Here is the hard reality. The chances that your case, or any case, will get to a real trial on the merits is way less than one in 10. The truth is that only between two and five cases out of 100 will be resolved with a trial.
What does that mean for a party drawn into civil litigation? The statistics point to a group of “best practices” that effective litigation counsel should employ. It is a blend of efficient trial preparation, motion practice, management of discovery and, perhaps most of all, advanced negotiation skills. We review some of those here as a starting point for developing a case strategy.
Civil Trials in Business Litigation is a Rare Event
Some cases will be resolved by a motion or other court action – the statistics here are less clear – but the clear majority of civil litigation will be settled in some fashion. The fact is that in today’s world, we don’t litigate toward a trial on the merits, we often litigate toward a negotiated resolution.
That is not to say that you ignore the trial. Being unprepared to actually try a case is a sure-fire way to be tossed out on a motion or forced into a bad settlement. But it provides some different perspective both on the way that the case is handled, and the way that the case is likely seen by the judge.
If we are honest with ourselves, we quickly recognize that the cost of a civil trial, which can run to tens or hundreds of thousands of dollars, often is not something that is a good investment. Case settle because it makes economic sense. And let’s face it, the judge knows that you’re going to settle thae case too. Chances are, he or she is counting on it.
Let’s look at some of the statistics and think about how it should influence the way that we handle cases.
Statistics on the Rarity of Trial in Civil Lawsuits and How it Affects Business Litigation
There are some 350,000 civil cases pending in the federal court system. There are 673 federal judges as of June 30, 2015, and the average caseload was 522 cases, 423 civil and 94 criminals. See U.S. District Courts – Total Weighted and Unweighted Filings.
The number of civil trials completed has steadily declined in the federal trial courts over the past 15 years, from 11,502 in 1990 to 4,734 in 2015. U.S. District Courts – Civil and Criminal Trials Completed. The federal judiciary’s own statistics indicate that 1.1 percent of all civil cases reached trial. U.S. District Courts — Civil Cases Terminated by Nature of Suit and Action Taken.
The statistics in the New York Supreme Court, the trial court of general jurisdiction in New York, are similar. Only 3 percent of cases are disposed of as a result of a verdict or decision. 2015 Annual Report of the Chief Administrator.
The increasing case load and scarcity of civil trials has begun to work its way into the earlier stages of a federal court case. In federal court in the districts where we practice, it is becoming more commonplace to have motions decided on the papers and more of the case management work is handled by a magistrate.
It is not unusual, for example, to have motions pending for more than six months before a decision or to not see the district judge until the case is quite well advanced. Individual practices vary significantly, of course, but on the whole the District Judge is becoming more removed from the case over time.
A study undertaken by the Institute for the Advancement of the American Legal System examined 7,700 cases for a one-year period ending September 30, 2006. See Civil Case Processing in the Federal District Courts. The information is now dated, but it provides some insights worth noting.
- Motion practice may be worth the effort. A surprisingly high number of decisions were granted dismissing all or part of a case on a pre-answer motion to dismiss (44 percent) or summary judgment (54 percent).
- The time that it takes courts to decide substantive motions is significant and varies among court. Three to eight months was not uncommon.
- There is a correlation between being given a hearing on a motion and the speed with which the motion is decided.
- Motion practice promotes settlement.
Commercial Litigation Best Practices
Knowing that a trial is by far the least likely manner of resolution of a matter, what are the litigation best practices to look for in a lawyer.
- Effective Trial Preparation
- Negotiation Skills
- Motion Practice Skills
- Effective Relationships with Adversaries and the Courts
- Efficiency in Managing Discovery
- Managing the Calendar
- Consider Using Trial Counsel
Trial Preparation in Commercial Litigation
Why start preparing for a trial that isn’t going to happen? There are a few reasons, not the least of which is that if the other side gets a whiff that your lawyer is unprepared for a trial, that lack of preparation will be used to your disadvantage in several different ways.
Fundamentally, however, the lack of preparation tilts the risk profile in favor of the other side, whether it is in the actual trial, motion practice or negotiations. You must begin getting ready for trial. But knowing what we now know, we have a perspective to trial preparation.
You want to defer those things that will not hurt the trial preparation and may not be used. There are few items on this list than one might imagine, but they include some experts and consultants, exhibits or demonstrative evidence.
Our own view toward trial preparation is to do it once and document for the future. For example, if I subpoena documents from a third party, I don’t sit down with the stack, review them and flag the key items with post it notes. It’s highly inefficient and assures that the process must be repeated.
I use lesser paid staff – or get the client’s assistance – to convert the documents to digital format, place them in a management program and capture all the objective information (e.g., date, author, type). I have done my legal research so I am familiar with the material legal and factual issues, so I set up a system of issues. As I review in the litigation management system, I provide only my analytical comments and organize them. Later, say in preparing for summary judgment, I will be able to retrieve the documents without having to sit and review post it notes and make new copies.
This is all trial preparation work, but to be effective, it must be handled efficiently – done once and documented is always the goal.
