skinny: It is all a bunch of hooey. Those companies weren't sanctioned for mere inadvertent failures to produce. They were sanctioned for conscious failures to produce highly damaging yet readily available e-files in the possession of key witnesses. The same happened in the old hard copy days when firms covered up damaging evidence. In short, these sanction cases have nothing to do with e-discovery all about failing to take the expansive approach to document production.

Take a breath. The new rules merely codify what common sense lawyers were doing pursuant to the old rules. The advent of more and more information being maintained in electronic form merely means that you must incorporate your IT department into the same sort of document retention practices and procedures that have been used for decades with regard to hard copy documents. Depending on the size of your company's e-files it may require full time attention to run but it is no different than in the old days when companies used document custodians.

When a case is filed, I strongly recommend that you don't accept the premise that in addition to your in-the trenches lawyers you also need a separate team of e-discovery lawyers. E-discovery lawyers are neither fish nor fowl. Lawyers are trained as lawyers and not IT experts. By definition, e-discovery lawyers are usually not proficient litigators or else they wouldn't be e-discovery lawyers. Having them manage any part of the discovery aspects of case adds an additional layer of lawyers and is risky. Because litigation is a moving target with issues constantly changing, multiple layering of this sort requires a high degrees of redundancy in order that the right hand always knows what the left hand is doing. You can count on there being discovery sanction cases involving an e-discovery group not being on the same page with the in-the trenches litigation group.

How to conduct discovery efficiently and effectively could fill a book, but suffice it to say, discovery is an area where in-house counsel must play a far more active role than many have in the past. Again, use your best-case story as your guide, continually asking, “How will this help our best-case story?” and “What are the likely benefits versus the costs?”

The End Game

This series has focused on two things ' lowering litigation costs while achieving optimal results. Most civil cases that aren't dismissed, end in settlement. So let's discuss the end game.

When your case is strong it is quite easy. You just keep hammering until the other side cries uncle, using the trial preparation mentality approach discussed in a previous article in this series. On the other hand, if your case is like most cases it will have some strong points and some weak points. How to choose the right end game for such cases is an art rather than a science. Much will turn on how well your team develops your case versus what the other side does and choosing the opportune time to strike up settlement talks when you are in the leverage position.

When your case is weak, start talking settlement as soon as possible. Litigating to delay paying the piper is almost always more costly ' whatever present value of money you might save by paying lawyers to drag on litigation can always be factored into an early settlement. This may sound like common sense, but perhaps because many litigation teams along with their in-house counsel appear to fall prey to inhaling each other's fumes, on many occasions they do not see the freight train coming down the track. I saw it cost savvy in-house counsel, along with one of the top firms in the country, $800 million in additional monies paid in one case in which I was on the other side.

That is why you need to have someone ' an experienced litigator ' assigned to play devil's advocate on every major litigation move, from a strategic and cost perspective. In fact, in substantial matters some savvy in-house counsel are quietly adding a shadow counsel, independent of their outside counsel's firm, to their team to perform this task. The incremental cost of such a lawyer in substantial matters is far outweighed by the costs savings and the added assurance that you are not heading into buzz saw. In my admittedly biased view, those who have litigated on both the plaintiff and defense side are the best suited for this sort of engagement, because they know how to litigate leanly and they also provide your team with insights into how the other side thinks.

Finally, if you do go to trial, use your best-case story to keep your case simple, short and effective. Remember, judges and juries love short trials and dislike those who complicate and draw them out.

There Is No Quick Fix

This series has attempted to provide an integrated approach to controlling litigation costs and achieving optimal results. This may not be as palatable as the latest fad quick fix approach but nothing that is important ever comes easy.

In the end, in-house counsel must follow the same best practice litigation approaches employed by the top litigators and they must have someone on their team who has the experience and skill to know how to demand that your litigation team employs them. As well-intended as outside counsel's promises may be about reining in their billings, they will not do so unless and until you rein them in yourself.

