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MANAGING YOUR LAWYER IN LITIGATION: When your budget is more important than precedent or ego

By Grant M. Glenn

Woner, Glenn, Reeder, & Girard, P.A.

Copyright 2015

 INTRODUCTION:

There are different litigation philosophies, some of which can be unnecessarily expensive for the litigant.  Some law firms have clients that are really not concerned about the financial cost of litigation, and thus their view of litigation may not favor a client who truly needs to limit the expenditures on litigation as much as reasonably possible. For many if not most clients, “winning at any cost” is neither true nor reasonable, but some lawyers work in a culture where winning at all costs is the norm, they do not understand the concept of litigation on a budget.

Rule 1: KNOW THE CULTURE OF YOUR LAW FIRM YOU ARE CONSIDERING HIRING. 

I work for a business law firm which has had over 100 banks as its client base.  They all pay their own litigation bills, and most bankers are extremely concerned about the bottom line.  In this culture, major litigation decisions are always being made by our lawyers using a cost-benefit analysis.  Decisions to take a deposition or file a motion must be considered from a pretext: how will this action substantially benefit our case; and would the failure to take this action seriously hinder the potential outcome of the matter?

Our firm is based in Topeka, 60 miles from Kansas City and we appear often in Kansas City area courts.  We are engaged in litigation with lawyers from all sizes of firms.  When we see two lawyers drive to Topeka  together to appear for a client at a simple motion hearing, we are reminded of the old joke where the punch line is  - “you need two: one to carry the brief case and one to drive the BMW.”

It took me years to realize that many clients do not hire lawyers based upon economic reasons.  Rather, there is often ego or relationships involved that in fact have little to do with the bottom line.  Perhaps the client went to school with the lawyer; or the client is invited to sit in the special law firm seats at the football game.  In fact, there is good reason to believe that some clients want the satisfaction of knowing that their lawyer has the highest billing rate in the city, because in their minds that means that they must be the best, and that the client wants the world to know it can afford the best.  In reality, many of the best lawyers do not charge the most, and there may be many other factors that are of greater importance in affecting the cost of litigation, than merely the hourly rate.

There are other lawyers who represent clients where winning at all costs in the strategy that they beat their opposition into submission.  Sometimes, the precedent of losing could have a huge financial impact on other cases the client may face, or upon the value of its stock.  Lawyers representing these kinds of clients, have difficulty in defending other clients in a different manner, thinking that to do so might even border on the unethical.

Thus, interview your law firm.  Be aware of its client base, its luxurious surroundings, and its litigation philosophy.  You may really like the lawyer, but he or she may not be a good fit with your company needs. 

Rule 2: DEVELOP A PLAN WITH YOUR LAWYER ABOUT WHAT DISCOVERY WILL BE CONDUCTED.

“Discovery” is the process of learning about the other party’s case.  The most common and most expensive kind is taking depositions of the other party and other key witnesses.  They are expensive because there is time incurred to prepare questions for them, time to take them, often travel expenses to take them, and then time to index them afterwards.  In addition, there is a court reporter cost ranging from hundreds to sometimes over a thousand dollars. You can control how many and which depositions your lawyer intends to take.

Depositions

At the beginning of the case, ask your lawyer which depositions he or she believes your side needs to take.  Ask that they be listed in descending order of importance, and provide an explanation of why the lawyer believes the deposition may be important.  This will not be a static document.  As more is learned about the case, the criticality or order of importance may change.  New names may emerge.  However, you are thereby asking the lawyer to develop a discovery plan and get your buy-in to the plan.

As a client you can ask the lawyer to justify each deposition.  Further, challenge the lawyer and ask, “Can we get the critical information in an hour or two hours?”  Although this may not significantly limit the preparation time, shorter depositions do save money.  Unfortunately, you cannot control how many questions another lawyer at the deposition may ask.  If you are a co-party to the litigation, your lawyer should engage the other party’s lawyer and ask about sharing the cost of taking depositions. 

