Is your company equipped to survive the stresses of a lawsuit and come out not just intact, but stronger? This paper will offer ten practical tips on how to prepare your business for the many decisions, problems and challenges which every company -- whether large or small, plaintiff or defendant -- faces in litigation. More often than not, a company's ultimate success or failure in a lawsuit depends not just on the underlying strength of its legal claims or defenses, but on its preparedness, planning and execution of a litigation "game plan."
I. UNDERSTAND THE BUSINESS RISKS AND RAMIFICATIONS
Despite their many variations, all business lawsuits have one thing in common: companies would rather do anything else than become involved in one. They fall outside the parameters of the company's mission, whatever it may be. They serve as annoying reminders of a company's failure to be able to prevent -- or at least resolve -- business disputes using positive rather than negative tools. Against this backdrop, company executives confronted with the need to bring or defend a lawsuit sometimes avoid making the rigorous analysis they would otherwise undertake when studying any important business decision. This can be a costly mistake.
Most commercial litigation does not come as a surprise. There is usually a pre-lawsuit period when the parties attempt to negotiate their differences, giving both sides a window to assess the likelihood of litigation and the attendant risks and rewards. During this time, it is critical that those within the company who were involved in the circumstances leading up to the dispute have an opportunity to voice their views and concerns about what they hope or need to accomplish by bringing or defending a lawsuit. Since they know the underlying facts, they are the individuals whose schedules and resources will be most strained and tested in the months or years to come. The regional sales manager who just lost three key employees (and all the confidential information they could carry) to a competitor needs to understand that in an injunction matter, massive document production and extensive depositions may require hundreds of hours of time away from her business pursuits and those of her key support personnel. The manager of a former employee threatening a claim for sexual harassment needs to understand that every aspect of his management style, good or bad, is about to become fair game for the opposition. If the key personnel are not sufficiently apprised of these practicalities, and committed to the litigation at the outset, it is almost certainly doomed to failure.
II. ESTABLISH CLEAR PROCEDURES FOR REPORTING
POTENTIAL CLAIMS AND SUITS
While this would appear self-evident, oversights occur more frequently than one might imagine. Especially in companies with many departments and/or multiple sites, it is not unheard of for complaints to languish on someone's desk for days or weeks at a time. Even when a complaint is forwarded to the right person, it is frequently the case that the person sending it has no accurate idea as to when it was served. Once the complaint finally makes its way to the legal department or other appropriate company executive, and then to outside counsel, playing catch-up puts the company at a distinct strategic disadvantage.
Reporting procedures should be written, simple and straightforward. More importantly, they should be regularly reinforced within the company. Failure to report a lawsuit could result in problems with, or denial of, otherwise applicable insurance coverage. Moreover, opposing counsel with a penchant for hardball litigation tactics may not be amenable to requests for an extension. An unsympathetic court may even enter judgment for failure to respond to the complaint on a timely basis. In short, defending a lawsuit is difficult enough without having to worry about having a chance to defend it in the first place.
III. ESTABLISH A LITIGATION TEAM WITH A CLEAR
DELINEATION OF RESPONSIBILITIES
Two scenarios often play out in business litigation. They are quite different factually but equally frustrating strategically. The first one occurs when virtually every litigation decision needs to be examined, reexamined and reexamined again by practically everyone who might want to have something to say about it. This, of course, makes it difficult to accomplish anything productive, and certainly impossible to accomplish anything quickly.
The second scenario occurs when no one can or will make a decision about anything, either because of fear of accountability or lack of attention. This leads to similar delays and frustration. The bottom line is that not everyone needs to make every decision every time, but someone does. Establishing a litigation team is therefore critical to the efficient conduct of the case. Depending on the circumstances, the team may include in-house counsel, the key business person(s) with knowledge of the underlying facts and those personnel with knowledge of document location and computer data. Outside counsel should be given clear instructions about who needs to be consulted about what, and when.
IV. FOCUS EARLY ON DOCUMENT GATHERING
Although document production is probably the most distasteful part of a business lawsuit -- because it is undeniably time-consuming and boring -- it is often the most critical phase of all. Lawsuits are won and lost in the documents and a company can leave its adversary in the dust with efficient and effective document production.
Careful thought must be given to the categories and locations of documents which are or may be relevant to the litigation. For example, in a discrimination case, although the plaintiff's personnel file is an obvious category which should be relatively easy to retrieve, others such as company policies which were in force at the time but which have since been revised may not be so easy to find. Similarly, in a trade secrets case, identification of the documents containing the alleged trade secrets, whether formulas, customer lists or pricing data, should be undertaken immediately.
Once the relevant documents have been identified, and the "document-gatherer" team member(s) selected, the next step is to begin locating potentially relevant files. The human resources department will almost surely have that personnel file, but what about the personal notes taken by the plaintiff's supervisor during her disciplinary sessions with the plaintiff, now kept in that supervisor's desk drawer? Similarly, in a trade secrets case, there may be a central file or database of customer names, addresses and contacts located at company headquarters, but what about the call reports faithfully kept by the field salesman working in a territory five hundred miles away, now stored in his home office? Granted, it is almost impossible to capture all potentially relevant documents at the outset, but careful thought and analysis at the front end can save countless hours and retracing of steps at the back end.
