From the Mind of an Attorney:1 A Lawsuit is a Giant Machine One Enters as a Pig and Exits as a Sausage But You Need Not be the One Who is Chopped Up and Processed " property="og:title" />
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Forensic Files - March 2011

 

From the Mind of an Attorney:1 A Lawsuit is a Giant Machine One Enters as a Pig and Exits as a Sausage But You Need Not be the One Who is Chopped Up and Processed

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  1. Introduction: Litigation is negotiation by other means.

From the Mind of an Attorney: A Lawsuit is a Giant Machine One Enters as a Pig and Exits as a Sausage But You Need Not be the One Who is Chopped Up and Processed Most clients do not understand commercial litigation, which would be fine, except that most litigators don’t either.

We start with the basics, a lawsuit has three phases: pleading, discovery, and trial. Everything litigators do is geared toward trial preparation or actually trying the case. Just kidding, that’s not the way it is.

The overwhelming majority of business cases are settled prior to verdict, often for reasons—such as cascading legal fees, fear of negative publicity, and exogenous risk—unrelated to the merits of the underlining dispute. Thus, litigation must be viewed as a prolonged settlement negotiation, and litigators’ efforts ought to be directed at least as much toward improving their clients’ settlement posture as toward preparation for trial. To paraphrase military theorist Carl von Clausewitz, litigation is negotiation by other means.

Rather than In God we trust, courtroom walls should be emblazoned with Abandon hope all ye who enter here. Some think the New York State court system is a great, dumb, lumbering beast. Others see it as an intelligent creature with a well-thought-out goal: to make litigation so inefficient, irritating, and expensive that any litigant in his or her right mind will run screaming from the courthouse and immediately settle, clearing the judge’s caseload of the pesky distraction of all those darn lawsuits. On the other hand, if litigants were in their right minds, they wouldn’t be litigants. Therefore, litigators must guide their clients through a broken or malicious system, like Virgil leading Dante through the underworld.

  1. How to litigate and how not to.

As in war, where a strategic goal is to conserve human and material resources while destroying those of the enemy, litigators should look for any opportunity to cause their adversaries to incur more legal fees than their clients.

Clients sometimes say a dispute is a matter of principle, cost be damned. They only say this, however, at the start of litigation. Soon it becomes a matter of principal and dollars eclipse ideals. Often the biggest issue in a case is the burden of escalating legal fees. The typical large firm team approach to litigation involves researching every conceivable issue, reviewing and analyzing every arguably relevant document, and taking the deposition of everyone even tangentially connected to the event in question. This tactic has obvious benefits: it stimulates the economy, enhances the law firm’s bottom line, and meets internal CYA policies. However, it also has minor disadvantages: it forces the large firm’s clients to incur legal fees several orders of magnitude greater than those of their adversaries, focuses on minutiae to the expense of the great themes on which every case must be based, and limits the senior lawyers’ knowledge to that of the junior lawyers dragooned into doing the scutwork. Even the largest corporations and the most well-heeled individuals eventually tire of spending far more for something than it’s worth. Thus, this team-approach style generally ends up forcing clients to settle, if only to get out from under the crushing burden of legal fees, and forced settlements are often to the clients’ disadvantage.

On the other end of the spectrum, a litigator’s lack of thoroughness will spell death for even the most vibrant lawsuit. Commercial cases have to be meticulously constructed from disparate small details, garnered from many documents and witnesses. This needs to be done within a thoughtfully designed strategy, particular to the case, under the direction of a skilled and experienced lawyer. All too often, the most important aspects of a case are assigned to young lawyers, who lack the experience to mine the golden nuggets from documents produced on discovery or to distinguish gold from pyrite. Forensic accountants, damage experts, and litigation support consultants generally do a better job of analyzing data than do young lawyers, who lack the precise skills and experience a particular project requires. In addition, the accountants do it at lower cost. Counseling clients to retain forensic accountants, damage experts, and litigation consultants early in the case can give the litigator valuable information that he can use to posture a felicitous settlement.

  1. Winning is not proving you are right.

Winning is not proving you’re right; it’s maximizing dollars, net of legal fees.

The engine of litigation is self-righteousness. Bertrand Russell’s dictum that “the whole problem with the world is that fools and fanatics are always so certain of themselves, but wiser people so full of doubts” holds true for litigation, since it’s often the fools and fanatics who force litigation. The great majority of clients and adversaries are so sure they are right that they think they’re perched alongside God, as He proclaims, “Let there be light.” Truth, justice, and other similarly quaint philosophical conceits are irrelevant to business litigation. The truth is often so deeply buried under rationalization, distortion, and intentional and inadvertent falsehood that it couldn’t be recovered even if some misguided Diogenes cared enough to search for it. What passes for truth in a lawsuit is what the evidence shows, and that often is something quite different. Perhaps justice comes in heaven, but unless God has a more perverse sense of humor than we are led to believe, no litigators or clients will ever find out.