Business Litigation Negotiation Skills
We study negotiations as a principal tool in our litigator’s tool box. Not only is the overwhelming probability is that the case will be settled because of some negotiation, but the fact is that litigation is series of negotiations great and small.
What does that mean for the big picture and the day-to-day? First, it means that you have accepted negotiation as a discrete area of expertise, to be studied and practiced. Second, it means that you accept personal interactions such as body language and deception detection as key to your success. Third, it means that you keep your eye on the fact that this agreement, good or bad, is most likely how any dispute will end.
For example, you need to know what your case is worth on a risk-adjusted basis. We do an analysis of the value of a case, we try to assess the probability that the case will go one way or another, and we come up with a number.
The value that we assign to a case will guide not just our negotiations, but the activities that we choose to pursue and the resources that will be put into a case. Surprisingly, many clients and attorneys do this only with a seat-of-the-pants assessment.
The effective attorney today has a reputation for integrity with adversaries and third-party neutrals, who play an ever-increasing role in disposing of cases. That leads to another key but often overlooked best practice, which is the effective management of key relationships.
Effective Relationships with Adversaries and the Courts
All the statistical evidence points to one simple fact: an attorney who is respected and liked will receive more favorable treatment for his client. Your lawyer will get a better deal from someone who likes and appreciates working with him or her. You will get a better result from a court if the judge respects the attorney and isn’t annoyed with him.
Clients often make the mistake of confusing aggressiveness with effectiveness. We are very aggressive as attorneys, but not foolish. We smile and treat adversaries and the court with respect and civility. And it makes a difference in the results that we achieve for our clients.
Motion Practice in Business and Commercial Litigation
The statistical evidence indicates that there are advantages to be gained by motion practice. Our own experience is that courts are slow to make decisions that can be appealed. For example, a motion dismissing all of a case on summary judgment can be appealed and the standard is “de novo” review. What that means is that the appellate court is going to look at the record and decide whether it would have made the same decision.
Trial judges can often deny the same motion, however, because it just means the case proceeds on to trial, and that means that the decision is essentially unreviewable. Besides, the overwhelming probability is that the case will settle anyway.
Trial judges, in our view, often are more inclined to make decisions that involve an abuse of discretion standard, which means that the appellate court will defer to the trial court’s holding.
We are often skeptical about the ability to get a case resolved on a motion, but there are a couple of reasons why motions are an important consideration. First, the statistical evidence indicates that they are granted with some frequency. We try to look at the objective evidence, not just our own subjective experience.
Second, our own experience is that motion practice is an effective way to strip away nonsense, narrow claims and sometimes to reduce discovery.
Managing Discovery in Civil Litigation
The volume of discovery has exploded. Digital documents and email mean that cases that once had hundreds of pages to consider now have thousands, and those with thousands have millions.
Effective counsel today has a plan for collecting and managing discovery in the most efficient means possible. That may mean outsourcing drudge work, computer-assisted discovery and effective litigation management.
The discovery plan should also mean a discussion what we call “insourcing.” A client can collect, code and organize discovery far more efficiently and at a much lower cost that outside counsel. It takes organization and dedicated personnel, but it can cut the cost of a commercial litigation in half.
The discovery plan should likewise include a review of deposition practice for what is essential, which to us means: necessary to prepare for the actual trial, is necessary to prove the facts that we consider key, or is necessary to uncover facts of which we may not be aware.
In a similar fashion, an early examination of expert issues is often key, and frequently the early retention of an expert consultant will provide a very significant return on investment in focusing counsel’s work in the case.
Managing the Calendar in Commercial Litigation Matters
Too often there is a tendency among lawyers to let the court set the calendar by rote. We disagree with this approach. We see the court calendar more as an agenda, particularly in federal court cases managed by a magistrate judge.
A critical aspect of being an effective lawyer today is managing discovery, and discovery – both the scope and the timing – is a function of the calendar. What we try to accomplish is to identify at the outset the key issues on which discovery is important, to set the calendar around our view of the case, and to try to get our agenda accepted by the court.
Phased discovery, limited discovery or discovery directed to specific issues will often define the case favorably to a client and lead to dispositive motion practice or settlement.
Similarly, pushing the calendar avoids delay in getting the case closed. The longer a case is open, the more it will cost. Effective counsel is the squeaky wheel in the system and pushes others, including adversaries and the court, to stick to the calendar.
Consider Using Trial Counsel
As much as it often grieves us to say so, there are cases in which we should consider either handing the case over to trial counsel or be prepared to be the second chair.
Trial advocacy is a skill learned with experience and kept sharp with practice. In many cases, the return on investment for a real business litigator does not merit being in the first chair at trial. Your lawyer may not get enough courtroom time to be sharp, or is simply less effective in getting the file ready.
We recommend having a discussion early on with business litigation counsel about using a trial attorney, and when appropriate, have someone specific selected for that task.
We cannot purport here to give you an exhaustive list of the best practices for a business litigation, but these seven items certainly provide a starting point. What is important is to have a realistic understanding of how the court system actually resolves disputes and build a strategy that reflects that reality.
If you have any questions or comments, or want to discuss a specific matter, please do not hesitate to contact Jay McDaniel at 973-602-3915 or at [email protected].