The general counsel of a major motion picture studio in Los Angeles recently told me that the single most valuable attribute of outside trial counsel is the ability to guide a company clear of an actual litigated dispute. Make no mistake--this was a seasoned litigator by training and a lawyer who very well understood that some disputes must be fought and won. However, there are important reasons to avoid the courthouse--cost control, risk avoidance, business distraction, damage to business relationships and adverse publicity, to name a few. And very often, over the years, I have seen clients thrust into unwanted lawsuits without a clear path to early resolution for the wrong reasons--pride, failure to appreciate litigation risks, anger, miscommunication, desperation and greed.
An experienced trial lawyer should be able to advise corporate clients in advance of filing in ways that minimize the chances that risky and expensive litigation will be waged for the wrong reasons and will place the client in better stead to prevail should a case proceed. To achieve this, in-house and trial counsel should take these concrete steps:
1. Prepare to win any case before a dispute arises: This means, at a minimum,
assess and augment employee/management training and compliance programs in the areas deemed most likely to generate litigation risk; implement a coherent and strategic document retention policy, including an email and employee social media program, custom-tailored for the needs of the particular organization; and ensure that the client's agreements with third parties contain the client's preferences for dispute resolution (e.g., arbitration clauses), choice of law, and choice of venue in clear, unambiguous language. These key steps minimize litigation risks, increase readiness if risk arises, and even provide affirmative protections in a number of contexts if litigation materializes.
2. When the possibility of a dispute arises, act quickly and decisively to assess the merits of the potential claims and defenses in light of the client's business objectives. Establish a line of authority and communication on the matter that protects privilege, involving the legal department in the assessment. Generally, designate an internal lawyer as lead communicator on the matter with the business client and have the lawyer work with outside counsel on the assessment. Gather and review the key agreements and writings, identify the key internal witnesses and understand the central facts from them, comprehend the basic legal rules at issue, and obtain a very clear understanding of why the dispute arose and what the range of desired outcomes is. To the extent not known, understand the client's and the opponent's history in litigation. Only by examining the merits of your client's side in a dispute in light of the range of objectives can a resolution strategy be formed.
3. Put the shoe on the other foot. Understand the potential adversary's best-case legal position. Try to ascertain the business objective of the other side. Then identify "win-win" scenarios in light of your case assessments and your own business objective.
4. Attempt pre-litigation resolution: To do this, protect the content of the candid settlement communications from later discovery and use settlement privilege agreements should be documented; determine the "best" messenger to conduct the dialogue--senior manager or executive, business executive with the closest relationship with the potential adversary, in-house counsel, or outside trial counsel--there are risks and potential benefits with each choice, but the choice needs to made thoughtfully; consider employing a trusted third-party mediator to explore the "win-win" scenarios you have already examined; and be in position, if necessary, to explain the strengths of your potential case and risks to the other side--costs, relationship damage and business distraction.
Final word: Each of these steps is best explored in a close partnership between experienced trial counsel who has seen the risks and benefits of employing each of the foregoing steps compared with litigated outcomes, and corporate in-house counsel who best understand the business objectives as communicated by their clients and the general philosophies that companies bring to resolving disputes.
