Business Litigation Demystified

By Diane Cafferata

If you are a business executive or manager, U.S. litigation is a part of your life. Whether your company is involved in litigation already, trying to avoid it, or trying to make decisions in the context of existing litigation trends, having a basic understanding of how the litigation process works is a must in today's world.

• Language: English
• Publisher: Little Phoenix Publishing
• Release date: Nov 1, 2020
• ISBN: 9781734976106

Diane Cafferata

After more than twenty years at Quinn Emanuel Urquhart & Sullivan, LLP, the world's largest all-business-litigation firm, partner Diane Cafferata has represented both plaintiffs and defendants in a wide variety of complex commercial litigations. As a Fellow of the Stanford Center on Conflict and Negotiation and with an MBA from the Stanford Graduate School of Business, Diane is known for developing and executing creative strategies that get her clients excellent litigation results even in the most challenging cases. An important part of Diane's winning approach has been leveraging all of her clients' resources more effectively. Having clients more meaningfully engaged enables the whole team to work at a higher level, getting better results with less stress. Diane wrote this book to make the basics of the U.S. litigation process more accessible to both domestic and foreign businesspeople. Diane has received several national and regional litigation awards and has worked on many of the biggest and most prestigious litigations over the last ten years. When she isn't advocating for her clients, she enjoys racing cars, cooking, and writing.

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BUSINESS LITIGATION DEMYSTIFIED

Diane Cafferata

Little Phoenix Publishing, 2020

BUSINESS LITIGATION DEMYSTIFIED.

Copyright © 2020 by Diane Cafferata. All rights reserved. Printed in the United States of America. No part of this book may be used or reproduced in any manner whatsoever, including photocopying, recording, or other electronic or mechanical methods, without the written permission of the publisher, except in the case of brief quotations embodied in reviews and certain other non-commercial uses permitted by copyright law. For information, email [e-mail].

Editor: Katie Chambers of Beacon Point Services

Production Team: Danielle Decker of Decker’s Word Shop and Jen Henderson of Wild Words Formatting

Cover Design: Ryan Lause

ISBN:

978-1-7349761-0-6 (e-book)

978-1-7349761-1-3 (print)

For bulk order discounts of the print version, email: [e-mail].

BUSINESS LITIGATION DEMYSTIFIED

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Disclaimer

This book is presented solely for educational purposes. Neither the author nor the publisher is offering it as legal or other professional services advice. While the author has put forth her best efforts in preparing this book, the author and publisher make no representations or warranties of any kind and assume no liabilities of any kind with respect to the accuracy and completeness of the contents and specifically disclaim any implied warranties of merchantability or fitness of use for a particular purpose. Neither the author nor the publisher shall be held liable or responsible to any person or entity with respect to any loss or incidental or consequential damages caused, or alleged to have been caused, directly or indirectly, by the information contained herein. No warranty may be created or extended by sales representatives or written sales materials. Every company is different and the advice and strategies contained herein may not be suitable for your situation. You should seek the services of a competent professional—ideally a trial lawyer—and this book will merely help you work with them.

Although I am a lawyer, I’m not your lawyer. Nothing in this book creates an attorney-client relationship between us. This book should not be used as a substitute for the advice of a competent litigation attorney admitted or authorized to practice in your jurisdiction.

Further, this book and the views and opinions in it are not endorsed, blessed or even necessarily shared by members of Quinn Emanuel Urquhart & Sullivan LLP. No statement or omission in this book should be attributed to anyone else but me—and even then, remember the whole point of this book is to provide generalized background information and not any particular advice.

Note about pronouns:

As linguists and grammarians have endorsed the singular they, I have opted to use this throughout to avoid the cumbersome he or she and to ensure no gender is assigned to any specific role.

Table of Contents

Chapter One: Why this Book?

Chapter Two: The Playing Field

Chapter Three: The Selection, Care, and Feeding of Litigation Counsel

Chapter Four: The Pleading Stage

Chapter Five: Attacking the Pleadings

Chapter Six: The Discovery Battle

Chapter Seven: Effective Motion Practice

Chapter Eight: Wrangling Expert Witnesses

Chapter Nine: Pretrial Preparation Activities

Chapter Ten: Trial Basics

Chapter Eleven: Costs and Case Management

Chapter Twelve: Early Exit

Conclusion

Acknowledgments

About the Author

Contact Information

Leave a Review

Endnotes

Chapter One:

Why this Book?

