One of the amazing things about the Web is the ability to keep in touch with people even years after last seeing them. Recently, “an “old college buddy” contacted me after coming across this site while doing legal research.  It turns out that he’s an attorney in Los Angeles.

Keith Turner is a litigation attorney with his own Los Angeles based practice.  He co-wrote the following article about choosing a litigation attorney.

Five Questions To Ask Your Litigation Counsel
By Keith Turner & Stephen Kane

When asked, many entrepreneurs state that being sued is among the greatest of their fears.  Litigation has become an inescapable reality of business life – many companies, large and small, will either be sued or have to file a lawsuit at least once during the course of their lifetimes.  As a result, litigation may best be viewed in the same logical way as any other business decision that an enterprise must make.  Successful business people already know how to assess and appreciate risk in making their every day business decisions.  This article will show business professionals how to approach litigation so that they will fully appreciate the risk involved and will then be able to make appropriate, confident business decisions regarding their companies’ litigation matters.

There are numerous ways that a business can minimize the likelihood that it will be involved in litigation.  These include, among many others, properly registering trade names, marks, and other intellectual property; having an employee manual that is prepared, or at least reviewed, by counsel; and implementing a document retention policy and ensuring that all business records are kept in accordance with it.  However, this article assumes that your company is past the point of litigation avoidance and has engaged, or is in the process of engaging, a litigation attorney to represent it.

At the beginning of any case, your litigation attorney should provide you with a comprehensive written evaluation of the known facts involved in the case, the law that will be applied to those facts, a litigation plan for the case and a budget for the costs of implementing the litigation plan.  This initial evaluation letter will set the framework for the entire case.  As the matter develops over time, the evaluation, and the plans and budgets necessary to implement those plans, will necessarily change.  It is crucial that you as the client have a clear understanding from the beginning of the case what can be expected in the matter so that when choices need to be made regarding changes to the evaluation, plan and budget, you will be in a position to make good decisions that positively assist in moving the case forward to a successful resolution.  Ideally, the initial evaluation letter should address the items set forth below.  If it does not, do not hesitate to contact your attorney.  Regardless of how far into a case you may have already progressed, it is never to late or inappropriate to discuss with your lawyer the following questions:

1. Will We Win?

Whether your business is the plaintiff or defendant in a case, one of the first questions you should ask your lawyer is if you will win.  In order to determine the likelihood of success, a lawsuit is generally evaluated on its objective and subjective elements.  Most cases have three main objective components: (1) the facts that underlie the dispute; (2) the legal claims that form the basis for the suit and the legal defenses to those claims; and (3) the damages that stem from the claims.

The subjective parts of a case include a variety of factors such as witnesses’ credibility and jury appeal, including their ability to convincingly convey the specific facts needed to win; the likeability, legal and trial skills of the various attorneys involved in the matter; and the attitude of the judge toward plaintiffs, defendants, the type of litigation before him or her, and the attorneys in the case.

Naturally, it is impossible to guarantee any outcome – and any attorney who does so should be viewed with skepticism.  However, experienced counsel should be able to provide you with a professional opinion of the merits and detriments of your case.  Based upon his or her analysis of the objective and subjective factors involved in any matter, your counsel should be able to give a percentage likelihood of success, as well as a potential dollar range of verdict and settlement.  As the case progresses through the litigation process, the percentage and range initially provided to you by your attorney should become more defined.  In the event of extremely high stakes cases, professional jury consultants are available to assist your attorney in further analyzing the risk involved in your matter, as well as the chances for prevailing.

Regardless of the outcome provided to you by your attorney, obtaining a second opinion for legal matters is often money well spent.  Whether for a fixed fee or for a budgeted amount, experienced counsel can provide a qualified or limited opinion and recommendations for resolution that may assist you in evaluating the variety of methods that may be available to you when handling your case so that you can then make the best business decision regarding it.  While some attorneys may feel a lack of loyalty if a client seeks or obtains a second opinion, confident counsel should welcome having another opinion on the case.  Most people do not hesitate to get a second opinion when they receive a medical diagnosis that will have a significant impact on their personal lives.  The same approach applies to the impact that litigation will have on your company’s operations.

2. How Much Will It Cost?

In order to properly make business decisions regarding your litigation, you need to know how much the case is going to cost.  Many businesses require that a budget or estimate of legal fees and costs be approved by the business before the attorney is permitted to implement any litigation plan.  The accuracy of any budget will depend on the type of fee arrangement.  Most litigators prefer the traditional hourly fee arrangement.  However, some business lawyers are more entrepreneurial and will be willing to consider alternative fee arrangements such as contingency, fixed-fee or some type of hybrid.  Even in the defense arena, attorneys may be willing to work for something other than the traditional hourly fee arrangement, such as a reverse contingency.  In any case, it is important to remember that hourly rates, contingency fees and other cost items may be more negotiable than you assume.