Stewart M. Weltman, a member of this newsletter's Board of Editors, is the principal in the Chicago-based Weltman Law Firm. He can be reached 312-606-8756 or [email protected].

This is the fifth and final entry in a series of articles discussing how in-house counsel can better manage litigation matters.

Now the hard part ' when the rubber meets the road and you actually litigate the case. This article attempts to provide you with some practical rule of thumb suggestions on how to rein in costs and optimize results. The more experienced the person monitoring your litigation, the more effective these rules will be when applied.

Motion Practice: Hold Your Fire Until You See the Whites Of Their Eyes

Many defense teams routinely try to win at every case endpoint regardless of the prospects of prevailing ' with each plan including in its budget motions to dismiss, motions to block discovery, motions for summary judgment and so on. This is bad strategy and increases costs. Choose your battles wisely and don't shoot unless you have a good shot at prevailing.

For example, while the majority of defense teams routinely file motions to dismiss, in many instances this can seriously, yes seriously, harm your chances of prevailing. Rule of thumb: Do not initiate the motion to dismiss procedure unless there is a reasonable likelihood that the plaintiff's complaint will ultimately be dismissed with prejudice.

If all that results is that you are likely to force the plaintiff to amend her complaint until she gets it right, you have done the plaintiff a great favor, yourself a disservice, and paid for it to boot. Motions to dismiss that do not result in a dismissal with prejudice, educate the plaintiff about the weaknesses in their case, give them a preview of how you intend to attack their case, and allow them to correct them from the outset. This, in turn, inevitably undercuts your ability to get the case terminated at the summary judgment stage.

In this regard, while better opportunities may present themselves to terminate cases at the summary judgment stage, the same principles apply. You should have a reasonable expectation of prevailing or you have just helped your opponent prepare for trial.

Shoot with a Rifle

Rein in your outside's counsel's tendency to leave no stone unturned, and make every argument under the sun. While such endeavors allow you to pay for the post-graduate education of your outside counsel's highly paid young associates, it does nothing for you. With regard to every motion, you should require your counsel to list the issues that they intend to raise, what the legal support is for that position, why they think it is a winning position, and what they think are the prospects for prevailing. Are they well within the pocket of the law or are they cutting edge? Remember, now that you have a best-case story, you can and should ask how a particular argument or position interfaces with your best case story. Rule of thumb: unless you are angling for the appellate court, urging a losing position in the lower court is a bad practice that uses up the limited chips that each side has before a court.

Discovery with a View

Discovery can make or break a case. It can also break the bank. So the question becomes how to manage and conduct your discovery so it doesn't become a black hole? First rule of thumb: Avoid discovery disputes ' they are costly and courts hate them.

The problem is that most litigation teams still employ a thread the needle approach to what they are willing to produce and a blunderbuss approach to what they demand ' approaches that both inherently create discovery disputes. You should do the exact opposite.

Your Document Production

Engaging in trench warfare over every inch of discovery you provide can be one of the most expensive and, as recent discovery sanction decisions demonstrate, dangerous gambits to take. Strategically and cost-wise, the better tack is to expansively produce all documents and other information that possibly relates to the issues in the case ' regardless of whether you think it may or may not have been precisely requested. The days of playing cat and mouse over discovery production are over.

With the size of document productions these days due to electronic documents, you only want to do one production if possible. Moreover, while you may have every reason to believe that your limiting interpretation of your opponent's request is reasonable, the risk of a court later finding that you withheld relevant documents is just not worth it.

Software programs that purport to help you winnow down the documents you need to produce to comply with discovery requests are getting heavily marketed of late. Relying on such programs is a risky practice and you should approach these programs with a high degree of skepticism. The only purpose of such expensive programs is to winnow down your production based upon criteria fed into the software, violating the above described expansive production rule. And until they create a program like “HAL” from the movie “2001,” this is even more risky than having a horde of inexperienced lawyers making these decisions.

