If you are fortunate, your company will spend a minimum of time and money on litigation. But it’s unfortunately often a reality of doing business. Companies that act like they will have litigation can make that process less burdensome, and increase their likelihood of a good outcome.
Discovery is the phase of litigation where parties exchange information necessary to pursue or defend a claim and often represents a large percentage of the costs – monetary and otherwise – of litigation. In our ever-developing world, the volume of information and the decreasing costs of retaining that information increases costs of discovery by increasing the volume of litigation available. That said, you can reduce discovery costs significantly and improve your potential litigation position well before a lawsuit is even filed by encouraging your managers and staff to think like a lawyer and implement four practices in your day-to-day business operations.
- Seek advice of counsel early
Legal expenses impact your bottom line and understandably businesses like to avoid them. Nevertheless, legal costs can grow exponentially if you allow issues to fester. Any lawyer can tell you of cases where significant costs could have been avoided had counsel been contacted earlier. Examples may include asking counsel to determine whether a termination provision has been triggered, or whether a party breached a contract.
Outside counsel usually can give effective advice for inquiries such as these in a minimal amount of time and may not even charge you depending on the situation or the amount of time needed to address the issue. By seeking advice early, your counsel may advise you to take action that may limit the need for litigation to even occur.
- Mark communications seeking legal advice consistently and in an easily identifiable way
One of the more time-consuming aspects of discovery is when your outside counsel responds to document requests from the opposing side and must determine whether or not the attorney-client privilege or work-product doctrine protects the information from discovery.
With few exceptions, communications with or for your outside counsel (even if not yet retained) for the purposes of legal advice as well as materials created in anticipation of litigation may not be disclosed to other parties without your consent. Encourage your employees to make a notation in the subject line of emails when legal advice is needed or will likely be needed such as “ANTICIPATED LITIGATION” or “LEGAL ADVICE NEEDED” even if a lawsuit has not been filed and a lawyer is not included in the communication. Also make sure that all employees use the same notation consistently. This practice will save your outside counsel significant time identifying records during discovery and offers the greatest chance of protection.
- Limit communications to necessary stakeholders
Generally, a transparent and collaborative attitude among employees reflects a healthy and desirable work environment. But otherwise beneficial emails shared amongst large numbers of employees may be relevant to litigation during discovery. During litigation, your outside counsel may be required to search for keywords from multiple custodians. If a relevant email chain includes dozens of recipients, the number of documents reviewed by your outside counsel will compound significantly. Managers should consider and limit communications likely relevant to discovery only to the necessary recipients and should consider using corporate email accounts for various groups (e.g., [email protected], [email protected], [email protected]).
- Notate background information and impressions if litigation seems likely
An often overlooked cost of litigation is the time needed for outside counsel to communicate with your employees to gather information needed to craft discovery requests or responses. Of course, those employees may view taking hours of time answering questions from outside counsel as stressful and a distraction from their job.
This burden may be decreased if employers are trained to foresee when litigation may occur. For example, when they sense that a relationship with a vendor, a customer, or other third party is deteriorating, those employees should record the nature of the relationship, a timeline of relevant events, and other impressions. These types of records can be used by your outside counsel to efficiently identify relevant information in discovery and learn more about your business, which will help avoid business disruptions from your outside counsel. Your employees should similarly notate “ANTICIPATED LITIGATION” or “LEGAL ADVICE NEEDED” or something similar in the heading of this type of record because it may be a protected attorney-client communication even if you haven’t retained an attorney and a lawsuit hasn’t been filed.
When businesses face a dispute, attorneys owe their clients a duty to zealously pursue a cost-effective strategy that gives their clients an opportunity to have a judge, jury, or government agency decide the merits in the light most favorable to them. The costs of discovery in the modern age of technology often prevent cases from ever reaching a decision on the merits because those costs become prohibitively high for businesses. Nevertheless, by employing some of the strategies mentioned here, which encourage your employees to think like a lawyer, those costs can greatly be mitigated.
This article should not be construed as legal advice or a legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.
Barnes & Thornburg LLP is a large, full-service law firm that seeks to take a more entrepreneurial and cost-effective approach both to client service and its own business. Read more Metropreneurial Legal Insights.