V. DON'T FORGET COMPUTER DATA AND E-MAILS
In identifying and gathering potentially relevant documents, don't forget computer data and e-mails. Retrieval of this information may require special assistance from the company's in-house systems specialist, or possibly from an outside consultant or expert. Either way, these days computer data and e-mail are just as likely -- if not more so -- to yield important information than hard copy documents. Consequently, their proper retrieval is critical. Pay attention to chain-of-custody issues and carefully document all steps taken to identify, collect and print out computer data or e-mails. Make sure that the technical personnel who assist in these tasks can clearly and simply explain and demonstrate what they did and how they did it, should their testimony later become necessary.
Equally important is asking your opponent for all computer or e-mail files which may be relevant. Document requests should include specific categories for computer data and e-mails. It may also be appropriate during discovery to seek production and inspection of your opponent's hard drive and/or laptop computer(s) if relevant information is likely to be stored there.
VI. PREPARE YOUR WITNESSES FOR DEPOSITIONS
Depositions are not pleasant -- the best that can be said about them is that, one way or another, they eventually come to an end. Business deponents dislike depositions for many good reasons, but two seem to predominate. First, depositions require the business person to take time out of an already overcrowded schedule to sit for hours (sometimes days) in a conference room (invariably too hot or too cold) with at least one (and often many more) questioning lawyers whose primary goal seems to be to avoid, at all costs, ever getting to the point. Second, answering questions about the underlying business dispute at a deposition serves as an unwelcome reminder to the business person that this is one problem which the company (and maybe he or she personally) couldn't solve. These two negative factors seem to become more intense the higher the deponent is within the organization.
Against this background, then, it is not surprising that deponents -- especially senior executives -- often resist spending the time necessary to prepare for their depositions. Having already lived through at least some of the facts giving rise to the dispute, and possibly having been involved in the litigation strategizing and decisionmaking, the business person may think it unnecessary to spend any more time in preparation for a deposition. While some people are capable of being fantastic witnesses with no preparation at all, most are not. This is not to say that preparation sessions lasting for days on end are necessary or desirable -- although for some witnesses they may be. At the very least, however, adequate time should be set aside in advance of the deposition to review with the witness the key themes and documents of the case and to familiarize him or her with the deposition setting.
VII. RETAIN EXPERTS AS EARLY AS POSSIBLE
Undoubtedly, nothing is more frustrating to a potential expert -- whether accountant, jury consultant or computer guru -- than getting a phone call at the eleventh hour about possible retention. Last-minute expert shopping is counterproductive for several reasons. First, by the time the pressure is on, decisions about which experts to retain, and on what subjects, may be driven more by a sense of desperation than by reasoned analysis. Second, if the retention of experts is allowed to lapse until late in the game, the company loses out on the valuable insights and advice the expert can offer in terms of planning discovery, following up on certain themes and the like. Third, particularly in high-profile cases involving specialized issues, waiting too long to retain experts can mean that the best candidates are already spoken for -- by your opponent.
The role of experts in the litigation should be discussed and evaluated as early as possible. Even if no final decisions are made, potential areas of expert testimony and assistance should be agreed upon and possible candidates identified. This avoids the all too common last-minute rush to find an expert, with its accompanying drawbacks.
VIII. EXPECT THE UNEXPECTED AND HAVE A
No matter how well-organized and focused your efforts and those of your counsel, unexpected developments never fail to occur. The witness whose formerly steadfast recollection has dramatically changed, the documents no one thought existed which suddenly appear, the judge who absolutely refuses to grant a continuance -- these are just a few of thousands of examples which complicate any lawsuit.
The key to controlling potential damage lies in the company's reaction to unexpected developments. Quickly assess through your litigation team whether the event is simply a bump in the road or if it fundamentally affects the goals and objectives of the case. Finding documents late in the game, although embarrassing, may mean nothing more than the inconvenience and time required to make a supplemental document production. A key witness' change of heart, on the other hand, may be fatal to the company's claim or defense. Only through prompt, candid analysis can a company tell the difference.
IX. PERIODICALLY EVALUATE WHETHER THE LAWSUIT
IS SERVING ITS PURPOSE
Business lawsuits last at least for months and often for years. During that time, business goals, objectives and decisionmakers may change, requiring adjustments in the prosecution or defense of the litigation. A business lawsuit, especially a large or complex one, can easily take on a life of its own. The litigation team should regularly revisit the business goals and objectives which the lawsuit is designed to serve and assess whether the litigation still meets those ends. If not, then the company needs to make some hard decisions about its future strategy. However difficult these decisions may be, making them promptly and candidly is always preferable to putting them off until another day, when it may be too late.
X. HAVE A POST-LITIGATION WRAP-UP
No matter what the outcome, a business lawsuit always teaches a company something about itself. A company might learn that it has a vice president of development who can testify with conviction and passion about its trade secrets, and who would be a great witness in the next case. It might learn that its systems specialist has a host of ideas about how to improve the company's e-mail security, derived from her experience as a member of the litigation team. It might learn that some of its managers are not paying enough attention to the company's sexual harassment policy and that extra training is needed.
In the aftermath of litigation, when everyone involved is anxious to get back to work and put the lawsuit behind them, it is easy to overlook these lessons. One way to increase the likelihood of putting the lessons learned into practice is to convene a post-litigation analysis session involving all team members, specifically for the purpose of creating an action plan to ensure that worthwhile lessons resulting from the litigation will not be lost or forgotten.
Lawsuits are an inevitable part of the life of a company. While these practical suggestions cannot change this fact, they can help your company handle litigation in a focused, efficient and ultimately successful manner.