There are few things that lawyers love more than telling war stories. Partially, that’s because many lawyers either only or primarily have friends who are lawyers, and war stories are a way for lawyers to relate to each other—your barber doesn’t understand the pain of reading through 5 paragraphs of irrelevant objections posed to each of 75 interrogatories, but your fellow lawyers will. One common feature of war stories is a note regarding how much was at issue in the case. “I was handling this $25 million claim once….” Lawyers include the dollar figure in dispute as a shorthand for the complexity of the case they’re talking about. “Oh, we’ll be in depositions for a month solid, this is a $10 million case!”
I don’t know where I picked up this habit, but I know exactly how I learned to rethink it. A friend of mine, as in-house counsel, was handling a case worth over a billion dollars. When he told me about it, my jaw dropped. One of the first things I asked him was, how do you manage a case that big? And he told me about the several law firms he had engaged, all the people working on it. But then he said: it’s not really a complicated case. There were only 4-5 real factual questions, and a similar number of legal ones. It’s just that every factual question had a very high price tag associated with it. The high price tag doesn’t make the factual question any more complex, or any harder to litigate. For example, your builders’ risk policy either has coverage for flood damage or it doesn’t. If it does, then it doesn’t matter whether the flood washed the whole building away or just some materials from the laydown area—coverage is coverage, irrespective of quantum.
I recently arbitrated a case where $20 million in claims hinged on the interpretation of a single clause in a single sentence in a 30+ page contract. The quantum of damages that hung on the resolution of the meaning of that clause did not affect how complicated it was to interpret that clause. And at the conclusion of the arbitration, the panel interpreted that clause to mean what most people off the street would have told you it meant. Put differently, the interpretation of that clause, and evidence that could be offered in aid of that interpretation, would have been exactly the same had the claim been $100,000, $1,000,000, or the $20 million actually claimed. The damages claim had no effect on the complexity posed by the interpretation of that sentence.
I do not mean to suggest that damages claims don’t pose their own problems. Sometimes (but not always), as damages claims grow, their formulation does become more complex, although seldom does the complexity increase linearly with the growth of the quantum. I do, however, mean to suggest that lawyers should shed our collective habit of using the claimed damages as a shorthand measurement for the complexity of the case. Sturdza v. United Arab Emirates, 281 F.3d 1287 (D.C. Cir. 2002) is an example of a highly complicated case where the eventual damages, had the plaintiff prevailed, would have amounted to the low six figures. In contrast, the lawsuit by developer Larry Silverstein (the owner of the World Trade Center buildings in New York) against his property insurers posed a simple question (did the Sept. 11, 2001 terrorist attack count as one or two occurrences under the applicable insurance policies), whose resolution was worth $3.55 billion. The $3.55 billion price tag did not make the insurance policies’ language any more convoluted, complicated, or harder to parse than the language would have been had the damages been only $35.5 million.
Even if you otherwise agree with me, you might well ask: okay, it’s a bad habit, but so what? What’s the harm? Ultimately, the answer is simple: the lawyer’s view of the complexity of the case colors every bit of advice he or she gives the client. How many document custodians to harvest ESI from. How many discovery motions to fight, and how hard to fight them. How many depositions to take. Lawyers have a related bad habit of using a certain percentage of the amount as issue (I’ve heard between 10% and 30%) as a “rule of thumb” for budgeting purposes, such that a $10 million case ought to have a legal fees and costs budget of between $1 and $3 million. As long as we keep using the damages claim as a shorthand for the complexity of the case, we’re going to continue to give clients bad advice—advice that is keyed to a level of complexity (high or low) that the case doesn’t actually have.
Rather than asking how much is at issue, lawyers (both in-house and outside) should ask: what factual or legal questions control the resolution of this case? How hard are those questions to answer? Where will the evidence that answers these questions be found? Don’t collect ESI from 20 custodians because it’s a $20,000,000 case; do collect ESI from 20 custodians if each of them is likely to possess information critical to the resolution of key factual questions. In short, stop making decisions based on the quantum of damages being sought, and start making them based on the issues that affect entitlement to those damages. When your strategy is guided by the factual complexity of the case, rather than the quantum of damages being sought, the solutions you craft for your clients will more accurately reflect what really needs to be done in the case.