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Deep, Early Analysis of Cases Can Reduce Litigation Costs

Deep, Early Analysis of Cases Can Reduce Litigation Costs

Does saving money early in the life of a case create risk? What specifically can experienced litigators bring to the initial stage of a case?  Are there risks in trying to settle too early?

LexisNexis’ Director, Client Relations (Litigation) David Dilenschneider recently moderated a webinar panel comprising skilled litigators—in-house counsel with experience at three of the world’s largest corporations and one outside counsel.

Featured at the session—titled “LexisNexis Presents: Early Case Assessment & Resolution”—were Robert Kell, a Director with Jackson & Campbell in Washington, D.C., where he is Chair of the firm’s General Litigation and Trial Practice Group; Paul Amirata, currently President and CEO of Amirata Claims Consulting LLC and, as of April 1, 2011, Vice President of CGL Claims for Enstar (U.S.); Tyler Mercer, Senior Counsel Litigation, Valero Energy Corp., San Antonio; and Paul Slater, Counsel, General Electric in Fairfield, Conn.

Dilenschneider asked, Why should defendants invest dollars and resources early in a case.  GE’s Slater said it is “vitally important” for defendant companies to know what documents exist, where they are, what they say, and who the crucial witnesses are on both sides. Spend the money there, he said, because then -- before you go into discovery -- you can determine whether to move forward with litigation or pursue a settlement. “Money spent at the outset of litigation is usually well spent,” he said.

In light of the recent difficult economic climate and fees commanded by top legal talent, Dilenschneider asked about the cost of bringing in outside counsel.    While GE and most companies must live within strict budgets, Slater said, “firms that can be creative with fee arrangements have a better shot at getting litigation assignments—especially during the tough times we’ve been through.”

Kelly added that this is where a partnership between the client and the attorney comes into play. There is a trust factor a client will develop with an outside firm. A company may see a lot of cases coming through the door, then has to know whether the matter is routine or a ticking time bomb. “That’s where the experienced litigator can be very helpful to a client, especially if the trust factor is in play,” Kelly said. He said experience is advantageous if the attorney knows the court and the local plaintiffs’ bar, understands the jury pool and, of course, knows the law.

Insurers usually want to resolve a case as early as possible, Amirata offered, except if the case will set bad precedent or open the floodgates to future litigation. “A good claim is a settled claim,” Amirata said. “Otherwise, it normally becomes more expensive over time.”

Dilenschneider asked which kinds of cases typically require more focus on early on. Slater said complex tort litigation like asbestos, welding rods, and pharmaceutical actions fit that description, adding that a finite group of claimants and some relationship with the plaintiffs’ attorney puts one in a better position to find a way to benefit both sides. “The good plaintiffs’ firms out there recognize that many companies are fearful of trying cases,” Slater said. “Having history with these firms . . . gives you the ability to negotiate from strength.”

Liability vs. Damages

When assessing the risk posed by a case, Kelly said, it is important to distinguish between liability and damages.  “That drives the strategic focus,” he explained. “If liability is at issue and there’s a significant possibility that you may be able to avoid liability based on a standard of care, based on state of the art, whatever it might be, perhaps the best thing to do is figure out a way to bring that critical liability issue front and center as early as possible. You may want to roll the dice, seek a judicial resolution through summary judgment or some other vehicle. Or perhaps you show your cards through motion practice and then go to a settlement discussion or mediation.

“Alternatively, if liability seems pretty certain then it’s often in the defendant’s interest to move to early mediation, bearing in mind there are incentives defense lawyers don’t focus on enough from the plaintiff’s point of view that also favor mediation. For example, the plaintiff’s lawyer has a lot less invested in the case so they may accept less. They may be willing to go to a damages phase and may be willing to discuss something that turns into an early resolution.”

Dilenschneider asked whether an experienced practitioner is more likely to have a handle on both the liability and damages. “It becomes more of an art than a science,” Kelly replied. While there definitely is a place for checklists, protocols and detailed reporting—which Kelly said he finds invaluable—“at a certain level you need to be able sniff out the cases that are time bombs and give those your particular attention.”

Relationships With Opponents

Valero Energy’s Mercer said, “I encourage everyone out there to talk to plaintiff’s lawyers or opposing counsel. Too often we insulate ourselves from the other side. Relationships are often huge drivers of getting cases resolved early.” He also said he broadly encourages in-house counsel to hire lawyers who have actually tried cases. “Lawyers who have tried cases are not overly cautious, don’t overdo discovery, don’t waste time chasing rabbit trails, don’t over-prepare for trial and don’t settle on the courthouse steps just simply to avoid taking a case to trial.” He said these are all factors that can save money for corporations.

But is there a risk in settling too early? Mercer said tight budgets are simply an economic reality, but that does not let in-house counsel off the hook to produce positive outcomes. “There has been a move away from the traditional litigation model,” he said, where a routine normally followed is moving for dismissal, filing an answer, engaging in discovery, then moving for summary judgment. “Since going in house,” Mercer said, “what I’ve found is that this usually results in wasted money in the form of useless discovery and motions, and maybe a settlement later rather than sooner.”

A Big Money Waster?

Look for opportunities to exchange basic information and conduct informal discovery, Mercer added. Even ask for informal access to the plaintiff or the client; then, if appropriate, try to move to early mediation. “The greatest money waster in most of these cases is discovery,” he warned. Trying to assess cases early helps avoid a “no stone unturned” discovery model, an exercise that rarely uncovers “smoking guns.” He added that diving into expensive and time-consuming activities also poses the risk of irritating opposing counsel and the judge. He said the parties can become entrenched in their positions through the rigor of the discovery process. “I encourage outside counsel to strike a balance between cost and really useful information,” Mercer said.

Following the “damages vs. liability model” helps save litigation costs, Kelly said. “If you’ve got pretty clear liability and the issue is damages, going to an early mediation will save you money.”

Finally, the speakers agreed that pursing early settlement is not a sign of weakness. “Where you have a good defense on liability, scorched-earth discovery is very wasteful,” Kelly said, urging listeners to identify the “jugular issue,” the critical legal issue in the case and focus there. “That’s a way to keep costs down.”

Mercer said thinking that trying to settle early makes you look weak is a trap. “If it makes sense—do it,” he advised. “You build credibility if you fairly settle legitimate claims quickly. It makes it easier to resist unreasonable demands later.”