Early Case Assessments – What You Need to Know
In earlier blogs, we discuss what to do when your company has been sued and how to report on litigation to senior management. Today we discuss what to do in the early days of litigation, in particular early case assessments (“ECA”):
1. The Basics. An ECA is simply a systematic way for the Legal Department to thoroughly analyze newly filed litigation within a relatively brief time frame to allow the company to:
- Evaluate the case and what it’s worth (vs. the cost of litigating)
- Develop a fulsome litigation strategy (i.e., how best to defend the case),
- Analyze potential settlement options that could end the case quickly.
While it’s relatively easy to define, it’s not easy to do. To create a proper ECA, prepare yourself to devote the time necessary to do it properly. Your goal is to get the assessment prepared within around 60-90 days of receiving the complaint and present your detailed findings to the executive team so they can make critical decisions early in the litigation process. If you do it correctly, an ECA will inevitably help you drive better results with litigation, either in terms of resolution or cost and most likely both.
2. What’s this lawsuit all about? Your ECA will contain a summary of the complaint and the allegations against your company. Within a week or so of receiving the lawsuit, you need to set up a meeting with you, your outside counsel, and the key company witnesses or actors in the dispute and basically do a page turn of the complaint together (i.e., a table read). Not only will this help you generate a more comprehensive and useful summary of the lawsuit, it will give you insight into the relative merits of the complaint overall and help you start to collect the key documents and facts you need to complete the legal analysis portion of the ECA.
3. Cost to litigate. No surprise but the ECA requires a well-researched estimate of the cost to litigate, because a driving factor in how the company will deal with the lawsuit is money. Your first task is to sit down with your outside counsel and work out a realistic budget going all the way through trial and appeal. The lesson here is don’t focus only on attorney fees. Another helpful trick is to try to estimate what the other side will spend. Additionally, fully explore whether the company has insurance that may cover the lawsuit or if there is another party who may owe an indemnity to your company. Finally, consider whether you have the ability to use litigation financing offset some or all of the cost.
4. Key documents and facts. The core of the ECA is the investigation into the facts. A major limitation is that you don’t have access to the other sides’ witness nor their documents and emails. Still, there is enough information you can gather from your own sources that can get the job done. You need to do an initial document search (which is much easier now due to e-Discovery tools and techniques) and you’ll need to interview all the key witnesses. This legwork is hard and not inexpensive, but it is part of an overall process that repeatedly pays dividends if done consistently and correctly. Once you’ve done the detective work, the ECA should include the following:
- The 10 best documents for each side
- The 10 best facts for each side
- Interview summaries of key witnesses
- A list and description of any “hot documents” (i.e., smoking guns, commercially sensitive, and so on)
5. Outline the legal issues. The two most frequent questions you hear from executives with respect to litigation are “What’s the case about?” and “Will we win?” Both are fair questions and the latter one is hard to answer. To get to the answers you need to analyze the complaint and then, use the documents and facts you have gathered up to start to take positions on the question of “winning.” Here’s what you need to assemble:
- Set out your defense strategy, including how you will defend the claims, including any affirmative defenses and, if you’re lucky, your own counterclaims. To do this properly, you need to make sure you have the applicable jury instructions for each claim so you know each element of what the plaintiff must prove.
- Summarize the other sides’ position, including damages sought and any type of non-monetary relief like an injunction.
- Discuss any expert witnesses needed and the subject matter of their testimony. If you have experts in mind or know the other sides’ experts, describe what you know about their credentials and effectiveness as a testifying witness.
- Describe your venue, the judge, and (if a jury trial) the typical jury pool for this court and tendencies to be plaintiff or defense oriented.
- Discuss your opposing counsel and what you can find out about their abilities, past trials, reputations, work ethic, tactics, and so forth.
- What is a “good” litigation outcome for the company?
6. Timeline. It seems a bit old-fashioned but you will be shocked at how much useful information you can obtain via a fulsome timeline. It’s not difficult to prepare. All you need to do to is list in chronological order, the key events (facts) of the case and tie each event to relevant documents, if any. Of course, you will keep and continue to update and refine your timeline after you have finished the ECA.
7. Themes of the case. Ensuring you have the right themes for your case is crucial to winning at trial. Themes are basically short-cuts that help the fact trier (usually the jury) understand the case, providing a simple filter through which they evaluate the testimony and written evidence. It’s the story of the case. There are four elements to a theme: a) it is understandable, b) it comports with the evidence, c) it is memorable, and d) it rings true. As you assemble your assessment, you will be on the lookout for the best themes for your case. You should also try to anticipate the themes the plaintiff might use in their case. This helps you think of ways to fight their themes and develop evidence that will undercut them at trial.
8. Settlement options. If you have been involved in commercial litigation you know that over 90% of cases settle. Since you know the case will likely settle, one of the most important tasks of an in-house lawyer and a key section of the ECA is to deftly and properly evaluate the case for settlement, meaning primarily how much would be the right amount to pay to get rid of the litigation. If you conduct the ECA properly you will have a fairly good idea about the likelihood of winning or losing a particular claim. Once you have that analysis you can prepare a decision tree. The bottom line is to think creatively with your outside counsel and your business team about potential settlement offers.
9. Other considerations. While you are evaluating the case, there is more to keep in mind than just winning and losing in court. Part of your task here is to think of all the areas of concern surrounding the lawsuit. One thing your ECA should do is flesh out any embarrassing documents or trade secrets that you will need to be concerned about. It might not be fair, but resolving the fight quickly might be in the best long-term interests of the company.
10. Lessons learned. Everything discussed so far is part of the analysis and process of creating an ECA. But not all of the work goes into the creation. You need to be sure to take time after you’ve completed the ECA (or after the case has ended) to look at the information you gathered about the dispute and determine what lessons can be learned. Your highest value as an in-house lawyer occurs when you proactively look for ways to avoid problems from occurring.
Now that you know the basics, you can create your own ECA process. With the insights you’ll derive, you can begin to change behaviors that will lead to fewer disputes. For those that do arise, you will find that they are resolved faster and with better outcomes for the company.
If you have questions about this blog or need assistance with a litigation matter, please reach out to email@example.com.