Litigation Cost Control : Civil Litigation Lawyer & Attorney : Fred Fresard Law Firm : Alternative Billing, Retainer Contracts

Other than attorney’s fees, one of the most expensive components of complex litigation is expert consultant fees. In a high exposure product liability case, for example, the attorney may retain experts in various disciplines such as accident reconstruction, toxicology, biomechanics, economics, mechanical engineering, failure analysis, etc. With each expert having an hourly rate well into the three figures, expert fees can add up quickly. In the past, when clients complained of exorbitant expert witness invoices, the typical outside counsel response was, “Well, that’s what he costs.” No more. We owe it to our clients to provide them with predictability and reasonab

leness in their litigation costs. It is our job, as the team member dealing directly with the experts, to control our clients’ outlays by getting the expert to commit to a budget, and then holding the expert to those original cost estimates.

The first step in controlling expert costs is at retention. Upon retaining an expert, the cost-conscious trial attorney should require a budget from that expert as part of the retention agreement. Litigation budgets for experts are best broken down by phases. The expert should be able to provide a reasonable estimate of the time and costs that the expert and his team will incur for the initial review phase of file materials. If a scene or product inspection is required, travel costs, travel time and inspection time can all be estimated with reasonable certainty. The next phase is the actual discovery phase. In this phase, the expert must prepare an expert report or assist in preparing responses to expert interrogatories. In addition, the expert will likely be required to give a deposition. Of course, prior to the report or the deposition, any testing or demonstrations that the expert intends to present at trial must be performed and included in the budget. The final expert budget phase is the trial preparation and trial phase. This portion of the budget involves preparation for trial testimony, attendance at trial, and testimony at trial. Again, estimating travel time and attendance time is not overwhelmingly difficult. If the expert is kept on the stand longer than anticipated, supplemental budgets can be e-mailed to the client from the war room during trial.

Both the client and counsel must understand and be receptive to the occasional need for expert budget supplementation based on unforeseen developments. Budgets are by definition best estimates based on the preparer’s experience in similar situations. Reasonable clients understand that sometimes events take unexpected turns, and additional unforeseen work is required. Accordingly, the trial lawyer must have an understanding with his client and with his expert as to the circumstances under which amended or supplemental budgets may be submitted, and the factors that will be considered on whether to approve them. With a trusting and open relationship, client and counsel can work together to control litigation costs while ensuring a successful outcome.
 

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The third component of a successful remote examination is conducting the deposition itself. The examiner has two options -- telephone or video-conference. The method chosen depends on a variety of factors that ought to be weighed jointly by client and counsel.

Telephone depositions are cheap, and they the least technologically advanced of the two options. So, they don't cost much and are the least likely to have a technology breakdown. They come with one major drawback, however, and everyone who has participated in a teleconference knows what that drawback is -- nobody can see each other. In a telephone deposition, the examiner is unable to provide and perceive body language. The body language of the examiner if as important as that of the witness. In a telephone deposition, the examiner is unable to use techniques such as leaning forward to indicate interest, or looking at ceiling tiles to indicate boredom. Similarly, the witness's body language provides cues to the examiner about where to go with her questioning. Seasoned examiners can quickly detect whether a witness is nervous about a particular line of questioning just by observing eye movements or nervous habits. The loss of the ability to provide and perceive body language is a major drawback of the telephone deposition, and must be carefully considered when deciding on the format of the remote examination.  

One "deal killer" for me regarding telephone depositions is when opposing counsel is present in the room with the witness. The disadvantage of being on a "blind" telephone line while your opponent is in the room with the witness outweighs any cost-saving advantages. This is especially true with expert witnesses. The examiner has no way to know if the attorney and witness are passing notes or otherwise signaling each other regarding answers. The examiner is unaware of chats in the hallways during breaks. The examiner essentially has no control, or very little control, over the conduct of the deposition. And control is everything in an adversarial process. 

A video conference examination, on the other hand, can resolve many of the issues presented by a telephone examination. Being able to view the witness allows you, as the trial attorney, to assess how this witness will play before the jury. In addition, you can direct the witness to particular exhibits, and see whether the witness gets flustered or otherwise has difficulty locating data. Combined with internet document display software such as Web ex or Live Meeting, the examiner can present exhibits to the witness “on the fly” and get the benefit of a spontaneous response to the exhibit.

The video conference deposition, however, comes at a price. Although the technology has greatly improved in the last five years, remote examinations by video conference still present a high risk of technology failure. Sometimes, the voice track does not match the video track, or the video is jerky or blurry. Sometimes documents will not display correctly.  Video conferencing gets better every year, however, and will continue to provide enormous cost savings in the future.

