Litigation: the first 90 days

October 2013 | SPECIAL REPORT: INTERNATIONAL DISPUTE RESOLUTION

Financier Worldwide Magazine

The first 90 days of a suit are critical. Yet defendants and their lawyers tend to sit by passively as the early stages of litigation run their course. “Frequently”, writes Craig McEwen, “lawyers and their clients are trapped by the routines, incentives, and traditional expectations of legal and business practice.” See Craig McEwen, Managing Corporate Disputes: Overcoming Barriers to Effective Use of Mediation for Reducing Cost and Time of Litigation, 14 Ohio St. J. on Disp. Resol.1, 26 (1998). The machine grinds into familiar motion: cost sensitivities and court deadlines encourage the repetition of habitual practices – answering the complaint, launching discovery, filing motions. By the time both clients and their lawyers engage seriously with the case, discovery – which in US litigation accounts for one-fourth of outside legal fees – is already well underway. SeeLawyers for Civil Justice, Civil Justice Reform Grp. & U.S. Chamber Inst. for Legal Reform, Litigation Cost Survey of Major Companies 17 (2010).

Drifting passively into discovery delays resolution and costs money. To avoid this costly drift, defendants should approach the first 90 days of each case in the same way. As early as possible, and unquestionably before discovery begins, defendants should formulate a trial plan. This means gathering key facts, selecting key witnesses and documents, and analysing the other side’s arguments with an eye toward trial. Without this information, it is impossible to assess realistically – and thus monetise – the basic strengths and weaknesses of the case and to evaluate possible end-game solutions.

Arguments. The first step in formulating a trial plan is to analyse not only the bare legal elements of the plaintiff’s claims, but to anticipate and evaluate the arguments that plaintiff is likely to raise at trial. Too often defendants’ attorneys, faced with budgetary constraints, draft the answer without analysing the issues in sufficient detail. This is reactive and wasteful: any early savings will, inevitably, be dwarfed by long-term costs associated with irrelevant discovery and avoidable changes to litigation strategy. Better to analyse and narrow the scope, and assess the risk, of each claim and defence. Better to estimate damages quickly and accurately. This information can then be used to value the case, to decide on a settlement amount (if any), or to plan a sound litigation strategy.

Key documents. The second step is to identify the 50 to 100 key documents in the case. Most trials turn on a handful of game-changing exhibits. Almost all are identifiable early on. Waiting until discovery is underway to do so is not realistic. The millions of pages of electronic data involved in most corporate cases cannot be narrowed effectively by junior attorneys, much less contract attorneys, working alone. Instead, experienced trial counsel must be involved to anticipate and highlight the documents that will truly matter at trial. Proposing that key documents should be identified early is not a new idea. Most counsel agree that “corporations should know most of the pertinent facts within thirty days”. John B. Henry, Fortune 500: The Total Cost of Litigation Estimated at One-Third of Profits, Metropolitan Corp. Couns. 28 (Feb. 2008). Even so, most companies are reluctant to analyse the case early on, falling instead into the trap of preparing a pro forma answer and waiting for the discovery hammer to drop before digging into the documents. This approach invariably costs more. It is no secret that discovery is typically overbroad and inefficient: according to one study, the ratio of pages discovered to pages entered as exhibits is 1000/1. SeeLawyers for Civil Justice, Civil Justice Reform Grp. & U.S. Chamber Inst. for Legal Reform, Litigation Cost Survey of Major Companies 3 (2010). What many litigants fail to recognise is that preparing a trial plan within the first 90 days saves money. It can, for example, be used to narrow and focus the work of the document-review team. Likewise, it can shorten the period of time required to prepare witnesses for deposition and ensure thematic consistency across witnesses when they are eventually deposed. As judges are increasingly using interrogatories to limit the scope of arguments that can be made in proceedings, early assessment of the arguments in a trial plan also ensures that key points and documents are always included in written interrogatory responses. It should come as no great surprise that focusing trial counsel on the key issues early on generally results in lower legal fees.

Witnesses. The third step is to identify and assess relevant trial witnesses. There is nothing premature about doing so within the first 90 days. Witnesses, their statements, and – critically – their credibility can make or break a case. Here, again, the early evaluation of potential witnesses is instrumental to an accurate cost-benefit analysis. Weak witnesses might be a reason to pursue settlement; strong witnesses make litigation more viable. In addition, having the business side of the client involved in trial preparation at the start of a case often facilitates greater internal support for the onerous but inevitable discovery efforts that will follow.

How to use the trial plan. If you understand the arguments, have reviewed the key documents, and have evaluated the human frailties of your witnesses, you can now evaluate your case. Is this a matter where you have the legal arguments on your side but your witnesses are weak? If so, then perhaps your best opportunity is at summary judgment. Is your case jury friendly: can you simplify the arguments and are your themes consistent? If not, then perhaps you should be lowering your damages expectations. At the very least, a trial plan helps you answer three critical questions:

What are my best arguments and what is the value of the claim? A trial plan helps you determine which cases to fight and which to settle.Armed with this information, you can make an informed and rational decision about how much to invest defending the action and the appropriate value of any settlement offer.

What factors make a difference and when will the key issues be decided? Understanding the nature of your best arguments is critical to determining when the key questions will be resolved. Some factual disputes are likely to be resolved during document discovery and depositions, others only at trial. Likewise, some legal disputes can be resolved quickly by the judge at summary judgment. Knowing when, and having an educated idea of how, these critical turning points will be resolved allows you to better estimate legal fees and to decide whether to settle or whether to fight.

What is the path to victory? Most cases settle because they are not worth the risk or the cost of bringing to trial. For all but a few cases on the margins, it is practically impossible to assess both risk and cost absent a trial plan. And for the cases where settlement appears unattainable – for the cases that must be fought – a trial plan is essential. Either way, preparing a trial plan within the first 90 days is the best method to ultimately obtain the result you want: victory.

Louise Stoupe is a partner and Pieter de Ganon is a litigation associate at Morrison & Foerster LLP. Ms Stoupe can be contacted on +81 3 3214 6979 or by email: lstoupe@mofo.com.

Louise Stoupe and Pieter de Ganon

Morrison & Foerster LLP