Informal discovery can also save money.  Generally, lawyers or their staff should informally meet with all witnesses to a case, unless the witness is another party or the lawyer is otherwise ethically prohibited from talking to the witness.  Sometimes the conversation will make it clear that the witness may not have key knowledge.  Even if he or she does, the scope of the deposition can be limited to what is pertinent if the homework has already been accomplished.  Sometimes, instead of sitting for a deposition, the witness will be willing to sign an affidavit, which could reduce the chance that the witness will change his or her story at the time of trial.

Often, depositions may be limited in expense by hiring a local lawyer to take a deposition in another locality, or by agreeing to take the deposition by video  or telephone, usually having a local reporter present with the witness.  Almost never should you pay for a court reporter to travel a significant distance from the lawyer’s home city to the location of the deposition, unless the reporter is willing to “eat” the expenses as part of the service.

You or a representative of your company is likely to be deposed as a party.  Your lawyer should be able to anticipate what depositions the other party or parties will want to take.  Other than preparing the witness, there is usually only modest time expended in preparing for such depositions.  Sometimes, it may be more prudent to send a lawyer who has a lower hourly rate, particularly when the expected area of testimony is fairly well understood in advance.  However, it is almost never prudent to skip attending such depositions altogether, as surprises are always possible, if not probable.  You want your main “gun” present for critical depositions.  It is seldom necessary for more than one lawyer to be present representing you at any deposition.  The same goes for not needing paralegals or law clerks present – they add to the costs, but seldom really make a difference in the outcome. (This is likely different at trial).

Ask your lawyer to prepare an outline of questions that will be covered a few days in advance of the deposition.  Involve your key company employees who have knowledge of the subject transaction, and ask them to review the outline and make additional suggestions for the lawyer’s consideration.  Litigation is necessarily a collaboration.  You and your lawyer are a team, working together for a prompt and just outcome.  Your employees will have a different perspective than the lawyer.  It is the lawyer’s job to separate the relevant, and develop a strategy which may or may not include your questions.  However, in most cases, the client’s input will make for a better end product and your lawyer should welcome this kind of input.

Paper Discovery

In addition to depositions, there is also “paper discovery” such as interrogatories, request for production of documents and requests for admissions.  Most of the paper discovery should be served, and the responses received, prior to starting depositions, unless it is critical to take a key witness deposition early for some strategic reason.  Oftentimes, requests for admissions can be served late in a case to button down some of the key facts and save the expense of having a foundation witness appear at trial or make a necessary record for a motion for summary judgment.  The anticipated paper discovery should be included in the initial litigation plan.

Modifying The Plan

This litigation plan should be updated monthly with the invoice.  Ask the lawyer to write a brief cover letter explaining changes made from the previous month. Do not be afraid to engage the lawyer about the changes – make sure you are “on board” with the changes as they occur.  Remember, your lawyer is not your enemy.  You must have trust in your lawyer from the beginning.  The lawyer has a responsibility to make reasonable and worthwhile recommendations for the adequate defense of your case.  However, there are as many different ways to  defend a case as there are lawyers, and it is important that you understand what is happening and why – being vigilant and asking questions regularly reduce the chance that  “billing creep” can occur as a product of the law firm’s culture.

Trial

As preparation for trial nears, discuss with your lawyer, what firm members are going to be involved in the trial. Most trials taking more than a few days, should reasonably be manned by more than one lawyer, or at least a lawyer and a paralegal.  The work load of preparing for and then participating in a longer civil trial, is generally difficult, usually requiring an hour outside of the courtroom for every hour in it.  A lawyer sitting in the second chair can listen to the testimony and make suggestions for additional questions to ask the witness.  Most lawyers benefit from the perspective of another legally trained person in the room, who has the factual background to fully comprehend the meaning of the testimony and what may need to be done to counter certain evidence.

You want your trial to be adequately staffed by competent lawyers, and supporting personnel when necessary.  Asking the lawyer for the “plan,” assures that serious thought is given to this, and that unnecessary bodies will be left at home to be called upon if research needs arise on short notice.