Remote examination of a deponent is a very powerful cost savings tool. However, as with most other litigation efficiency tools, the practitioner must exercise his judgment and only use remote examination when it will not compromise his ability to prosecute or defend his case. Working in concert with the client, the cost-conscious litigator can determine which witnesses are best suited for remote examination, and which ones warrant the cost of traveling to a deposition. As with all litigation cost control measures, sound judgment and close consultation with your client provides both you and the person paying the bills with the greatest benefits.
 

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Law department management expert Rees Morrison extolls the virtues of decision-tree budgeting in a    recent   post. Mr. Morrison is a recognized authority on in-house counsel cost control techniques, and his endorsement of this very effective cost containment tool speaks volumes. (Mr. Morrison also has an earlier post on the software available for creating these decision tree budgets.)

Virtually all corporate clients now require some kind of litigation budget for hourly work. As I have discussed in previous postings, it is a challenge to craft a budget that takes into account all the vagaries of high stakes litigation. The decision-tree method is an excellent tool for addressing these challenges. Decision-tree budgeting provides the client with a road map of the range of litigation costs she is facing. The tree breaks the case down into segments and allows the client to see what it will cost to get to various stages in the litigation.  The client can then strategize in advance how to respond to significant events, such as denial of a motion for summary judgment. The client thus gets predictability and control over her litigation costs, which is the goal of any cost-conscious litigation management professional.  

Decision trees also help the litigation attorney solidify his overall strategy in the case. When an attorney sits down and crafts a decision tree budget, the case plan takes shape. Future "if-then" decisions become readily apparent, and everyone on the case team knows where they are going. The entire case is now reduced to writing, allowing informed decision-making with regard to tactics and expenses.  Also, budget amendments can be limited to specific sections of the "tree," so both client and outside counsel have a clear understanding of what was changed and how much it changed.

Decision tree budgeting, then, accomplishes both goals of an effective litigation cost control program: it preserves the quality of the legal representation while allowing the client to predict and contain the costs of the litigation. And that's why people like Rees Morrison rave about it.  

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Step 2: Carefully prepare for the deposition -- logistically and analytically -- to minimize the downsides inherent in remote examination. The second step in conducting an effective remote examination of a deponent is the logistical and analytical preparation. That is, the attorney must ensure that all of the practical components are in place to ensure the deposition goes ahead as planned, while also preparing for the deposition differently than she would for an in-person examination. 

Initially, the examining attorney must decide if a telephone deposition is adequate, or if video will be required. Obviously, video-conference is preferred, but not always available. Although video-conferencing technology has come a long way, it still generally requires that the deponent go to a court reporter's office or other facility with video-conferencing capability. Video-conferencing also increases the likelihood of something going wrong, since more technology is involved. If the witness is important, though, video-conferencing is worth the trouble.   

Another practical consideration before commencing the examination is how to manage exhibits. In a big case, it is a rare deposition that does not involve the review of any documents. Accordingly, the witness must have hard copies of the the exhibits. A critical preparation step is to ensure that any exhibits that will be used at the deposition are sent to the court reporter ahead of time. The exhibits are then on the table in front of the witness when the examination commences.

If the examiner does not want to show her hand, an alternative is to use an on-line remote presentation site such as WebEx or Live Meeting. The exhibits can then be displayed on a screen for the witness to review while being examined. This method only works when there are few exhibits, and the documents are not voluminous. When confronted with a large document, a witness may request the opportunity to examine the entire document before further questioning. If the document is not available in hard copy for the witness, opposing counsel might cry foul. Another downside of electronically presenting exhibits is that the witness cannot be directed to annotate documents. This is particularly problematic with photographic exhibits. Often, a witness is asked to circle and initial specific points in a photograph. Although some software allows for annotation and printing, the process can be cumbersome. One solution is to send the court reporter actual copies of important exhibits that the examiner knows, in advance, she will want the witness to annotate.  

After preparing for the logistics of the deposition, the examiner needs to consider any modifications to the actual examination to account for not being in the room with the witness. A particularly evasive or difficult witness is even more difficult to control over the phone. So, the examination may need to be tighter and more forceful than usual. The parties also tire more quickly over the telephone, so the examination should be structured to get into the important issues early. Finally, not being present in the room allows the witness to communicate more with his attorney. The attorney and witness may use body language to give each other cues that they would never use if the examiner was present in the room. 

Remote examination should not be undertaken lightly. Not all witnesses are candidates, and more preparation is required than for a typical deposition. I have found that negotiating agreements with opposing counsel early on in the case can resolve many of the downsides inherent in remote examination. With these advance agreements and thorough preparation, phone and video-conference depositions can be very effective litigation cost control tools. 

