Litigation: Managing joint defense groups in asymmetrical lawsuits

How to work together with your co-defendants to lower the cost of litigation

This is the sixth and final article in a series about managing asymmetrical litigation. The first article described these David versus Goliath situations and some of the unique issues that they present. The second, third and fourth articles provided strategies for avoiding or controlling discovery and document production, and the fifth article discussed managing plaintiffs and discovery disputes. This article considers issues raised in multi-defendant actions, which present special challenges and opportunities for Goliath-sized defendants in asymmetrical litigation against small, non-practicing plaintiffs.


David-sized plaintiffs often name multiple defendants in a single suit, as doing so can significantly reduce their costs. Savvy plaintiffs are also happy to create opportunities for multiple defendants to disagree on legal theories, case management approaches and trial strategies, which reduces the likelihood that any defendant will succeed. In the patent litigation context, these plaintiffs, in response to recent changes regarding joinder, file multiple suits simultaneously in the same court and then have them consolidated. Doing so can reduce the number of bites at the apple that defendants have to weaken a patent (e.g., by only subjecting a patent to a single round of validity and noninfringement challenges, instead of a series of them).

Notwithstanding these strategies, multiple defendants with proper management can leverage the strengths of the Goliaths to neutralize some of the advantages created by the David-sized plaintiff. As discussed throughout this series, one of the primary disadvantages faced by large defendants is their higher costs of litigation, particularly discovery costs, which create pressure to settle for nuisance value. To overcome this, defendants can pool resources to reduce their costs of litigation.

However, it is critical to pool resources wisely to avoid inflating rather than reducing costs. For example, in the patent litigation context, defendants can share the cost of searching for prior art and preparing and presenting an invalidity case. The shared use of an invalidity expert may also make sense. Similarly, defendants can share costs or split responsibilities for third-party discovery and discovery from the plaintiff. Defendants can also often share vendor fees, such as court reporters, videographers and e-discovery providers. (We are surprised by how often multiple defendants will each pay large sums of money to process the same documents or synchronize the same deposition videos.) By contrast, it generally does not make sense to share costs on issues of infringement and damages, especially where each defendant will have different facts and arguments.

Taken to its logical conclusion, multiple defendants can maximize their cost savings by using shared counsel. This may not be an option in many cases as corporate defendants often have go-to defense firms with which they have longstanding relationships or would be unwilling to share counsel with a competitor (as co-defendants often are). In our view, sharing counsel makes the most sense for small nuisance value suits, where the cost of litigation dominates the potential liability at trial. In cases involving core issues or significant potential liability, each defendant should have its own counsel.

Even when they don’t share counsel, the defendants should enter into a joint defense/common interest agreement as a first order of business. Such agreements allow for the sharing of work product and privileged information, without waiving attorney client privilege and work product immunity, and are necessary for any level of meaningful cooperation and coordination. While there are myriad variations, a streamlined approach makes most sense. Such an approach :

  • Allows for the confidential exchange of information,
  • Clearly delineates what can be shared and what, if anything, must be shared,
  • Addresses potential conflicts of interest
  • States what happens if a defendant withdraws from the group or settles with plaintiff, but otherwise avoids excessive complications

Managing a joint defense group can sometimes be like herding cats, with each defendant wanting to go in its own direction. Clients and their counsel may have differing strategies, and it can be necessary to remind co-defendants that healthy compromise may be necessary to get everyone rowing in the same direction. For example, in the patent litigation context courts typically adopt a plaintiff’s proposed claim construction where defendants cannot agree on a single construction. Thus, a construction that all defendants can live with and that preserves the best defenses is preferable to pursuing a marginally better construction to which not all defendants will agree. It is a good practice to hold regular meetings or telephone conferences to coordinate tactics, and to allow ample time to negotiate compromises.

Joint defense groups can also present the freeloader problem, where some defendants, like the proverbial fiddling grasshopper, are content to sit back and rely on the other defendants to do the heavy lifting in the litigation and bear the associated cost. While this approach may be tempting to save costs, it comes with considerable risk. As parties often unexpectedly settle out of litigation, the freeloading defendant can be stuck litigating alone without having developed its case. In our experience, plaintiffs often offer the most favorable settlements to the defendants that are best prepared, to remove them from the case and focus on the more vulnerable parties. Accordingly, it is best to remain engaged in the defense and to responsibly share costs and responsibilities with the other defendants. A threat to drop a freeloading defendant from a joint defense group is often sufficient to keep them in line.

Despite these challenges, the benefits of a coordinated defense can help deleverage the advantages of a low cost David-sized plaintiff over a group of Goliath-sized defendants. In asymmetrical litigation, bitter rivals may become (temporary) allies against a common foe.

 

The authors enjoyed sharing some of their experiences with asymmetrical litigation through this series of articles. Readers of this series are encouraged to contact the authors with their own experiences, suggestions and questions for anonymous and confidential inclusion in a follow up article.

Contributing Author

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Mark Baghdassarian

Mark Baghdassarian is a partner with Kramer Levin Naftalis & Frankel LLP’s Intellectual Property Group. His practice involves complex patent infringement actions involving satellite radio...

Additional Contributors: Aaron Frankel

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