The general advantage of the traditional hourly fee arrangement (from the client’s perspective) is that it can provide a relatively accurate estimate of the overall costs of the matter from an early stage in the case.  However, another approach may be for the attorney to provide estimates or budgets for defined phases or time-periods within the litigation, creating a “menu” of legal strategy and activity options that the business can then select from for each defined phase.  Because many litigation activities can be deferred or performed in any one of several of the phases of litigation, this method may provide you as the client more control over when those things occur (and thus when you will have to pay for them).  Alternative fee arrangements can also be structured to create a more partner-like relationship between a business and its attorney so that their respective objectives and goals become more aligned.  This can work to prevent attorneys from feeling that they are merely selling their time, and clients from feeling that their attorney is simply trying to profit from the business’ misfortune.

The accuracy of a litigation budget may be significantly affected by two main conditions your attorney cannot control: 1) the opposing party and his counsel; and 2) the court.  The opposing party and counsel can significantly increase litigation costs if they are particularly combative, uncooperative or unreasonable.  If your opponent’s agenda is not to achieve a quick and efficient resolution of the matter, your counsel may need to adjust strategy to attempt to exercise better control over the case.  Obviously, this change in strategy will necessitate additional work to be performed on the case, which will be reflected in an increase to the litigation budget.

Some judges and courthouses are efficient and sensitive to litigation costs.  Others are not.  Some courts, such as those in Los Angeles County, keep detailed statistics on case disposition factors.  These statistics make it possible for your counsel to more accurately analyze the court factor in the cost equation.  If no statistics are available, then the accuracy of any budget will necessarily be adversely affected.  Additionally, an attorney with actual experience before the judge assigned to your case, or access to other attorneys who are familiar with the judge’s “style” will be able to tailor strategy to fit the judge’s reputation and ensure a bit more accuracy in budgeting.  In any case, make sure your attorney has done his or her homework and considered all available information regarding the judge and court when reviewing a litigation budget.

By far, the most significant “line-item” in an attorney’s litigation budget will be for trial and trial preparation.  However, because 95% or so of civil cases settle before trial, the actual biggest legal expense most parties, including businesses, will incur is usually for activities that occur during the “discovery” phase of litigation.  “Perry Mason” or “Denny Crane” moments make for great television drama, but rarely happen in reality in civil trials due to the discovery process.  The goal of the discovery phase of litigation is specifically “to prevent trial by ambush”.  In order to achieve this goal, each party to a case is required to identify the known facts, documents and witnesses that support its case by taking depositions, exchanging documents and providing responses to written interrogatories.  Counsel should be able to provide a cost/benefit analysis for each phase of discovery.  While the discovery process is supposed to be mutually cooperative, the process will invariably cost more if opposing counsel is unnecessarily combative or uncooperative.  One remedy for dealing with non-cooperative counsel is to file a motion to appoint a referee to supervise discovery for the court.  Of course, the appointed referee also needs to get paid, so this potential fee should be weighed against the cost of dealing traditionally with an uncooperative opponent before any such motion is brought.

Additionally, there are a number of things a business can do to control litigation fees and costs in an hourly fee arrangement.  First, determine in advance exactly who will be working (billing) on your matter.  To the extent possible, keeping the number of timekeepers on your matter to a minimum will increase efficiency and help to ensure cost effectiveness.  Being able to consistently do so is one mark of an attorney who is able to efficiently manage his or her cases.

Second, ensure that you have a clear understanding of not only when your attorney’s “clock” starts running, but also how it runs.  Most attorneys who bill hourly do so in six minute (0.1 hour) increments.  However, some will bill in 0.2 or 0.25 increments.  Most attorneys bill for telephone time.  When attorneys and clients become friendly, phone conversations can slide into personal matters.  Many clients are surprised and upset to find out that they have been billed for a telephone call that they thought concerned mostly personal matters.  Understanding how your lawyer intends to bill you for activities will allow you as the client to avoid unnecessary expenses by addressing these types of situations in advance.

Third, require your attorney to submit to you detailed bills, on at least a monthly basis, which provide the following information: each activity or action, described in sufficient detail so that you understand what it is and why it was necessary to progress the case; the timekeeper who performed the activity and his/her rate; time spent on the activity; and the total dollar value for each separate activity.  You should carefully review your attorneys’ bills to determine which attorneys are working on your case; how the case is moving forward; whether there is any unnecessary duplication of activity; and whether the amount of time (and fees) for each activity is reasonable.  You should feel free to question your attorney regarding any aspect of his or her bill.