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Robert C. Mattern of Mattern & Associates LLC has an excellent piece on Law.com about how well-managed firms can survive and thrive in the current climate.  In his article, entitled How to Face a Triple Threat: The impact of economy, cost recovery and alternative billing on Big Law, Mr. Mattern outlines the three threats facing firms today, and how a nimble management structure can allow a firm to take advantage of these challenges:

While everyone is talking about the current economic situation and the impact it has had on attorneys, it is only one facet of a three-pronged attack on the operational side of law firms and how they manage the practice of law. The other issues law firms are facing are the changes in the cost recovery landscape, and the increase of alternative fee arrangements. As with the current economic situation, both of these areas represent opportunities for the firms that embrace and adapt to the changes that are occurring in the marketplace.

Mr. Mattern notes that in the current economic climate, firms must gear their services and use of technology to respond effectively to the ups and downs of turbulent financial conditions.  He also points out that while many firms have moved to scanning and printing documents rather than copying them, most firms have failed to institute new cost recovery programs to recover the cost of scanning and printing.  Finally, he discusses the challenges in dealing with cost recovery under flat fee and performance-based billing arrangements.

Mr. Mattern's article captures three of the serious challenges being faced by law firms today. Add to these burdens inflated associate compensation structures, ever increasing outside vendor costs and decreased matter volume, and it is clear that law firms have their management hands full.  

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Step 1: In consultation with your client, asses the witness and their potential testimony to determine whether remote examination is appropriate. The suitability of a deponent for remote examination depends on the importance of the witness to the ultimate outcome of the case, and the potential length and complexity of their testimony.

In every case, the witnesses vary in importance to the outcome of the litigation. Often, several witnesses who must be deposed whom the attorney knows in advance are unlikely to have much useful information. These witnesses are prime candidates for remote examination. A very minor player, such as a firefighter who merely directed traffic at an accident scene, is typically an ideal candidate for remote examination. Those decisions are easy. As we move along the spectrum to more important witnesses, such as family members, scene witnesses, and even some treating physicians, more judgment is required. But those witnesses are still very strong candidates for remote examination. The decisions start to get harder and require very careful consideration and judgment as we move to critical eyewitnesses, major treating physicians and experts. It may be that the need to lay eyes on these witnesses far outweighs the benefits of cost savings.

The second factor in determining the suitability of a deponent for remote examination is the potential length and complexity of the examination. If it is anticipated that the examination will take much of a day, dozens of hundreds of exhibits, and review of numerous photographs or video, the deponent is probably not a good candidate for remote examination. Oftentimes, the importance of the witness and the complexity of the examination are aligned, making the decision fairly straightforward. Other times, it’s a tough call. In any event, careful judgment and consideration of the risks is always required.

During this period of assessment and consideration, and before the final decision is made, consultation with the client is required. Part of giving value to clients is to keep them involved in decision making on cost cutting measures. As I have discussed in many previous postings, imposing cost saving measures often requires some risk taking by both client and lawyer, and a high degree of mutual trust. Involving the client in the decision about which witnesses to depose by telephone or video conference enhances the level of mutual trust, and allows both parties to feel that they have shouldered the risk equally.

My next posting on this topic will discuss Step 2: Carefully prepare for the deposition -- logistically and analytically -- to minimize the downsides inherent in remote examination.

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Conducting depositions by telephone or video-conference, which I call “remote examination,” is becoming increasingly popular. Clients and their outside counsel are changing the way they practice to control their litigation costs, and one of those changes is to seriously look at using remote examination to save on time and travel costs. While the cost savings are substantial, it is critical that you take three necessary steps to protect your client's interests when conducting remote examinations.  Follow these three steps, and you will increase the likelihood of conducting a thorough and high value examination:

1. In consultation with your client, asses the witness and their potential testimony to determine whether remote examination is appropriate;
2. Carefully prepare for the deposition -- logistically and analytically -- to minimize the downsides inherent in remote examination; and
3. Conduct the deposition in a manner that maximizes the effectiveness of your examination despite the limitations of not being present in person.

Following these three crucial steps will allow you to conduct a robust and effective examination of the witness while saving you and your client money. This is the first of a series of four postings. The next three postings will discuss these steps in more detail, so you and your client can garner the efficiencies of remote examination without compromising the defense or prosecution of your case.

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Two of the most effective tools for the cost-conscious litigation attorney are forms and checklists. I'm not talking about "do-it-yourself" forms like those on www.legalzoom.com or the forms provided by the court clerk. I'm talking about forms and checklists carefully drafted by counsel who manage pattern or high volume litigation. Correctly prepared forms and checklists give clear direction to the team and provide your client with superior value. Like many efficiency tools, however, forms and checklists can be dangerous if misused. Attorneys who rely too much on these tools risk abandoning their client service obligations. Our job is to analyze the issues, apply our legal judgment, and provide our clients with sound legal advice. Forms and checklists are not a substitute for any of those professional obligations.

