In-house ACCess : In-house ACCess: Association of Corporate Counsel : ACC : The In-house Counsel Bar Association

By John DeGroote and Alan Dabdoub 

John DeGroote is the President and Chief Legal Officer at BearingPoint, Inc. and member of the ACC Dallas-Fort Worth chapter. Alan Dabdoub is Special Counsel at Lynn Tillotson Pinker and Cox, LLP in Dallas, Texas and former Chief Litigation Counsel of a large subsidiary of a Fortune 100 Company. 

As we all know, high-stakes litigation can be time consuming and disruptive, and one of outside counsel’s jobs is to make the process as predictable as possible. It’s easy to assume outside counsel will provide excellent service in every case, but it’s safer to articulate what you want from them early on so you can avoid surprises and communication breakdowns. While a great process can’t guarantee the desired result, it will make managing your stakeholders’ expectations much easier. The following five tips are sure to get you off to a great start.

1.     Avoid Fire Drills

Let outside counsel know as soon as possible how to minimize disruptions to the business. This may vary case by case, but in all scenarios, communicating a plan will enhance responsiveness and service. Tell your outside counsel:

• How often you’re required to update internal stakeholders during the litigation, the type of information you need, and the format in which you need it;
• The expected dates to report probabilities of a loss so the company can accrue for contingent liabilities in a timely manner;
• Protocol for contacting company witnesses and the times during the fiscal year to avoid scheduling important company depositions or undertaking large discovery projects that will consume company resources;
• The minimum amount of time needed (i.e., one month, two weeks, etc.) to respond to document requests, begin preparing for a deposition, or to review drafts of briefs.

Knowing these details allows outside counsel to better understand how to minimize business disruptions, while reducing internal stress and creating a tailored, professional service that surpasses clients’ expectations.

2. Get Rid of Bad Problems Quickly

Great problem solvers use early case assessments and alternative dispute resolution techniques, and motivate their adversaries to resolve the case. Exploring various alternative dispute resolution strategies demonstrates sophistication, not weakness. If possible, lead rather than manage the process. Suggest a call to opposing counsel to objectively present weaknesses in your adversary’s case, suggest that outside counsel send an offer of judgment early in a case to shift the risk, suggest a summary trial immediately after discovery, or suggest a non-binding arbitration.

The benefit of exploring creative dispute mechanisms is twofold: Earlier resolution allows you to focus on preventing litigation, and if the case isn’t resolved, you’ll be in a much stronger position to marshal support for a trial from your internal stakeholders. Exhausting creative problem-solving techniques will help prevent second-guessing in the event of an adverse verdict.

3.     Help Me Do More with Less

You’re charged with enabling the business in a legal and ethical way. The less time spent on outside counsel tasks, the more time spent on enabling the business. Outside counsel will increase productivity and value by doing the following: 

• Return all emails and calls within a few hours after they are received if possible.
• Conduct an early case assessment before filing suit if the company will be the plaintiff, and within 90 days of being served if the company is a defendant. This early case assessment will serve as the playbook during the litigation;

Outside counsel should also provide you with several things including:

• Electronic or hard copies of all substantive pleadings, emails and correspondence;
• Short and practical litigation reports;
• Briefs ready for filing.
• A liability and damages analysis every quarter;
• A scheduling order of the case allowing you to inform internal stakeholders of important events happening in the case; and
• A robust decision tree analysis of the value of the case, updated as appropriate, so you can recommend to stakeholders the best final resolution for the company.

This type of service will ensure that you’re updated often on the substantive, strategic and budgetary aspects of the case. You’ll be able to answer tough questions about the case anytime and will be free to take on other challenges within the company.

4. Help Me Pitch Your Value

The most overlooked attorney work product is the invoice. Outside counsel should not send invoices containing charges for an administrative service, associate training, or duplicate time entries. Each time entry should reflect an effort to drive the case toward a resolution. Ask outside counsel to set forth in their invoices: 1) what the fees are to date over the life of the case, and 2) a general description of how the activities on that invoice have moved the case closer to a resolution. This will help you better judge the value received in the case and allow you to communicate that value to internal stakeholders.

5. Explain the Settlement Value

A decision tree can help in-house counsel quantify the settlement value of a case depending on the likelihood of certain outcomes at different stages in the litigation (i.e., whether summary judgment will be granted, whether important evidence will be excluded, whether punitive damages will be awarded, etc.). You’ll then be able to better determine optimal settlement, pre-trial, trial and appeal strategies.

To create a decision tree,  ask outside counsel for the odds of winning a summary judgment, winning at trial, and of obtaining a low, medium and high verdict. Then, ask what the low, medium and high range of a verdict can be. You can then create the decision tree based on these percentages. While a decision tree is based to a certain extent on subjective data, your internal stakeholders will understand the settlement value much better as you walk them through it. This reduces the chances of the company overpaying on a case or foregoing a propitious settlement opportunity. And your stakeholders will be grateful for that analysis.       

For in-house counsel with many internal stakeholders, the litigation process should be just as important as the case result. Create a list of service expectations in every case and communicate that to outside counsel. This will maximize the value of the legal services received, strengthen your working relationship with outside counsel and enable you to most effectively manage internal expectations from start to finish.

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Bob Banks wrote in the Harvard Business Review a number of years ago that Xerox had a legal budget and it was always exceeded. For sure there are numerous legal expenses, but the culprit for breaking the budget was typically litigation.

Many ACC (formerly ACCA) members convened at the Brookings Institution to seek a remedy. They had tried the usual attempts to manage billings. These remedies get dusted off, renamed and revived to manage legal fees. Those of us who have been around long enough have seen them in their various reincarnations. Increase the number of law firms serving you to increase competition and loosen the dominance of any one firm. Then came “shrink the number” of the law firms serving you, so you negotiate a better price. Alcoa took this idea to extreme by reducing the number of firms serving it to one. It did not survive because it had its own price distortions built in.

These fee management schemes, flat billing, value billing, all come and go, and it is a bit amusing watching them rediscovered by new in-house attorneys who are convinced they have found the fountain of youth. But this is not about billing schemes; it is about lawsuits. Frustrated by the inability of these fee management schemes to control costs, many ACC senior counsel joined other members of the legal community and convened at the Brookings Institution in the mid 1990’s to fix the problem once and for all, at least in the federal court system, their forum of choice.

The newest version of cost control was based on the assumption it was a systemic problem. That is code for “none of our other solutions worked and it is not our fault”; it is therefore an endemic problem with system. The result was the Civil Justice Reform Act which had both its supporters and detractors. Then there were skeptics like me who believed that this too would pass.

The Civil Justice Reform Act had two fundamental premises at its heart. First, since no one else seems to be able to control costs, it was decided to give the courts the power to do it; and even better, they would design a process that encourages Alternative Dispute Resolution (“ADR”) and avoid the courts altogether. As ACC’s value challenge Version 9.2 illustrates, these rather dramatic efforts failed. ADR, upon solid scientific analysis, did not prove to have an impact on litigation costs, nor did the other attempts at case management.

However, in recent conversations with various court staff, a new concern is arising that is very troubling to the courts (we are talking jobs here) yet promises to dramatically reduce litigation expenses. Traditional commercial litigation is disappearing from the federal courts, perhaps the state courts as well.

In the next couple of blogs we speculate on causes of the phenomenon, and anyone with ideas please feel free to contribute.

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