Invoicing

Insist on current monthly invoices and pay them promptly.  Be sure to ask that you receive invoices monthly.  You cannot manage what you do not know.  Oftentimes, monthly invoices are up to 30 days “behind”.  Make sure you review the statements and know who is working on the case, their relative hourly rates, and confirm in your mind that it is in conformity with your litigation plan.  If the invoice is in accordance with your expectations, pay it promptly.  Most lawyers know who is paying promptly and they certainly know who is not.  You want the lawyer to put in the necessary late hours to win your case.  The lawyer will be less resentful of your efforts to manage, if you pay promptly – this is no time or place to let your comptrollers take their “float” on the payment date.  Insist that approved invoices be paid immediately.

RULE 3:  EFFECTIVELY EVALUATE YOUR POTENTIAL LIABILITY OR LIKLIHOOD OF RECOVERY. 

There is nothing certain about litigation, other than it is expensive.  There are very few cases that are ever “sure things.”  If you are a potential plaintiff, seriously evaluate your case before it is filed.  Be aware of your weaknesses as well as your strengths.  Determine a ballpark idea of the cost of taking the matter all the way to trial, and possibly an appeal.  Consider the time value of money – having a recovery today has more value than the same amount years later after you have a judgment.  Carefully consider the collectability of a judgment.  Is the potential defendant potentially insolvent?  Is the defendant able to file bankruptcy or transfer assets? If the latter, how much time and money is it going to cost to set aside the conveyances.  Looking at all these questions coldly and honestly with the help of your lawyer, who has investigated the facts, can help you come up with a realistic net recovery and determine how big a compromise you can economically make and still be ahead, rather than litigating to the end.

Be sure that the representatives of your company who “lived” the facts, are not the same ones evaluating the case.  It is important that someone do so who is objective and neutral.  Oftentimes, the witnesses that participated in the underlying transaction, cannot admit that they may have made a mistake, for economical or psychological reasons, or perhaps both.  Consider hiring a consultant, such as an experienced mediator to review your analysis and play the devil’s advocate for your assessment.

Defendants who have been sued, or know that they soon will be, have no less of a responsibility to evaluate their case on the same basis at the very beginning.  In addition to the uncertainty of any outcome, and the large costs of litigation, there are other costs that are harder to evaluate on a ledger.  Litigation is often a huge distraction from the productivity of some of the most important people in your organization.  It takes time away from profitability, and the prospect of being a witness, can be wearing on many, some of whom may never be actually called as a witness.  Litigation can change relationships, and almost never for the better.

RULE 4: MEDIATE, MEDIATE, MEDIATE

Before mediation was a widely used tool, lawyers discussed settlement between themselves and exchanged offers.  While this practice can still successfully conclude a matter short of trial, mediation has become the procedure in which many, if not most cases are settled.  Even if a matter is not settled during the mediation, the procedure itself often gets the parties on the right track to a successful conclusion.

The major advantage of mediation is that it gets each party to consider its own weaknesses as well as strengths.  While you may have completed an extensive evaluation of your own case, the case is not likely to settle before the other side has done the same.  The opponent’s lawyer may not be pragmatic or may be afraid to tell his or her client that the client’s case may not be successful.  A strong mediator will have no problem in telling both parties what the mediator sees as weaknesses of their respective cases.

When selecting a mediator, encourage the other party to make a recommendation of three names for you to select, or have your lawyer suggest three names from which the other party to select one.  You want the opponent to have confidence in the mediator.  If you control the selection, or a court did, then the opponent may not accept the recommendations of the mediator.  While that is a possibility for you, it is not as likely if you have performed an independent evaluation of your own case before the mediation has begun.

Most mediators will require that the “decision maker” for both parties attend the mediation in person, and if not in person, participate by telephone.  Follow this rule earnestly, even if it is not required.  As good as your pre-mediation valuation may have been, there is a good chance you will learn more about the other party’s case than you knew before the mediation.  Likewise, you may learn important information about your own case.