Used properly, forms and checklists are powerful efficiency tools. Form discovery gives associates and paralegals a solid foundation from which to craft case-specific requests.  As lead counsel, you can rest assured that you will obtain the basic information you need in every case -- but only if your form discovery is well-crafted in the first place.  The cost-conscious litigator should invest significant time in drafting the “perfect” set of form initial discovery.  The form is only the starting point.  Your team members and you still need to customize each set for each matter.  The "perfect" set of form discovery garners significant efficiency gains up front by allowing the team to focus on only those revisions and additions necessary for each particular case. To maintain these efficiencies, lead counsel needs to periodically update the forms.  Times change and the discovery must change with it.  For example, form discovery requests generated only three years ago might not include requests for MySpace or FaceBook information. Court rules get amended and cases get handed down.  The cost-effective attorney is the one who manages this tension between keeping hours low with forms and keeping quality high with customization and updates.  

Like forms, checklists are also powerful efficiency tools that must be carefully drafted and constantly updated.  Litigation checklists are merely a starting point.  They allow a busy trial attorney to confirm that tasks are getting done, and to track when they are getting done.  Under traditional hourly billing arrangements, the firm profited from lengthy team meetings where timebillers exhaustively reviewed the tasks to be completed on a case, even when most of those tasks are common to every litigation matter.  Checklists help litigation attorneys provide the same level of service to clients without the exorbitant hourly billings generated by these time-consuming team meetings.  To be sure, lead counsel still needs to sit down with the team to develop strategy and provide tactical guidance.  As with forms, checklists are no substitute for analysis, judgment and advice.  Checklists are a starting point, and need to be updated and customized just like forms.

In a national practice, creating and maintaining effective forms and checklists is very challenging. The modifications required for different jurisdictions can take as much time as drafting the material from scratch.  A litigation attorney with a busy national practice must invest in the software required to manage a library of forms and checklists specific to certain venues. For example, a significant part of my practice involves cases pending in federal courts around the country.   Even though the Federal Rules of Civil Procedure and Rules of Evidence are applied universally in all federal courts, local rules still vary.  Accordingly, I must maintain forms and checklists for different venues in a text-searchable database.  With such a database, creating, retrieving, customizing and updating the forms is very efficient and provides my clients with great value for their outside counsel dollar.

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Imagine you need to hire a courier service for your law firm.  A business associate gives you a name, and you call the courier in for a meeting.  He tells you he is the best courier in the business.  You ask how much to deliver a package across town.  This is where is gets weird.  He says he can't tell you.  It's too unpredictable.  He could get caught in traffic.  The recipient office could be closed, and he may have to go back twice.  He might have other jobs that day.  But, he says, if you agree in advance to pay him whatever it ends up costing, he'll send you an invoice after he does the job.  You, of course, are outraged.  Does he not know his business?  Does he not know his overhead so he can calculate a fair price?  You throw him out of your office and call someone else. 

When clients hire you, why should their expectations be any different?  Why can't they get a handshake and a price up front, before they hire you?  Without a doubt, managing complex litigation requires hard work and exceptional management skills. Those of us who are hired to handle such cases must manage our case team, our client, our witnesses, our judge, our opponent, the avalanche of documents, and ultimately the jury.  Historically, we had the luxury of not having to worry too much about the fees and expenses. After all, this was a huge case for our client, and they knew lawyers were expensive. They wanted to win, whatever the cost.

Those days are gone. No client who wants to stay in business in this era of global competition will give you a blank check and send you to war.  Our well-managed clients know that lawyers are no different than anyone else from whom they buy services – whether they be plumbers, paper suppliers, or couriers. Just as when they hire any other supplier to provide goods or services, our clients are entitled to a price from us up front.  It is our job to then manage the case in a way that gives them superior legal representation at the price we accepted when we looked them in the eye and shook hands.  

“But litigation is too unpredictable!” you say.  “I don’t cheat my clients and I don’t have time to spare. Every hour I bill to that file is legitimate,” you contend.  “Our firm can’t operate without tracking billable hours,’ you argue.  Objections noted. Overruled. Clients want predictability, accountability and reasonableness in their legal bills. Give them a firm price and firm handshake, or watch the work go to someone who will.  Is it easy?  Not by a long shot.  Do you have a choice?  Not at all.  But don't take my word for it.  Look into the Association of Corporate Counsel Value Challenge, and take a peek at how Burger King and AT&T are managing their legal costs.  

It's not easy, but it can be done.  I've been doing it for years.  And that's what I blog about on this site.  This blog is devoted to lawyers who, like me, have to manage and win high exposure, complex cases while keeping a vigilant eye on what the client is spending to get there.  I look forward to sharing my experiences with you, and learning from you how you do it in your practice.

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