Litigation On Trial
Litigation is a process whereby legal disputes are resolved. The process is designed to promote justice, ascertain truth, and provide a forum where an injured party can seek compensation for damages sustained. Too often, however, litigation falls short of these noble goals. Even a straight forward claim can take months, if not years, to be resolved and requires the expenditure of substantial sums of money.
Because of its harsh realities, parties often walk away from the litigation process questioning whether it was all worth it. Even when it leads to the “right” outcome, the time, expense and patience required to see a dispute to the end make it near impossible for the prevailing party to claim a true victory. The verdict is in. Litigation is truly a dispute resolution process of LAST resort.
Many litigants enter the litigation process with the simple goal of having their “day in court”. They seek an opportunity to present their evidence before an impartial fact-finder – whether a jury, judge, or arbitrator – and obtain a fair resolution to their legal dispute. While some may foresee a few twists-and-turns on the path to resolution, most are unprepared for the inefficiencies and delays they are likely to encounter.
The litigation process is rarely straightforward and litigants are confronted with unexpected and, in many instances, unnecessary challenges. These challenges can take many forms. For example:
- Overburdened judges who cannot devote sufficient time to the varied cases on their docket. As a consequence, pretrial motions (and other procedural tools) designed to simplify, focus, or terminate the litigation are not adequately considered. Instead of being decided on the merits, motions are often simply denied as a matter of course. Not only does this render the time and effort to prepare and argue the motions a waste, but it also leaves improper and irrelevant issues within the scope of the litigation.
- Obstinate attorneys who prefer to obstruct, delay and obfuscate rather than bring a dispute to a just resolution. While lawyers have an ethical obligation to zealously advocate on behalf of their client, zealous advocacy does not include the gamesmanship used by some. Some attorneys will employ tactics for the sole purpose of annoying, harassing or inconveniencing the other party. In addition, in the name of advocating for their client, they will advance disingenuous arguments by misrepresenting evidence and misstating the law. The frivolity of these tactics notwithstanding, the other party or parties to the litigation must nonetheless expend the time and effort to fully and completely respond to these maneuvers and protect the interests of their client.
- Rules of procedure that do not comport with the complexities of the modern business world. While the precise rules of procedure vary by jurisdiction or venue, most include a “discovery” stage. Discovery is the stage of the litigation where each party has the right to obtain information and documentation from the other parties in the litigation. The scope of discovery is intentionally broad and allows the litigants to obtain all information and documentation relevant to any claim, defense, or issue in the litigation – even if the evidence is ultimately inadmissible at trial. In the old days, businesses met their document production obligation by collecting files from the filing cabinet or offsite-storage facility and then making them available for review to the other party. Even in the paper world a party’s discovery obligations could be cumbersome, but in today’s world of electronically stored information the burden of discovery has increased exponentially. Electronic storage systems, email servers, back-up servers and employees’ desktop computers, laptops, tablets, and smartphones are all potential sources of information from which information must be collected. Not only is a party responsible for producing the substantive information contained in an electronic file, but, in many instances, it must also extract and produce the related metadata (the imbedded data in an electronic file that contains descriptive information about the file including the author, the date of creation, and similar information). The effort necessary to collect, review and produce this electronic information is significant, time consuming and very costly.
- Trial Calendars are another source of inefficiency in the litigation process. Just because your case has completed all the pre-trial phases of the litigation process does not mean your “day in court” is imminent. To the contrary, because of the sheer volume of cases in the system, cases otherwise ready for trial may still be months, if not years, away from seeing the inside of the courtroom. Compounding the issue is the fact that trials are typically not scheduled for a date certain. Instead, Courts publish trial calendars on which a number of cases (the specific number varies by court but typically are no less than 20 and can be as high as 50, or more) are listed for trial during a given period (usually one to three weeks). Each of the cases on the trial calendar must be prepared to proceed to trial, if called. Because many cases settle on the eve of trial, litigants – even those low on the list – are never certain when, or if, their case will be called. Nevertheless, the parties, their counsel and witnesses, must stand ready to appear. Cases that are not called during the calendar period will be automatically transferred to the following calendar (a month or more later). It is important to note that the number of cases appearing on a trial calendar far exceed the number of cases that can be tried during the trial period. As a consequence, it is not uncommon for a case to appear on multiple calendars before it is actually tried. Each time, the litigants must endure the time, effort, cost and inconvenience to be ready if called.
These and other issues burden the litigation process substantially and create a tremendous amount of uncertainty as to the cost and duration of bringing a dispute to resolution. After all there is a reason why litigation attorneys do not offer their clients a flat rate. Charging by the hour ensures that the risk of delay and inefficiency is shifted to the client.
Litigation also has an intangible costs for businesses. The process disrupts a company’s normal operations and negatively impacts morale. Resources are held in reserve to hedge against potential adverse results. New initiatives and investments are delayed pending the outcome of a dispute. Management is paralyzed from making key decisions due to litigation’s dark cloud of uncertainty. Employees are called upon to take on tasks beyond their job description to assist legal counsel in advancing the case. Unfortunately, these “costs” are not fully appreciated and realized until well after the litigation trigger has been pulled.
In the final analysis, a company’s success in managing legal disputes should not be measured by wins and losses at trial or arbitration, but instead by how effective it is in avoiding litigation in the first place.
