How businesses can minimize litigation expenses

Getting a handle on costs that can wreak havoc on a company’s budget

Litigation is notoriously unpredictable, making accurate planning and budgeting extraordinarily difficult. With up-front planning, however, businesses can manage litigation costs, minimizing impact on the bottom line. Here are seven steps that every business should take to control its litigation expenses:

1. Select counsel carefully: Your corporate law firm may not necessarily be the best choice to handle litigation, so evaluate the expertise and approach of the attorney who will be leading your case to ensure he or she is able to bring about a satisfactory conclusion in a cost-effective manner.

For instance, will counsel assist in a quick resolution, if possible, or prolong the defense or prosecution? Does counsel have courtroom experience trying matters to conclusion? An attorney who has successfully guided many matters to conclusion will draw on that experience to focus on efforts and costs that are essential to achieve your goals.

Counsel’s reputation in the legal community is equally important. An attorney with a statewide reputation as an effective advocate often has the clout to convince opposing counsel to rethink an overly aggressive position, or consider early resolution.

2. Hire the lawyer, not the firm: Ask about the attorneys and support staff that will be assigned to your work. For maximum value, only one or two attorneys should work with you, in most cases. Discuss whether more than one attorney needs to attend hearings, depositions or similar events, recognizing that two may be required if trial becomes necessary.

3. Ask about resources: Does counsel use the latest technology? What type of document management system does it maintain, and how can it use that system to your benefit? Can documents be easily and inexpensively transmitted and stored, so they can quickly and effectively be reproduced for hearings, mediation or trial? Does your counsel have access to PowerPoint or other effective methods that will enhance presentation at less cost?

4. Discuss fee arrangements: Do you want an hourly rate, or should you consider alternative fee arrangements, such as fixed fees or fees based upon result? Ask counsel to discuss available options and analyze which arrangement might be most cost-effective for your particular case.

If your attorney insists on charging an hourly rate, discuss the rate and ask for reasons supporting it. Lawyers must compete for business, so depending on the nature of the work, the skill and time involved and the hope for future business, your counsel may be willing to reduce the proposed hourly fee.

Will counsel deliver significant value for each hour billed, or will there be some learning on the job? Does your work require the expertise and skill of senior attorneys or could lower priced attorneys get the job done effectively? Is counsel willing to cap fees at a certain sum if budgets are exceeded?

5. Request a proposal: Most people request multiple bids when making a major purchase. If time allows, your litigation work should be no different. Consider requesting proposals from three or more candidates. The proposal should include the identity of counsel, a brief description of counsel’s expertise and courtroom experience and the proposed fee arrangement.

6. Ask for an action plan: A framework for handling your litigation is an important way to streamline work and plan ahead. The plan should be a negotiated agreement. Meet with counsel to review, but do not hesitate to question the necessity of an action or its cost.

The plan should also include deadlines for each major phase of the case. They must be realistic and, absent unusual circumstances, should be achieved on schedule. Nothing drives litigation costs higher than missed deadlines, continuances and delay.

7. Mandate reporting requirements: Counsel should report about all important events, as well as provide periodic updates. Insist upon a quarterly reporting requirement that addresses the litigation, further activity outlined within the action plan, amending the plan and whether the ultimate goal is being achieved. Watch for escalating costs and carefully review expenses to make sure there are no budgetary surprises.

While it may be hard to plan for litigation expenses, there are ways to control the costs. Collaborating with qualified counsel from the outset, establishing a reasonable fee agreement and setting forth an agreed-to litigation plan that addresses goals and costs is the most effective way to achieve cost controlled litigation.

Gary Burt, a trial attorney and shareholder in the Primmer law firm, can be reached at 603-626-3300 or gburt@primmer.com.