This book was designed for anyone who would like to quickly sharpen their understanding of the litigation process, as well as learn some of the key dynamics around developing a winning litigation strategy, without investing a great deal of time in doing so.

The main audience for this book is:

U.S. and foreign company executives, officers, and employees

U.S. and foreign in-house counsel

It will also be beneficial for:

law students or young litigators

outside lawyers unfamiliar with litigation

litigation experts and consultants

litigation vendors

anyone who wants to be better informed and empowered in the event of litigation

This book is absolutely going to give you a solid foundational understanding of the U.S. litigation process in a quick and easy read. One executive who read it texted me, I think I am ready for litigation. Bring it on!

I promise you this book will enable you to:

Make better decisions and recommendations about the selection of litigation counsel

Steer the company away from litigation by dealing with threats effectively before being sued

Ask better questions of the company’s litigation counsel

Recognize opportunities afforded by undeveloped facts

Provide better advice to employees collecting materials, preparing for deposition, assisting with strategy

Better understand the contents of legal bills

Explain to others at the company the significance of events in the litigation

Explain to others at the company what is being spent on the litigation and why

Mitigate risk for the company by creating policies based on a better understanding of possible litigation threats

Better manage stress

Why Learn More About the Litigation Process?

Litigation creates risk, uncertainty, substantial cost, and business distraction

Running a business successfully, large or small, depends to some degree on legal advice. Even fairly small- to mid-sized businesses find themselves dealing with legal issues, such as compliance activities, employment counseling, contract interpretation, deal negotiation, and litigation.

Each of these subjects may be challenging and present risks for the company, as litigation often represents a relatively high level of risk and significant cost, distraction, and stress for a company’s management and employees. Litigation over a company’s practices can threaten or eclipse its business, or even destroy it.

Moreover, litigation is heavily dependent on procedural rules and the activities of a motivated adversary. Its outcome is primarily contingent on a myriad of decisions by an authoritative and extremely busy judge and ultimately may hinge on the decision of the jury.

And since most companies will find themselves in litigation sooner or later—this is true even if they are proactive in managing their employees, customers, and other business relationships—it is wise for them to have general familiarity with the litigation process.

Corporate disputes can arise from many sources: employees, former employees, independent contractors, customers, consumers, shareholders, competitors, business partners, and the government.

Typical subjects of large corporate disputes include: patents, trademarks, trade secrets and other intellectual property rights, contractual obligations and rights, financial and regulatory disclosures and compliance, gender and other types of discrimination, products liability and other tort claims, environmental issues, and unfair competition, to name a few.

Executives, Employees, and Even In-House Counsel May Have Little Experience with Litigation

Yet as pervasive and challenging as litigation can be, for many executives and employees, litigation is more or less a black box.

In a smaller company without its own in-house counsel, it may hire a litigation team and rely completely on that team for its understanding of options in the litigation. It may defer heavily to outside counsel simply because it does not feel equipped to do otherwise.

In larger companies, the company will rely on the expertise of its in-house counsel to supervise the outside litigation team. The in-house counsel will likely rely heavily on outside counsel as well, for the simple reasons that they are terribly busy, have many other legal issues to deal with, and the outside team is in a better position to manage the day-to-day of the litigation.

This state of affairs is okay. It happens all the time and we survive it.

But it’s like a patient and doctor. The doctor can just provide advice to the patient, but if the patient were more informed about the basics, then the patient can better understand and participate in the process.

Company executives may be saying, I don’t need to know this. This is why we have in-house counsel. But by achieving a basic understanding of the process, these executives can have richer discussions with their in-house counsel. They will have a more sophisticated view of the company’s options throughout the case and some of the decisions being made around the litigation.

This book will help certain in-house counsel as well, such as those with limited or only very general experience actually practicing or supervising civil litigation.

