Publications: Doing Battle with Chronic Litigation

Litigation is a reality of doing business in the United States. Large, often self-insured companies make deep-pocket targets for a better-equipped, better-financed plaintiffs’ bar. For corporate counsel, a critical question has become: How do companies deal with recurring litigation?

Particular products or courses of action can give rise to virtually identical lawsuits across the country. For example, businesses can face lawsuits when component parts in a product fail, or when concerns are recognized after several consumer complaints or after similar but unexpected reactions to a drug are reported.

Recurring litigation brings with it public image and public relations problems. Businesses’ exposure to damage claims can be overwhelming, especially if the first few cases turn into 100.

Effective coordination and management of these cases present logistical problems to many companies that rely solely on their in-house law departments. When many lawsuits involving similar allegations are filed against a single manufacturer, even giant corporations have problems keeping track of the cases and managing local counsel.

Companies facing multiple lawsuits need coordinated national defense counsel because the plaintiffs’ bar is organized and efficient. Plaintiffs’ attorneys are kept informed through widely circulated publications that report injuries alleged to be associated with a particular product or device. Plaintiffs’ counsel in one case will find out quickly what happened in another case against the same defendant – what was said and what evidence was produced.

When the same product defect is alleged, it is important for the company that the defense be at least as well-coordinated as the offense. Moreover, a national defense strategy may discourage multiple suits, as it becomes clear that the company intends to defend itself vigorously and consistently and will pay no more than the reasonable settlement value of each case.

Many companies, however, have no procedures for managing recurring litigation. They have no overall strategy or philosophy for disposing of cases in the least costly and most efficient manner. Without such a plan, local counsel operates virtually autonomously and attempts at coordination are haphazard. At best, this results in expensive, repetitive and inefficient activity by assorted local counsel. Manufacturers may even find themselves sanctioned by courts for inconsistent discovery responses.

A planned approach affords economies in factual investigation, discovery and case resolution. It minimizes the dangers of inconsistent defense strategies or discovery responses.

Companies are not in the business of defending lawsuits. Rarely will money spent on litigation advance corporate business goals.

The defense costs that companies are trying to cap include much more than actual legal fees, settlements or judgments. In the rush to embrace alternative billing systems, the single most significant cost often is overlooked. That is the time employees spend dealing with lawsuits instead of doing their jobs.

Need for Coordination

Although, at first, hiring national coordinating counsel may appear simply to be paying another set of outside legal fees, the practice is becoming accepted as a necessary component in a planned response to litigation. In the appropriate cases, instead of merely adding another layer of lawyers the use of national coordinating counsel allows a company to manage legal costs and liabilities just as it does other business decisions.

The concept does require a certain level of trust, goal-setting and teamwork between the outside and in-house lawyers. But when used properly, coordinating counsel can work with in-house counsel to ensure that small cases stay small and that troubleshooting is possible when disaster appears on the horizon.

Coordinating counsel reduces the defense costs of recurring litigation. It is difficult and expensive for each local counsel to interview and consult with the manufacturers’ employees and legal staff. It is better to ask all the questions at one time with one set of lawyers than to go about it piecemeal with each new local counsel.

One firm can be hired to partner with the in-house lawyer responsible for the litigation, which means that the outside firm works together with the company’s lawyers to develop and implement a defense plan. The concept of partnering implies the sharing of responsibilities with the in-house lawyers, rather than simply being hired as outside lawyers and providing periodic status reports.

Any decision to use coordinating counsel should begin with a detailed discussion with the proposed outside lawyers about the pros and cons of employing a national defense strategy.

The first step in any case is to investigate the facts giving rise to the allegations, which may have occurred years ago. The problem is that the people involved are scattered all over the country. None of these people, especially those no longer employed by the company, wants to talk to any lawyer, much less a new lawyer each time a case is filed. Even current or former employees who cooperate with counsel’s investigation find their patience wearing thin when they must explain fundamental facts for the third, fourth or fifth time. People quickly learn that “I don’t remember” is the quickest route to getting back to work.

An understanding of the research and development history behind the product is essential to any planned strategy. Documents must be reviewed; witnesses must be interviewed.