Managing the Risk of Legal Disputes
While there is no “magic bullet” to completely eliminate the threat of litigation, the risk of legal disputes can be significantly reduced and effectively managed by implementing the right strategy for your organization. The strategy should implement processes to ensure a business is: (1) prepared for its business venture; (2) proactive in identifying and mitigating risk; and (3) organized so that unexpected legal issues are addressed early and efficiently. The following are some suggested guidelines to assist you in managing the risk of legal disputes.
Prepared. Before starting a new business venture, it is paramount for an organization to fully understand the risks involved and how those risks are allocated. In addition, it must be prepared to address these risks should they materialize. To be adequately prepared, an organization should:
- Prepare a comprehensive risk assessment. A critical first step is to fully assess and understand the risk related to a given business venture. The identified risks should be scored based on the likelihood of the risk materializing and the impact of the risk on the organization should it materialize, and then be ranked in order of significance. The risk assessment provides an effective guide for prioritizing the risks that should be managed and monitored.
- Including risk-shifting provisions in contracts. The contracting process is an effective tool for managing risk. That is, an organization can effectively mitigate the risk of legal disputes by negotiation key risk-shifting provisions in its contracts.
- Analyzing contracts and related business agreements. After identifying and assessing the risk of legal disputes, it is essential to understand how the risk is allocated between the parties. If contract(s) and related agreements for a given venture are already in place, an organization must carefully analyze these agreements to determine its risk exposure. This analysis should be used as a tool for deciding how best to allocate resources for the project or business venture.
- Prepare “action plans” and “check lists”. Understanding the risks you may encounter and how those risks are allocated represent only half the battle. Of equal importance, a business must know what to do should these risks materialize. To that end, an organization should prepare “action plans” and “check-lists” providing step-by-step instructions of how to address certain challenges should they emerge.
- Train key personnel. Each member of the business team has a unique role and responsibility that contributes to the collective success of the venture. At the beginning of each new project or business venture, it is paramount to educate key personnel of the likely risks, their respective roles and obligations, and how to implement the emergency “action plans” and “check-lists” when needed.
Proactive. Throughout the course of the project or business venture, an organization must stay proactive in identifying and addressing issues that could potentially lead to legal disputes. An organization should:
- Hold regular status meetings. An organization should hold regular status meetings with members of the business team (at least one representative from each of the key disciplines). These meetings should discuss the overall status of the project or business venture, any new or emerging challenges, and the progress in resolving pending issues.
- Prepare updated risk assessments. Along with status meetings, an organization should regularly review its risk assessment and update it as appropriate. The updated risk assessment should reflect any new or changed conditions altering an organization’s risk exposure.
- Develop contingency plans. An organization should develop contingency plans to address changed conditions and emerging challenges. These plans should provide clear direction for addressing these issues.
- Audit contract performance. An organization should periodically audit its contract performance to ensure compliance with its contractual obligations. Any deficiencies identified during the audit should be immediately remediated and corrected.
- Provide additional training where needed. An organization should provide additional training to address deficiencies identified by the contract performance audit.
Organized. A company must stay organized so it can address unexpected legal issues early and efficiently. To that end, an organization should:
- Develop systems to organize electronic data and documents. Many organizations have to scramble to gather electronic data and documents relevant to an unexpected legal issue. To avoid the unnecessary stress and chaos when confronted with such an issue, a business should develop an organization-wide document maintenance and retention program. The program should establish clear guidelines for organizing, maintaining, and destroying electronic data and paper documents. From there, an organization should monitor its practices and ensure the program is consistently followed by all.
- Maintain documentation in accordance with contractual obligations. Many business agreements require an organization to generate and maintain certain documentation and information. An organization must understand the type of information for which it is responsible, how it should be generated or maintained, and if (and when) it must be shared with others. Demonstrating compliance with contract requirements and presenting contractually mandated supporting documentation in a timely and efficient manner will go a long way to diffusing a potential legal issue.
- Document, document, document. Witnesses relocate, memories fade, and motives change, but a properly prepared document provides a contemporaneous record of facts and circumstances at a given moment in time. In addition to complying with its contract requirements, an organization should document meetings, important topics discussed during telephone conferences, and any oral representations upon which it intends to rely. If feasible and practicable, it is best to confirm the content of the document with related parties (this can be as simple as sending a confirming email) – especially if you intend to hold another person or entity to the representations therein.
As the saying goes “an ounce of prevention is worth a pound of cure.” While this sage advice has near universal application, it is especially true when it comes to legal disputes. An organization must make the necessary up-front investment to develop and implement a comprehensive risk mitigation strategy ensuring it is prepared, proactive and organized. The specifics of the strategy will vary by organization as one size does not fit all, but with the assistance of a legal consultant an organization can develop an effective program tailored to its business.
The verdict is in and it is unanimous. Litigation is inefficient, very expensive, and disruptive to business. An organization, therefore, is best served by avoiding legal disputes in the first place. To that end, an organization should develop and implement a comprehensive risk mitigation strategy that ensures it is prepared, proactive and organized. In so doing, the organization will be armed with the tools to identify conditions that could lead to legal issues and be well positioned to address and resolve them before they snowball into full-blown legal battles.
*This article is intended to be a source of general information. It is not intended to provide legal advice. For specific counsel or advice, please consult with an experienced professional.
**For any questions or comments, please contact Three Twelve Group by phone at 404.872.5615 or by email at firstname.lastname@example.org.