I never ask my client to make a commitment to a certain dollar figure for settlement before the mediation begins.  Mediation is a process.  To take advantage of the opportunities that the process will present, parties should not be hamstrung by pre-conceived limitations.  Sometimes mediators can be creative in designing a structure for settlement that the parties had not considered before the mediation.  A party that is bound to some pre-mediation settlement amount or structure, is likely not to be in the position to take advantage of the circumstances that a settlement may present.

When the opposing party is an individual and not an institution, he or she may have important people in their lives present for the mediation.  These people may never gather again in a manner to influence an acceptable outcome.  The individual party may well have remorse or change of heart and never again accept an offer that he or she was willing to accept on the day of the mediation.

Parties often just want to tell someone in authority their story, and after they do so, they are willing to settle.  If one of the parties is an individual, suggest to your lawyer to recommend a retired judge as a mediator.  While retired judges do not necessarily make good mediators, they will nevertheless likely be seen as important authority figures, and be more likely to influence both the opposing party and his or her lawyer.

Urge that any settlement achieved during the mediation be memorialized in writing before the parties leave.  Make this a key term as part of your acceptance of the final offer of settlement.  Many if not most mediators would agree with this, but some grow tired or even lazy.  Suggest that your own lawyer prepare a basic settlement agreement form to bring on the lawyer’s laptop to the mediation.  When the settlement has been achieved, leave your lawyer alone to compose the settlement agreement.  Get the deal signed on the day of the agreement while memories are fresh, and people feel good about the deal.  Time changes both, and it is an unnecessary waste of time to have to be engaged in further litigation to enforce a settlement agreement that had not been reduced to a executed agreement on the day of the mediation.

RULE 5:  INSIST ON EARLY MEDIATION AND CONTINUE TO PURSUE SETTLEMENT. 

Litigation is so expensive, that is needs to be avoided when reasonably possible, and needs to be concluded as soon as is reasonably possible.

While the parties may have been unable to reach a deal before the lawsuit was filed, new faces of the lawyers should be a new opportunity to pursue settlement near the beginning of the case.  Good lawyers solve problems, they avoid making them worse.  Most lawyers are prejudiced against an early settlement for several reasons.  First, if the case settles, the meter stops.  Secondly, lawyers will ask, “how can we settle before we discover the facts of the case?”  “Asking for mediation, will be a sign of weakness.”  And on and on . . .  .

While the lawyer may never admit that they do not want to stop the meter from running, there is no doubt that this is often the case.  Unfortunately, these excuses also serve as barriers on the other side preventing the other lawyer in the case from persuading his or her client to engage in an early mediation.

However, the client should insist that mediation be attempted early. In federal court cases, the parties are given each other’s key information during the initial disclosures required by Rule 26, near the beginning of the case.  Once this information is in hand, both parties generally have a pretty good idea about the substance of the other party’s case, and should already have a good understanding of the strengths and weaknesses of the party’s own case.  While there is much unknown, the biggest unknown at this stage is how much bigger the bills are going to get before the case is resolved.  Most cases are settled, so the key is to get the case settled early when the other party has spent less on attorney fees, and that money is available to pay you if you are the plaintiff and for you to pay the plaintiff if you  are the defendant.

RULE 6: REMIND YOUR LAWYER THAT “YOU” WANT TO BE INFORMED ABOUT DISCOVERY DISPUTES. 

Disputes between the parties often occur during the discovery process.  One party may ask for documents that the other does not think the lawyer’s client should have to produce.  If these disputes cannot be resolved between the parties, then motions are filed with the Court, briefs are written and the court must take its time to resolve these.  Courts generally do not like spending their time refereeing such disputes.  Obviously, they lead to increased expense for the parties if there outcome must be litigated. 

When you ask to be informed about the disputes, you can put yourself in the position to ask your lawyer for the alternatives to filing motions.  Often protective orders can be crafted that will allow the discovery for limited purposes.  Sometimes, it just makes more sense to produce the documents voluntarily.  If you are asking for the documents, can the request be narrowed?  Are the documents you are seeking really that critical?  Can they be obtained from another source?