The best way to learn the product history is by doing a one-time, thorough factual investigation. With a complete knowledge of the product’s weak points – and any product that spawns recurring lawsuits has weak points – coordinating and in-house counsel together can develop a defense strategy. Only by knowing the issues from the beginning can the defense team hope to control the path of litigation and anticipate problems as the discovery process proceeds.

Developing a Discovery Plan

The defense team must use the product history they have learned to make a discovery plan. It is essential to find good experts and to prepare them thoroughly, because these experts should be used in every case. When a manufacturer’s experts say different things in similar cases, it may prove fatal to a given case.

Manufacturers should work with coordinating counsel to obtain every possible document involved in the product development. There is no need to wait for the first document production request by a plaintiff. A well-organized defense team should centralize document production and be able every time to produce a full set of documents on the 30th day, as required by Rule 34 of the Federal Rules of Civil Procedure. There should be no need to ask the judge for an extension.

After the discovery plan is developed, the defense team should decide whom the company representative is going to be. Everybody who had anything to do with products should have been interviewed. The defense team should determine: Who will be the best person to represent the company before the jury? Who has the time and conviction to tackle this critical job the way it must be done?

Discovery from the plaintiffs in the first few cases is valuable in the decision-making process for later cases. Conclusions by plaintiffs’ experts are not likely to change much from case to case; published reports will not change at all. Having such material when the fifth or sixth case is filed is essential in evaluating the strengths and weaknesses of both the plaintiffs’ and the company’s position.

For example, perhaps it can be determined in some cases that a common misuse of the product leads to malfunctions. In other cases, the manufacturer’s product may be used in conjunction with a different product made by another company, and the combination of uses leads to the problem. Without the benefit of coordinated discovery in early cases, the defense team may not make such associations until much time has elapsed. By that time, it may be difficult or impossible to modify defense theories accordingly.

The coordinating firm must work with in-house counsel to manage the cases by looking at the whole problem, not just one case. When national counsel is responsible for routine monitoring and management of cases, the manufacturer’s in-house legal staff has the time to focus on particular cases or problems and to look at how the big picture affects the company’s interest.

Coordinating counsel’s efforts can help the in-house lawyers decide which cases should be settled and which ones should be tried. For example, should the company spend $100,000 defending a $50,000 case? If that case is a winner and could set a precedent needed for a much more difficult multimillion-dollar case, the answer may be yes.

Recurring litigation abounds with common issues. The law may vary among states, but the defense team can save time and expense in the long run by creating and maintaining form banks. These can be used for anticipated motions to strike punitive damage prayers, or for motions in limine. When appropriate, a trial court record should be created with a view to the appellate issues.

Definition of Roles

National coordinating counsel should become an extension of the company’s in-house legal staff. This is not to say that the sets of lawyers are doing the same job; rather, outside counsel is filling a new role dictated by the style and organization of the plaintiffs’ bar.

No matter how strong the relationship, however, retaining national counsel is not an excuse for the company to relinquish control of key decisions or to permit strategy to be dictated by outside counsel. Outside counsel cannot be expected to appreciate all the company’s objectives or to recognize sensitive issues that may arise in the course of litigation.

There can be problems between coordinating and local counsel – for example, turf battles are not uncommon. But such problems can be resolved if the respective roles are clearly defined. When the relationship works, coordinating counsel, local counsel and in-house counsel should be able to discuss the facts, the law and the defendant’s trial strategy as three partners.

As partners, each one must make a commitment to the others. For large-scale matters, this involves the sharing of personnel, the acquisition and maintenance of compatible software systems and the structuring of financial relationships.

Other concerns, beyond start-up costs, may affect the relationship. For example, laws in particular states may interfere with a national defense strategy. And a close eye needs to be kept on maintaining the attorney-client and joint-defense privileges, especially when witness interviews are maintained and a defense strategy report is prepared and disseminated. Care must be taken to control access to all attorney-prepared documents and to ensure that only attorneys prepare litigation-related documents.

Overall, most companies would be well-served by coordinating their recurring litigation in an effective manner. To compete nationally and globally, most companies have implemented a coordinated approach to research and development, manufacturing and marketing. Companies and their counsel are well-advised to do the same for litigation.

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