I’ve won many cases and engineered numerous favorable settlements but have rarely convinced my adversaries that they were wrong. As Upton Sinclair said, “It is difficult to get a man to understand something when his salary depends on his not understanding it.” Thus, the more effective negotiating style is not to dwell on the disputed merits of a claim but rather to persuade the other side that an unfavorable settlement is the least unattractive option. That requires passing through the looking glass into a world where good and bad are reversed; the spiraling cost of litigation and the delays and unpredictability of the court system become the negotiator’s staunchest allies.

No single strategy works for every case. Rather than cut or stretch the case to fit the procrustean bed of his or her own style, the litigator, to be successful, needs to devise an effective and economical strategy suited to the case at hand. All people have strengths and weaknesses, and litigators must suss out their adversaries’ weaknesses and mercilessly attack them. Here, the damage expert or litigation support consultant can also play a vital role by assisting counsel in evaluating the damages claimed by an adversary or quantifying the client’s damages. This provides the litigator with an understanding of the client’s potential exposure or award and will aid the litigator in formulating a settlement.

Many litigators, especially those from large firms, lack trial experience, particularly when it comes to jury trials. There, pushing for a trial can be useful. Many judges cringe at the prospect of conducting a trial, but if a judge realizes that one side is concerned about trying the case, he or she will set an early trial date. Some lawyers are careless or cannot write a proper English sentence. They should be forced to respond to motions, which will expose their weakness to the court and their clients. Often, depositions attended by clients provide the ideal forum to display to adversaries’ clients the weak points of their case or their lawyer. It also provides an opportunity to display weaknesses in adversaries’ experts’ theory or calculation of damages – another service that can be provided by damage experts or litigation support consultants.

  1. The future is the hardest thing to predict.

An informed judgment of whether to proceed with litigation or settle requires an analysis of how the case would be determined if it went to trial and how much it would cost to get there. However, as Yogi Berra famously said, “the hardest thing to predict is the future.” If all relevant facts were known, it would not be difficult for an experienced litigator to determine how an intelligent and dedicated judge would determine a case. However, the entirety of the facts are never known. Also, there is a reasonable chance that the judge assigned to the case will not only be overwhelmed by his or her huge caseload but might also have been appointed by party pooh-bahs for reasons other than judicial talent. Moreover, judges and adversaries are subject to an unknowable, nearly infinite, variety of prejudices and pressures, all of which add to unpredictability. Thus, any such determination must turn on an educated estimate based on probabilities and will need to be constantly reevaluated as litigation proceeds.

  1. Conclusion: Choosing a lawyer.

It is not enough that litigators be intelligent and experienced, they must also care passionately about their clients. A client should not put up with a lawyer who neglects to promptly return telephone calls or respond to e-mails. It’s a warning sign, like seeing a termite scurry along your floorboards. Lawyers, who run large teams of associates on myriad different cases, do not have the time to devote their attention to their clients’ cases and end up knowing only what they are told by the middle level lawyers, who are to some degree passing on what the junior lawyers tell them. The most senior lawyer should be a sergeant as well as a general and must know every aspect of the case. Junior lawyers should be utilized only when that results in saving the client money, without sacrificing quality of work.

A large part of a lawyer’s job is to communicate effectively. When arguing to a judge, a jury, or an adversary, a lawyer must be able to present his case as a compelling story. Lawyers who cannot express themselves articulately and persuasively, both in writing and orally, are worth less than they cost, whatever their hourly rate.

While legal fees are important, never choose a cheap lawyer or one who cuts rates especially for you. Lawyers who bill at suspiciously low rates are not doing it to be nice; their practices aren’t sufficiently robust to support higher rates. A lawyer who cuts his rates to bring in a case in hard times will resent the case when economic conditions improve, and will work on matters that pay full rates, in preference to the less profitable ones.

But not to despair; litigation can be a heck of a lot of fun. All you need is money and a perverse sense of humor.

1 The ideas and opinions expressed within this article are solely those of the author and do not necessarily represent the views of Marcum LLP, the Advisory Services Group of Marcum LLP, The Forensic Files or its Editor. If you would like to submit an article for publication in The Forensic Files please email Michael.Garcia@MarcumLLP.com.

2 Robert N. Chan, Esq. heads the Ferber Chan Essner & Coller, LLP litigation department, where he has been litigating for more than 30 years with much success. Mr. Chan specializes in complex commercial litigation, arbitration and appeals covering the entire spectrum of business and employment disputes and has successfully conducted numerous jury and non-jury trials and appeals on behalf of both plaintiffs and defendants.

 
 
 
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