Ten Things: Managing Litigation – a Primer for In-House Counsel

As you know, I enjoy getting suggestions for blog topics from you – the readers of the “Ten Things” blog.  A few weeks ago I received a note from the general counsel of a small legal department at a relatively new company that was involved in its first material piece of litigation. Yuck.  She was a bit lost on how to manage it all and asked if I had any pointers.  I did.  As someone whose career started as a litigator and who came to the general counsel role through the litigation side (rare), I managed a lot of litigation and I understand how risky, painful and frustrating litigation can be for in-house lawyers.  Additionally, if you are not someone who spends a lot of time with litigation, it can be a bear to manage and keep from becoming a runaway time-suck and money pit.  I have written about what to do when you first receive a lawsuit, how to explain litigation to the business, and in-house counsel’s role during trial, but I have overlooked a truly important task, i.e., how to manage litigation.  This edition of “Ten Things” looks to remedy that oversight.  While this post is aimed at those who rarely deal with litigation, I think several of the points will resonate with crusty veterans as well:

1.  Take control.  My assumption here is that you have outside counsel handling the litigation.  Unless you work in a very sophisticated legal department, trying to handle material litigation in-house is a tough road to go down.  Regardless, while outside counsel are usually a necessity when it comes to litigation and partnering is critical, that does not mean in-house counsel must concede control of the matter.  In fact, the opposite is true.  You must make it clear that you are the undisputed leader of the litigation team and, ultimately, all material decisions rest with you. It is fine to concede and delegate much of the day-to-day busy work to outside counsel, but in-house counsel cannot check out of the process.  If you do check out you will find nothing but surprises – expensive, unpleasant surprises.  And if things go horribly wrong, the business will be looking at you and not outside counsel for accountability.  Do not become a potted plant and simply defer everything to outside counsel’s control and judgment.  Be the boss!

2.  Read everything.  Probably not what you want to hear, but in-house counsel must-read, edit (if necessary), and approve any material pleading, motion, memorandum,[1] presentation, and so forth applicable to the case.[2]  In litigation, accurate facts are very important, especially when it comes to describing the actions of the parties, the history of the dispute, and the subject matter at the heart of the litigation (a contract, technology, services, etc.).  No lawyer knows these facts better than the in-house lawyers. Likewise, outside counsel may unintentionally draft documents in a way that you think put the company in a bad light, get the facts wrong, or miss things you think provide important context to the dispute. Consequently, there is significant value to the company when in-house counsel carefully read, correct, mark-up, and edit the written work product produced by outside counsel.  Good outside counsel welcome your input and have no pride of authorship.  Nor should they.  You are paying the bills, so you get to decide.  This includes challenging your outside counsel when you think they are wrong.  That is also part of your job.  Being overly deferential is simply not wise, nor productive.

3.  Know who the client is.  Do not get overly excited about being the “boss” here.  You may be the boss when it comes to the legal team, but the internal client at the company is the ultimate boss and decider.  You must know who that is as there will be critical decisions, settlement opportunities, and other aspects of the case that require the input or approval of the client.  Plus, the business client will bring a different (and valuable) perspective to the process and look at things differently than lawyers do.  This perspective can help you avoid costly mistakes (e.g., not recognizing confidential documents or other information) and potentially resolve the matter in a way that is most favorable to the company’s strategic goals.  As the litigation moves along, be sure you are clear as to who in the business has the authority to make these key decisions and provide key input.  If the matter is not bet-the-company, this person may be a senior manager or vice president.  If the matter is important, then it may be the head of a business unit or even the CEO.  Find out “who” and then be sure they are looped into the process at the right times for their input.

4.  Define “winning.”  Knowing who the client is also provides you with guidance on helping define what “winning” the litigation looks like.  Winning is not as simple as winning at trial, as most cases (90%) never get to trial.  And even if they do, if you win $10,000 but were seeking $100,000, you did not win.  At some point early in the litigation, in-house counsel, outside counsel, and the client must sit down and lay out what the team considers a successful resolution of the matter looks like.  It may be defeating an injunction, it may be an early settlement, or it may be bankrupting the other side. Whatever it is, the team must all understand “winning” as that will drive the goals and strategy of your side during the litigation process.  Note that winning does not need to be binary.  You can define winning as a collection of outcomes or on a continuum.  Regardless of how the team defines winning the next thing to do is to put it in writing so everyone knows what was agreed.  Unfortunately, I can tell you that memories become short when the millstone of litigation is truly grinding down on both sides and what you thought was a winning resolution based on earlier conversations with the business now becomes a yellow shirt of shame in-house counsel must wear for “not winning.”

