Bet-the-Company Litigation: Part 2
October 31, 2005 | Filed Under Tactics, Managing
When we covered bet-the-company (BTC) litigation last time, the linked article had good ideas on how to handle these difficult cases.
As promised, a few ideas on avoiding BTC litigation in the first place:
– Analyzing for “lessons learned.” The military calls this an after action report, but the concept can be applied to litigation or other major dispute. There is a natural temptation to close the case file and ship the records to storage. But many large disputes stem from problems that can still recur, even if a settlement was reached.
– Seeking to “connect the dots.” Examine how some disputes may be linked together. It is said that good things happen in threes. In my experience, it is more common that bad results that lead to BTC litigation often result from a string of smaller problems that weren’t seen or dealt with on their own.
– Looking after the “crown jewels.” Most companies have a key product or service, critical suppliers or a primary regulatory agency. BTC litigation often stems from some breakdown in one of these areas. In-house counsel should be aware of major business initiatives in these areas and participate in planning for major changes or in advising on how to handle “disagreements” before they become actual disputes. Sometimes clients see their own interests very clearly, but cannot (or will not) see issues of a larger concern for the company. Taking on a key regulatory agency, for example, can sound decisive and proactive. But short-term victories can often prove illusory over time. The staff in the agency can have a long memory, and then when you really need a bit of slack later, it will be payback time.
In the third and final installment of BTC litigation on Wednesday, we’ll look at these three ideas as applied to a recent case–the litigation leading to the collapse of the Arthur Andersen firm.
Bet-the-Company Litigation
October 28, 2005 | Filed Under Tactics, Managing
Sometimes you have a case that requires special attention from the start.
Canadian newspaper National Post covered this topic from a session at the Association of Corporate Counsel annual meeting held this week in Washington DC.
Such a case can start like this:
… a filing from a regulator, a competitor, an inventor or even a lone consumer who later becomes lead plaintiff for a class. All turn out to have this much in common: If successful, they can lead to the loss of the entire company through financial ruin or a complete destruction of goodwill.
Some of the other signs to look for are:
… things that don’t track logically, such as demands for an absurd settlement amount or a plaintiff’s refusal to even discuss settlement, or some indication their motive is to destroy the company. Pleadings that assert novel theories of law or cases based on very recent changes in the law are also a danger sign, as well as those seeking injunctive relief that would provide the person filing the suit with competitive advantage.
The panel stressed the importance of getting support for the defense from the “highest levels of management.”
The article goes on to discuss important matters involving PR, retention of experts, HR considerations regarding company witnesses and insurance.
While support may involve significant spending, I was somewhat troubled by the notion that a GC might need “liberal, if not unfettered” authorization for spending on the defense.
In my experience, two keys to successful litigation are the selection of the team (both inside resources and outside counsel), and how the team works together. I have seen cases that proceeded with a virtual blank check start to stagger under the weight of over-staffing later in the proceedings. The notion of “leaving no stone unturned” can result in files full of 25-page memos on obscure areas of the law (the 18th affirmative defense or discovery motions) that are barely read and rarely used. Meanwhile, the plaintiff’s attorney has developed one or two main facts or themes that will defeat a motion to dismiss and resonate with a jury.
I don’t think it is a coincidence that many successful plaintiff lawyers are at smaller firms and tend to staff their cases much more leanly than their corporate defendant counterparts. Only so many lawyers can take essential depositions, only one can make an opening argument.
You can’t just out-spend the opposition and win. It has to be smart spending coupled with strategic thinking.
Someday a GC will select a smaller litigation firm to battle a name plaintiff attorney in a key case. That will be an interesting battle to watch.
And, if successful, that GC should get an “Uncommon Valor” award at the next annual meeting of the Association of Corporate Counsel.
On Monday: some ideas on how to avoid Bet-the-Company Litigation in the first place.
A GC on SCOTUS? (#2)
October 27, 2005 | Filed Under In the News
No.
Three thoughts:
1. I should have followed my Roberts “policy” on Miers.
2. Now the President is over a barrel. If he tries to appease the right, the left girds for battle. If he doesn’t, the right is already engaged.
3. The problem wasn’t just President Bush asking Ms. Miers. It was also her saying “yes”. If she had taken her nominee screening job seriously, she would have seen a conflict. If she was really looking for nominees qualified at the Roberts level, she should have seen a problem in the mirror.
While the President was focused on Katrina and Rita, it was Hurricane Harriet that surged over the White House.
And if Patrick Fitzgerald drops the dime on Messrs. Rove and Libby tomorrow, the President will really have hit the trifecta this week.
A World View of the Bottom Line
October 26, 2005 | Filed Under New Services, Managing
I noted last time a recent survey that showed corporate legal cost control has stagnated. The majority of all services were still performed at hourly rates (standard or “discounted”)–making budgets unpredictable and potentially rewarding over-lawyering.
Forward-thinking companies are becoming aware of offshore alternatives to gain cost advantages while delivering quality legal services. While still in its infancy, any GC (or client-driven outside counsel) needs to track this developing area.
One helpful new resource to view and bookmark is offshore-legal-services.com. Established by David Galbenski, CEO of Contract Counsel, this site presents a helpful introduction to this area, both with traditional background materials and with a series of short videos as well.
Mr. Galbenski has been an innovator in the use of contract legal services and Contract Counsel has been recognized as an Inc. 500 growth company. He is now extending his search for legal solutions worldwide.
This makes Mr. Galbenski a person to listen to and offshore-legal-services.com a site to watch.
Legal Costs and Consequences
October 24, 2005 | Filed Under Legal Resources, Managing
UK publication Legal Week summarizes the findings of an Altman Weil survey on corporate legal cost control. One clear lesson is:
While companies appear to be engaging in conversations with their external legal advisers regarding cost controls, the survey’s results mirror last year’s findings, showing that little is being done to curb law department expenditure and revolutionise billing methods. Indeed, cost cutting by in-house legal departments seems to have plateaued for the second year in a row.
The article quotes Altman Weil principal Daniel DiLucchio that hourly billing remains the main method of billing, lessening predictability in annual budgets. He also makes the helpful observation that reduced hourly rates, reported as the leading alternative billing arrangement (by 57% of companies surveyed), is really no alternative at all. Anyone who hasn’t seen reduced hourly rates combined with excessive hours hasn’t been around the block much.
The survey is available for purchase at Altman Weil.
The bottom line for outside lawyers: your client’s GC needs some assistance in cost control.
The bottom line for the GC: if you don’t show cost improvement, someone else will do it for your successor.
On Wednesday, a preview of a new source for information on one growing weapon for legal cost control.
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