The subject of reasonable billing practices is best left for a future article.  However, one last cost control measure you may wish to consider is requiring pre-authorization and time estimates before allowing your attorney to engage in research projects, take or attend any depositions, or bring any motions.

3. How Long Will It Take

Making a business decision for a litigated matter requires that you understand the lifecycle of the case.  Experienced counsel should be able to provide you with an estimate of how long it will take to fully resolve the case, whether it be through mediation and settlement or by reaching a verdict after trial.  Your attorney should also be able to provide timelines for the major events and decisions that will occur during litigation for which you will need to prepare.  Some of these events will be the trial date, the discovery cut-off date, the deadline to designate expert witnesses, and the deadline for filing any dispositive (case-ending) motions.  Some judges schedule a settlement conference date or deadline to complete some sort of mediation based on the parties’ needs in the case.  You will find that the deadlines set by these events often form the basis for your lawyer’s litigation plan.

4. Can We Settle?

The answer to this question is almost invariably “yes”.  As set forth above, approximately 95% of civil cases settle before trial.  However, the terms of any potential settlement must first be acceptable to you and your company before it can be effectuated.  Once you are provided with a well-thought analysis of the merits and detriments of your case, as well as the costs associated with litigating it, you will have at least some of the information necessary to begin making a reasonable cost/benefit analysis of whether to settle.  This analysis can also provide information on how best to proceed to posture the case to maximize the potential for settlement and the amount recovered via settlement.

Effectively managing litigation expenses while being sensitive to your opponent’s legal expenses are often a duel set of keys to positioning a matter for the best possible settlement.  On the defense side, many businesses will allocate a single “pot” of money for the costs of litigation as well as any potential settlement.  If the plaintiff’s counsel fails to appreciate that his or her “scorched earth” litigation tactics prior to engaging in settlement discussions are in effect eroding the potential amount that will ultimately be available to settle the case, then the plaintiff will undoubtedly fail to be able to obtain a favorable settlement.  On the plaintiff’s side, the key is often determining when the defendant tires of paying its attorney to defend and becomes more willing to simply pay off the plaintiff to go away instead.

5. What About Insurance?

One area that is often overlooked is whether there is any potential insurance that may cover some or all of the legal expenses, settlement or judgment for a case.  Both sides to a dispute should be sensitive to and plan their objectives and goals in light of what, if any, insurance may provide.  Good business lawyers will have access to resources that will allow him or her to analyze and inform you of the ramifications of any insurance issues that may arise during your case.

If, as a defendant, you have any potential insurance coverage, your defense of the litigation should be tendered to any of your insurance carriers that may be on the risk for the underlying claim as early as possible, unless your business has a compelling reason to avoid involving your carriers.  The reason for tendering as early as possible is because most policies preclude any responsibility for defense or indemnity before the litigation is tendered.

If your insurance carrier does agree to defend you in the lawsuit, it may retain its own lawyer to represent your business company in the case.  If that happens, your attorney should review the terms of your carrier’s defense to determine and advise you whether there are any potential conflicts of interest.  If so, your carrier may be required to also pay for counsel that your business selects.

If you are a plaintiff, you and your counsel should be sensitive to any potential insurance that your opponent may have, since insurance often fuels the best and quickest resolution of a dispute.  Be mindful that the mere filing of a lawsuit will be insufficient to force a settlement from an insurance carrier.  Your counsel will need to work with you and be prepared to prove what you claim and understand what portion, if any, of any recovery is potentially covered under the policy.

As a plaintiff, you may also have your own first-party insurance that covers some or all of your damages.  Before suing, your counsel should work with you to consider tendering the matter to your own carrier and ensuring to otherwise not impair your carrier’s own rights against any of the parties that may be responsible for the damages.

Conclusion

Litigation should be handled like any business decision.  This means doing the necessary research and working closely with your litigation counsel to ensure that you have sufficient information to make litigation decisions based on the business’ overall objectives and bottom line.  Your business can maximize its likelihood of success by requiring your counsel to provide periodic budgets, evaluations and recommendations so that you can actively manage the litigation.  Ultimately, the best results are obtained by a partnering relationship between your business and your attorney so that your attorney’s fees are aligned with obtaining your business’ goals.

Keith J. Turner
9595 Wilshire Blvd., Suite 305
Beverly Hills, CA 90212
O: 310.785.1710
kjt@kjtlaw.com