5.  Communications – External.  When managing litigation, it is important to set up regular meetings/calls with your outside counsel to discuss the case, developments, next steps, etc.  Most cases require a weekly status call or at least a weekly status call that can be canceled if there are no significant updates.  I would argue that it is rare that litigation is so stagnant that a weekly call is not productive.  It is also important to establish who is the main point of contact between the legal department and outside counsel.  This will solve a lot of problems because all critical communications must involve these two people.  You can establish who else should be copied on communications and invited to meetings and calls, but these two people are always involved and always in sync.  Likewise, ensure outside counsel understands that there is little good that will come from trying to go around this person to their manager or the general counsel (other than if the person is completely failing in their role and that needs to be brought to the attention of the senior members of the legal department).  This team also needs to decide the communication cadence with the general counsel or head of litigation so they are kept current on material developments and their input is obtained in time to be meaningful.  This includes everyone understanding what types of documents need review by in-house counsel before being filed or sent to third parties, and establishing reasonable deadlines for in-house counsel for such review. To sum up, external communication needs to be regular, planned, and useful.

6.  Communications – Internal.  Equally important, if not more so, is the internal communication plan, i.e., when in-house and/or outside counsel will update the business on the litigation.  If the case is material enough, this may mean the CEO or even the board of directors.  Keeping senior management apprised of where things stand with litigation is crucial to avoiding surprises. Surprises in litigation are generally bad.  It is important to remember that when you are explaining litigation to the business you must understand that business people usually need a lot of background and explanation about the litigation process so what you are telling them makes sense.  Do not assume they know what “discovery” is, or how a summary judgment motion can end the litigation.  Additionally, whenever you discuss the case with management tell them what they need to know, not what they want to hear.  Be even-handed and truthful. The business cannot make good decisions if their lawyers are overselling the bad or the good. Play it straight down the middle.  Like with external communications, there should be a regular calendar of updates for the business.  Internal communications are not always about updates to the senior management.  If the litigation is significant, consider regular updates to the CFO or finance regarding spending and the budget (and potential damages if your company is the defendant). The same is true for the company’s communications team as they may need to engage in damage control or respond to press and social media inquiries/stories.  If the company is publicly traded, investor relations needs to know what is going on with material litigation.  Finally, remember the client!  He or she must be kept apprised of what is going on with the case.  In most cases, they should be invited to or included on the regular communications with outside counsel so they always have the freshest information about their case.

7.  Know the case calendar.  Make sure you know all of the important dates involving the lawsuit.  Outside counsel have elaborate calendar tools to track important dates and deadlines.  Ask for a copy or a weekly update on upcoming dates and any changes in dates involving discovery, motions, witness preparations, mock juries, hearings, pre-trial disclosures, and – of course – the trial (and appeal deadlines).  All of these key dates should be entered into your own calendar tool (Outlook or Google calendars are fine) and then shared with the right people within the legal department and the business (especially the client).  It is best to identify one person as the keeper of the litigation calendar for the in-house team.  That way, all key changes, updates, additions, etc. will be put on the right calendars and nothing will get dropped or missed or messed up.  As in-house counsel, you should be constantly scanning ahead to the next week, two weeks, months, and so on so you know what is coming and when – and then using that information to keep the business updated as needed.  There is little more unpleasant than surprising a busy executive with the need to clear their calendar next week to prepare for a deposition – especially when that deposition date was known to the lawyers for the past several weeks.

