It has been noted and demonstrated that the longer a case lasts the more it costs (google “Jeff Carr cycle time). Sounds logical enough. But in elongated matters many of the “hidden” costs may not just be in tolling legal fees to outside counsel. Barriers to settlement, personnel drain, opportunity costs and loss of business focus can and often come into play. These impacts creep into a case’s ecosystem and often are unnoticed by the players involved. Sooner or later a case that was originally worth $1M in exposure has racked up fees closing in on $800k with no end in sight. Ultimately the cost will outweigh the potential liability (defense) and/or victory (plaintiff). Assuming money is the motivating factor for the litigation (which may not be the case) this matter is a loser, a sinkhole, a money pit of diminishing returns.
When a case first ignites, in-house and most likely outside counsel respond in a triage-like manner to determine litigation strategy. There is energy and focus. The team is assembled who will handle this matter and off they go. For whatever reason, other more urgent matters emerge, the court bogs it down in calendaring/scheduling, the parties embark on endless volleys of drafts, responses, responses to responses, or in-house counsel fails to keep tabs on outside counsel and stay informed of status – a case can quickly become stagnant and stifled. In-house assumes outside counsel is handling the matter. Outside counsel keeps toiling away. Legal fees keep being generated. Costs rise and returns vanish.
At the beginning of a new matter often times there is no serious examination of costs. Outside counsel may provide a “best guess” as to total costs but often this is an arbitrary number with no real accountability built in. Also, in fairness to outside counsel – lacking any significant insight into the matter in the early stages – it is a challenge to properly gauge the direction and amount of work it will take to work through this matter. Getting a budget together with realistic forecasts based on prior data would be ideal but it is rare that either in-house or outside counsel are capturing any metrics on existing matters that will help inform future case management. Therefore, with limited visibility everyone embarks on a guessing game.
Further complicating the matter is the fact that in today’s environment the sheer amount of potential evidence and relevant material makes it incredibly challenging for counsel to get their arms around the underlying issues, potential bombshells and otherwise develop case themes. Case strategy begins on day one but continues to evolve throughout the matter.
How to overcome these challenges? Learn faster. One tool or method that is currently gaining much visibility and creating excitement is Early Case Assessment (ECA). Putting aside for the moment the improper use of this term by many ediscovery vendors, real ECA can add significant advantage to any group looking to both understand the context of a matter and determine its overall size in terms of data scope and reach – which will help in budgeting. By focusing on examining the data already available and using tools to accelerate the learning curve, counsel will be able to gain a clearer picture of real exposure – both in terms of substance and potentially in terms of discovery scope. By focusing the factual analysis and legal assessment near the beginning of a matter expectations can be more easily set and met while efficiency in the process can be maximized.
Another critical tool is matter budgeting. Early on, a budget should be created, discussed and agreed to. Any costs increase should be a matter of discussion and agreement presented as early on as possible, not kept to talk about after the fact. Tracking costs against budget through the life of the case is key and should inform case strategy – certainly settlement strategy. If a case was initially scoped to create a $2M in potential exposure and the legal fees are estimated to be $500k if this proceeds through to trial – it can be said that this case represents a total cost of $2.5M. Given this figure, in-house may want to instruct outside counsel to enter immediately into settlement negotiations or proceed undaunted. Regardless of direction, in-house has a better understanding of how they stand financially and outside counsel understands how much room they have to work with. Needless to say, consistent measuring and updating must occur throughout the case’s life to recalibrate the costs versus gains of proceeding.
ECA in this context truly is just one part of the overall assessment that should be executed at the beginning stages of a matter. Given the gains in technology and the ability to more rapidly deploy data searching and analysis tools ECA from a discovery sense is taking on more significance. That said, it should not replace or be considered ECA in totality. There are many aspects of initial case learning and evaluation that must coincide with the data portion. Having a bevy of tools and methodologies ready and deploying an ECA strategy will help avoid the common situation where settlement expectations become unreasonable simply because the amount invested in the case has gotten so large.
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