RULE 7:  DISCUSS WITH YOUR LAWYER THE DESIRABILITY OF FILING A MOTION FOR DISMISSAL BEFORE DISCOVERY IS CONCLUDED. 

Preparation of motions for summary judgment take an immense amount of time and therefore expense.  They should be filed with prudence when there is a real likelihood of success or when reducing the number of claims has real financial value to you.  Typically, motions for summary judgment and their cousin, motions for partial summary judgment, are filed after discovery is concluded.  There are also motions for dismissal, which are rarely granted, and they are usually filed prior to any discovery occurring.  These may take less lawyer time to prepare since there is little discovery to discern in the process of preparing the motion and brief, but still should not be filed unless the outcome is reasonably certain.

Generally, these motions seek judgment in your favor because even when the known facts are not disputed, the plaintiff has failed to state a proper cause of action as a matter of law, or the known facts are insufficient to prevail, therefore a trial is unnecessary.  When such motions are successful, they are easily worth the investment compared with the additional costs and risks of trial.  That is why defense attorneys have traditionally favored filing such motions when possible.  However, the client should be engaged in the process and expect its lawyer to articulate good reasons why  he or she expects to prevail, or at least have a reasonable chance of success.  Such motions should not be filed automatically without an understanding of the costs and benefits. 

The decision to file a summary judgment motion is really one of the most strategically important decisions in the case.  There is substantial cost to prepare one, but if it is successful, the savings are multifold.  Because of the return if successful, the odds of prevailing do not have to be high, but the odds should not be remote if you are going to incur this cost.  Discuss this thoroughly with your lawyer and reach a conclusion that you are most comfortable.

Motions to dismiss probably will have less cost to file, but the chances for success are generally less, since by definition there has been no discovery performed, and courts favor giving the parties a fair opportunity to litigate their case before dismissal.  Sometimes parties that prevail in such motions only win a technical victory, and the Court then permits the plaintiff to amend its complaint and the case is reborn. 

Motions for partial summary judgment are filed with the knowledge that the case will not be dismissed even if the movant prevails.  However, they are designed to reduce the size of the case and perhaps the risk of loss, by removing certain case theories from the jury’s consideration.  There are circumstances when such a motion is appropriate, but you as the client need to be informed of the strategy and the goal and be reasonably convinced that a cost benefit analysis will support the investment in this tool.

Rule 8:  BEFORE APPEALING, KNOW WHEN TO FOLD

No one likes losing a case.  Sometimes appeals are motivated by the lack of acceptance of the inevitable.  Any case analysis should have considered that there is a risk of loss in any case that goes to a jury.  Sometimes, it is clear that trial error was substantial and there is a high probability of reversal.

Losing plaintiffs often try to appeal in an effort to get the defendant to pay something before closing the file.  The defendant should assess the cost of the appeal and consider whether spending a  portion of that money paying a settlement to the plaintiff, makes sense to end the matter with certainty, sooner rather than later.

When losing defendants appeal, there is likely to be a large bond that will have to be posted to cover payment of the judgment in the event the case is not reversed.  There will of course be the additional expense of preparation of the brief and then time spent months later for the lawyer to re-familiarize himself or herself with the case in order to make a proper oral argument.  Be sure that you are convinced that these expenses are a good investment and not just putting more good money after bad.  Sometimes the prevailing party will accept a modest discount of the judgment to settle the matter to get their cash sooner, even though the judgment will bear interest during the appeal.

 

CONCLUSION

Unless the client is regularly engaged in litigation and has a satisfactory track record with its lawyer, there are real potential savings in actively managing the lawyer and the litigation.  Probably the two most important things a client can do when starting this process is interview the proposed lawyer and determine the kind of culture the lawyer and the lawyer’s firm work to make sure it is compatible with your ultimate goals.  Secondly, develop a litigation plan with the lawyer to know what is expected to occur during the process, and confirm that the client agrees with it and is made aware as the plan necessarily changes during the course of the litigation.