This is the second in a series of posts about litigation costs facing corporate legal departments. It discusses strategies for controlling litigation costs. Previously, we looked at litigation trends for 2017, and in an upcoming post, will review litigation management technology.
In September of 2008, with Lehman Brothers on the verge of bankruptcy and the Great Recession about to hit full stride, the Association of Corporate Counsel released an interesting document. It identified various measures that corporate legal departments can take to reign in their litigation spending. (The ACC referred to these as “levers to control litigation costs.”)
Almost a decade later, that document feels as relevant as ever.
Economic conditions have brightened since the fall of 2008, certainly, but the price of litigation has only gone up. Corporate legal departments are as eager as they’ve ever been to get a handle on that growing slice of their budget. But in another sense, it feels like time has passed the document by. It fails to even mention, after all, what is now widely recognized as one of the most valuable “levers” that corporate legal departments have at their disposal in controlling legal spending in general, and litigation spending in particular—one that wasn’t on many people’s radar in 2008. But we’ll get to that in a minute.
First, here are a few timeless strategies that the ACC and others have identified for managing litigation costs:
Preventative measures: The surest way to limit spending on litigation is to avoid it altogether. Businesses have learned to prevent lawsuits by, for instance, identifying and addressing the weak points in their businesses most likely to generate legal action.
Maximizing internal resources: Legal departments can and should take advantage of all internal resources in the effort to reduce litigation spending. Those with enough personnel, for instance, can create internal discovery teams and establish well-defined procedures to make the e-discovery process much more efficient.
Choosing the right provider: The ACC talks about the concept of “matching” the right lawyer to any given case. It warns against “overbuying,” which can happen if you hire a bet-the-company lawyer for a routine case. (You can make an even bigger mistake by “underbuying.”) It also emphasizes the value of evaluating outside firms on a regular basis and weeding out underperformers.
Alternative fee arrangements: Firms and clients widely recognize the utility of alternative fee arrangements. Having gotten comfortable with flat fees, many firms and clients are moving to more nuanced arrangements in which firms pay fixed fees for certain litigation tasks.
The ACC’s document does not mention one “lever,” however, that should be one of the first to come to mind for a general counsel in 2017 – namely, analytics. It’s common knowledge that data can provide great insight into business activity, and the legal profession is no exception. Lawyers, in fact, are now comfortable using analytics (from services like Ravel, Gavelytics and others) to help predict the outcomes of their cases.
Legal bills are particularly susceptible to being mined for data- and analytics-based insights. That’s what we do at Brightflag, using our language analysis technology to drive down the external legal spend of our clients and helping clients understand what they are paying for each component task and phase of the matter, such as what has been spent on a motion and how was it resourced. Ten years ago, they might have been concerned with the “levers” above.
But today, no one should think about how limit litigation spending without also considering analytical tools.