8.  Suck it up on e-discovery.  Everybody hates e-discovery, though perhaps no one more than in-house counsel.  It is expensive, intrusive, and (unfortunately) critical to the case.  As in-house counsel, you cannot simply let outside counsel “run with it.”  If you do, you will pay more than you need to and you will inevitably have one or more bad days when documents that should not have been produced to the other side are, in fact, produced because outside counsel did not understand the nuance or context of the document.  Ultimately, you just need to suck it up and get up to your elbows in the guts of the process at the right level.  Four things to keep in mind:

  • Get the legal hold process right.  Litigation has, sadly, become a game of gotcha and one of the most common problems arises due to inadequate document holds and the accidental destruction of responsive documents.  Take personal control over the hold process, including the initial hold notice, working with your IT team, and sending follow-up notices and confirmations.  This is one of the areas of litigation management where in-house counsel has a lot to contribute.
  • Hire the right document review team.  E-discovery document review has become specialized.  If you have a review of any size, you will want to work with your trial counsel to engage a review firm that is best suited to your needs.  While it is tempting to go the “cheapest” route possible, that is generally not a great idea.  Document shop reviewers at $30 per hour can be transient, produce low quality, and are often not interested in the case or the issues.  That is, you get what you pay for (and you will pay for the mistakes they make over and over during the litigation).  Don’t cheap out.  Find true discovery counsel to help with the review and save costs by doing a better and faster job with significantly less – if any – errors or mistakes.[3]
  • Protect the privilege.  Ensure the review teams knows the name and initials of every lawyer in the department (even those that have left) so they can properly search for those in the documents.  Ask to be included in the review of any “close calls” about privilege (including work product) because you will likely have knowledge and context that outside counsel simply will not have.  If there is a fight over documents subject to the attorney-client privilege, spare no expense to fight it and be prepared to seek a writ of mandamus. 
  • Review the “hot docs.”  Every e-discovery review produces “hot docs,” i.e., documents that are clearly good or bad for the case.  Ensure that you see those as soon as they are identified (especially if they involve any of your executive team).  Ask to see any “close calls” here as well to help decide the issue.  Again, outside counsel will not be able to fully appreciate the full “good or bad” of the hot docs or close calls without your input.  Do not cede e-discovery completely to outside counsel.

9.  Constantly reevaluate your position.  Most in-house lawyers do a pretty good job with the initial case assessment, i.e., getting a good feel for the case based on the information and documents at hand at the beginning of the case.  This early assessment can drive a lot of good decisions if done properly (see my post on early case assessments for more).   The problem is that many in-house lawyers stop at the initial assessment and perform no other formal analysis of the case until trial.  That is a lost opportunity.  You should have a written case assessment[4] and look to update the document at least monthly (granted, there may be no changes) and after any significant motion, pleading, order, hearing, e-discovery development (e.g., “hot docs”), interview, or deposition.  Such events give you new insight into the strength or weakness of your position – and that of the other side.  Use this information to formulate – or revise – settlement strategy, motion practice, budget planning, senior executive briefings, and so on. As in-house counsel, you should always be “up-to-date” on the intricacies of your case and never be caught flatfooted if the CEO or other senior executive asks you “what do you think about the case?”  Having a constantly refreshed assessment in your pocket is crucial to getting this right and looking like you are in command versus behind the curve.

10.  It’s the budget dummy.  Of course, I saved the “best” for last.  There is little more important to in-house counsel than their ability to properly manage the litigation budget.  I have written generally about managing outside counsel spend but this is a much more specific endeavor.  The ongoing cost of the litigation and management of that cost is a daily chore that comes with managing litigation (and one that can trip up your career if you mismanage it).  Here are some things to consider:

  • Use the right firm for the matter.  Match the right size firm with the matter at hand.  I love the litigators at the big “bet the company” litigation firms, but their expertise and cost are rarely needed for a $250,000 breach of contract claim.  Your ability to manage the cost of litigation will go up dramatically if you spend time on the front-end getting the right size/type of firm to handle the case.
  • Ensure you have an accurate estimate/budget of the case from counsel.  Outside counsel should be able to give you an initial estimate and, after a few months, a better estimate. Ask them to constantly reevaluate the cost of the case as material developments arise.  Unless you have a flat fee or other arrangement, you must expect the cost of the litigation to ebb and flow and, likely, change (up or down) overall as things are revealed during the discovery process and as you see how the judge (or arbitration panel) sets the scheduling order and/or starts to rule on key motions.  Like your assessment of the case, you must frequently reevaluate your expectations around cost.
  • Prepare management for the cost.  Litigation is not cheap.  You will do yourself and the legal department a big favor if you are open and honest with senior management about the expected cost at the beginning of the case.  If the cost is going to vary, don’t try to hide it. Bring it forward as soon as you know and have the necessary discussion with management.
  • Keep the finance team fully apprised of the cost.  No one likes surprises, especially the financial kind.  Bring the finance team into the circle of trust from the start of the case. Spend time to ensure they understand the facts and claims of the case, why you selected the firm (and vendors) handling the case, and the expected cost of the matter. And underscore with them that the cost will likely change over time and that you will share updates with them as they become available.
  • Enforce budgets and guidelines.  Your outside counsel must know that budgets and forecasts are not things that they can simply ignore once created.  It is the job of in-house counsel to ride herd on outside counsel to ensure they stick to budgets and comply with outside counsel guidelines.  Start (and keep) an open dialogue with your trial counsel about estimates, costs, and that they must let you know the minute they think the budget may not hold (and give good reasons why).  An easy way to do this is a simple spreadsheet prepared by trial counsel at the beginning of each month setting out in detail, by task, what they need to do in the case, why they need to do it, and the estimated cost.  A document like this gives in-house counsel the ability to ask questions, change priorities, and give warnings to management and the finance team if it is going to be a “big spend” month.  The key is open and honest communication with trial counsel about costs and budgets.  They should welcome those conversations and a process that keeps the client informed and happy.
  • Consider litigation financing.  One way to take some of the pain out of litigation costs is to work with a litigation funder. You can read my past post on litigation funding but, in a nutshell, if the case qualifies, the funder will pay the fees and costs in exchange for a cut of any winnings (and you typically get to use counsel of your choosing).  If you don’t win, you owe nothing.  While not as common, litigation financing also works on the defense side of things but the structure is different.[5]  Regardless of which side of the fence you are on, in-house counsel are doing a disservice to the company if they do not explore litigation financing as an option to reduce costs and impact the bottom line.
  • Don’t forget insurance.  Lastly, whenever you are defending litigation, the first thing to do is check to see whether there is insurance coverage that might pay for the defense.  It can save the day financially so it is worth dusting off all of your policies and running the complaint past your broker for their thoughts too.  For more, see my post on insurance basics for in-house lawyers.

*****

There is, of course, more to managing litigation than I can set out here in this blog.  Hopefully, if you are new to litigation management, this will give you some basics.  One good resource to consider is this one-hour online course Litigation Management for In-House Counsel.  And if you take nothing more away from reading this post, keep top of mind that when it comes to managing litigation as an in-house lawyer there is simply no substitute for (and no excuse for not) getting your hands dirty.  Your personal and detailed involvement is critical, regardless of whether you are a legal department of one or part of the litigation section of a large in-house department.  No matter where you sit, the basics are the same (including whether you practice in the USA or elsewhere).  Take control and read everything.  In other words, be a lawyer.

Sterling Miller

October 31, 2021

My fifth book, Showing the Value of the Legal Department: More Than Just a Cost Center will be available in November! Stay tuned for an announcement when it is available to purchase via ABA publishing.  Two of my books, Ten Things You Need to Know as In-House Counsel – Practical Advice and Successful Strategies and Ten (More) Things You Need to Know as In-House Counsel – Practical Advice and Successful Strategies Volume 2, are on sale now at the ABA website (including as e-books).  If you are having trouble finding it or buying it, let me know.

Cover

I have published two other books: The Evolution of Professional Football, and The Slow-Cooker Savant.  I am also available for speaking engagements, webinars/CLEs, coaching, training, and consulting.

Connect with me on Twitter @10ThingsLegal and on LinkedIn where I post articles and stories of interest to in-house counsel frequently.  

“Ten Things” is not legal advice nor legal opinion and represents my views only.  It is intended to provide practical tips and references to the busy in-house practitioner and other readers.  If you have questions or comments, ideas for a post, please contact me at sterling.miller@sbcglobal.net or, if you would like a CLE for your team on this or any topic in the blog, contact me at smiller@hilgersgraben.com.

[1] Other than the law firm’s internal memoranda, i.e., things that will not be shared outside of the law firm.

[2] There are lots of “mundane” pleadings and documents that do not require your review, e.g., a deposition notice.  But, if you are not experienced with litigation, reading those documents can give you insight into how litigation works.

[3] Shameless plug: my firm offers high-quality/low cost discovery counsel services and I would be happy to speak with you about it.

[4] For samples see ACC-Sample Early Case Assessment Form and An Introduction to Early Case Assessment (Schiff Hardin LLP).

[5] See, e.g., Defense Funding: The Next Frontier for Litigation Financing (Proskauer)

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s