Rule of thumb: Don't be parsimonious in your document production. Produce more rather than less and demand a protective order with a good “clawback” provision for any privileged documents that might be accidentally produced. They are SOP these days. If you follow this approach, you will no longer need to pay for an army of lower level lawyers parsing through the documents with a microscope and making potentially case threatening relevancy determinations that you don't know about until they blow up in your face.

Cost-Effective Suggestions for the Discovery You Seek

With regard to the discovery that you seek, here is the first rule of thumb: Don't let your counsel waste time crafting clever and elaborate interrogatories. They are worthless and expensive. All you get back are useless lawyer crafted responses that artfully dodge the questions posed, whereupon each side their associates into do battle over.

Instead, demand a “Dragnet” approach to interrogatories ' “just the facts” regarding names and location of persons with knowledge, location or existence of documents, and if needed a simple interrogatory requesting your opponent provide an explanation of their basic contentions and what support they have for those contentions.

Document requests should be more expansive but calculated to seek only those types of documents that you need to fill in the gaps in your best case story. Unfortunately, depending on the type of case and its scope, the documents that you may have to seek and thus review, even if you shoot with a rifle, could be voluminous. But this is an area where penny wise can be pound foolish. Documents are the heart of virtually every major litigation matter.

So what do you do? Before plunging in you should do a cost benefit analysis ' how much is at stake should be the driver behind the scope and effort you put into any document review. You and your outside counsel should discuss this upfront because not every case should be litigated in First Class. With skilled counsel you can still get to your destination flying coach for those cases that do not merit First Class treatment. For instance, rather than having eyes review every page of every document, unlike when you are producing documents, you can use search software to find useful documents.

Depositions: Conduct NoExamination Before It's Time

Perhaps the mother of all litigation costs black holes is taking needless depositions and then dragging them out by asking worthless questions. Most litigation teams take the approach that if a person might have some knowledge of the facts, they must be deposed ' and thoroughly. Wrong. Rule of thumb: Operate with the presumption that any given deposition does not need to be taken and require convincing proof that it does.

In addition to what the witness might know or say, there are numerous other factors that must be taken into consideration in deciding whether to depose a witness ' whether the witness is hostile, friendly, within the subpoena jurisdiction of the trial court etc. The key question always should be how will this deposition either further development of your best case story or allow you to better learn about the other side's best case story? For instance there is no reason to take a hostile witness' deposition and then waste your best cross-examination during the deposition on the belief that you will surprise them ' there are rarely Perry Mason moments ever, let alone during depositions, and wasting your best shots at a deposition merely gives them pre-trial training on fending off cross-examination during trial. Better to merely ask such a witness what they have to say about the other side's case ' giving them the opportunity to exhaust their memory. Now you can go back and prepare to tear this story apart at trial.

I once deposed two key employees of an opponent in a substantial seven figure case for a combined 2' hours where all I asked about was their side of the story. I then drilled them each on cross-exam at trial to achieve a successful verdict for my clients. I didn't invent this approach, It is what the best litigators do for all depositions other than those where a witness may be unavailable at trial and you obtain their testimony for presentation at trial.

Rule of thumb: In-house counsel must become actively involved in what is going to be asked of each deponent ' if possible on a question by question document-by-document basis ' in order to reach a conclusion as to why and whether the deposition need be taken.

E-Discovery: Hysteria in a Bottle

Let's talk about electronic discovery and the new federal rules. Many laws firms continue to whip up hysteria about how it is a scary new world and that every company desperately needs the assistance of their firm's newly created e-discovery litigation practice group. The frenzy has been further fueled by certain recent high profile cases in which companies and their lawyers (both inside and outside counsel) were sanctioned for failing to produce key documents.

Here is the skinny: It is all a bunch of hooey. Those companies weren't sanctioned for mere inadvertent failures to produce. They were sanctioned for conscious failures to produce highly damaging yet readily available e-files in the possession of key witnesses. The same happened in the old hard copy days when firms covered up damaging evidence. In short, these sanction cases have nothing to do with e-discovery all about failing to take the expansive approach to document production.

Take a breath. The new rules merely codify what common sense lawyers were doing pursuant to the old rules. The advent of more and more information being maintained in electronic form merely means that you must incorporate your IT department into the same sort of document retention practices and procedures that have been used for decades with regard to hard copy documents. Depending on the size of your company's e-files it may require full time attention to run but it is no different than in the old days when companies used document custodians.

When a case is filed, I strongly recommend that you don't accept the premise that in addition to your in-the trenches lawyers you also need a separate team of e-discovery lawyers. E-discovery lawyers are neither fish nor fowl. Lawyers are trained as lawyers and not IT experts. By definition, e-discovery lawyers are usually not proficient litigators or else they wouldn't be e-discovery lawyers. Having them manage any part of the discovery aspects of case adds an additional layer of lawyers and is risky. Because litigation is a moving target with issues constantly changing, multiple layering of this sort requires a high degrees of redundancy in order that the right hand always knows what the left hand is doing. You can count on there being discovery sanction cases involving an e-discovery group not being on the same page with the in-the trenches litigation group.

How to conduct discovery efficiently and effectively could fill a book, but suffice it to say, discovery is an area where in-house counsel must play a far more active role than many have in the past. Again, use your best-case story as your guide, continually asking, “How will this help our best-case story?” and “What are the likely benefits versus the costs?”

The End Game

This series has focused on two things ' lowering litigation costs while achieving optimal results. Most civil cases that aren't dismissed, end in settlement. So let's discuss the end game.

When your case is strong it is quite easy. You just keep hammering until the other side cries uncle, using the trial preparation mentality approach discussed in a previous article in this series. On the other hand, if your case is like most cases it will have some strong points and some weak points. How to choose the right end game for such cases is an art rather than a science. Much will turn on how well your team develops your case versus what the other side does and choosing the opportune time to strike up settlement talks when you are in the leverage position.

When your case is weak, start talking settlement as soon as possible. Litigating to delay paying the piper is almost always more costly ' whatever present value of money you might save by paying lawyers to drag on litigation can always be factored into an early settlement. This may sound like common sense, but perhaps because many litigation teams along with their in-house counsel appear to fall prey to inhaling each other's fumes, on many occasions they do not see the freight train coming down the track. I saw it cost savvy in-house counsel, along with one of the top firms in the country, $800 million in additional monies paid in one case in which I was on the other side.

That is why you need to have someone ' an experienced litigator ' assigned to play devil's advocate on every major litigation move, from a strategic and cost perspective. In fact, in substantial matters some savvy in-house counsel are quietly adding a shadow counsel, independent of their outside counsel's firm, to their team to perform this task. The incremental cost of such a lawyer in substantial matters is far outweighed by the costs savings and the added assurance that you are not heading into buzz saw. In my admittedly biased view, those who have litigated on both the plaintiff and defense side are the best suited for this sort of engagement, because they know how to litigate leanly and they also provide your team with insights into how the other side thinks.

Finally, if you do go to trial, use your best-case story to keep your case simple, short and effective. Remember, judges and juries love short trials and dislike those who complicate and draw them out.

There Is No Quick Fix

This series has attempted to provide an integrated approach to controlling litigation costs and achieving optimal results. This may not be as palatable as the latest fad quick fix approach but nothing that is important ever comes easy.

In the end, in-house counsel must follow the same best practice litigation approaches employed by the top litigators and they must have someone on their team who has the experience and skill to know how to demand that your litigation team employs them. As well-intended as outside counsel's promises may be about reining in their billings, they will not do so unless and until you rein them in yourself.

Stewart M. Weltman, a member of this newsletter's Board of Editors, is the principal in the Chicago-based Weltman Law Firm. He can be reached 312-606-8756 or [email protected].