In-house counsel might seek to have greater familiarity with the litigation process for many reasons, not the least of which is that their expertise lies primarily in other areas. For example, a social media company may have an ongoing need for in-house counsel with substantial intellectual property and privacy law expertise. A company with frequent corporate and real estate acquisitions may need an in-house team with ample transactional and real estate experience. Although the in-house team in such situations might have some prior litigation experience, it’s often not efficient for such companies to employ full-time litigation experts in-house.

By way of further example, many companies are well served by hiring more junior in-house lawyers and raising them within the company so they become experts in the company’s business and operations. However, an attorney who has joined a company after just a few years of experience in an outside law firm will not have the same litigation expertise as more seasoned outside counsel.

Finally, even in-house lawyers with litigation experience often have experience only up until the point of settlement, but less frequently up through trial. Understanding the process through trial or arbitration is critical to handling or supervising the many preceding steps well. And proper management of the pretrial phase can lead to faster and more advantageous settlements.

Lack of Familiarity with Litigation Has Many Negative Consequences

Crazy Stress

I asked my friend Janie, who had been in-house counsel for a tech company, what she remembered keeping her up at night while serving in that role. Without hesitation, she answered, Uh, going to jail!

Executives and general counsel in public companies are required to certify the financials for the company. Sadly, they may not understand them completely and must rely in significant part on the general capabilities and integrity of their colleagues in the finance department.

Supervising a bet-the-company case or other litigation of strategic significance to the company requires a similar level of nervous trust with respect to many decisions. In such situations, decision-making is even more intense because the company is in crisis mode. This is not an optimal way to make decisions.

The fact that outside counsel is often hired to handle corporate litigation does not take the pressure off in-house counsel either. It adds to the pressure by making in-house counsel responsible for the activities of many lawyers without having direct supervision of them.

Inability to Participate Meaningfully or Fully

Also, company personnel will be less effective in developing facts, or arguments based on those facts, than they would be if they were familiar with the general procedural framework of the process.

This can deprive a company of its best arguments because the creativity of those inside the company—those in the best position to have or to gather the salient facts—is not fully engaged.

Outside counsel functions better when they are deeply familiar with their client’s business because it helps them formulate more successful legal strategies and make better-informed legal decisions on behalf of the client. Similarly, a client who understands the basics of the litigation process will be more effective in assisting counsel to develop the facts.

Poor Selection of Litigation Counsel

Next, young companies new to litigation frequently turn to the same firm they used as their deal counsel. They ask those that helped them incorporate, created simple employment agreements, or negotiated their joint venture, etc., to refer them to a litigator. Thus, they wind up with a litigator at that same firm.

But even if those transactional lawyers were terrific, that does not mean the firm’s litigators are well placed to handle the suit. Nor does it mean they can deal effectively with larger strategic considerations that may be implicated.

With little understanding of the litigation process, executives and in-house counsel may be at a loss when selecting litigation counsel, so they go for the lowest price because they are not sure what other factors to consider. This is not a good way to select counsel.

Poor Control of Litigation Costs

Litigation is very costly. In-house counsel, or whoever is supervising the outside litigation team, will be expected to control litigation costs. This is difficult for anyone because the cost of litigation is largely driven by adversaries and the judge.

Without an understanding of litigation, it is difficult for those supervisors to discuss with outside counsel the many options available and effectively weigh into decisions.

Further, in-house counsel may struggle to justify their decisions and the cost to the C-Suite. Or in-house counsel may feel pressured by the C-Suite not to settle a matter over a certain dollar amount, which in the long run could be a very expensive mistake if that threshold is not realistic given the costs and risks of proceeding with a dispute.

Missed Negotiation / Avoidance Opportunities

Pre-litigation communications and discussions with a potential adversary can, if not handled appropriately, cause litigation to break out. If a business misses opportunities to shortcut the dispute before it starts, it may find itself in litigation that could have been avoided.

Poor Risk Avoidance

Litigation represents a huge proportion of the overall legal risk a company faces. Without a greater understanding of the litigation process, its executives and even in-house counsel may not recognize, or take advantage of, opportunities to avoid a dispute altogether.

Difficulty Counseling Employees

Without a thorough understanding of the context of the litigation and why various litigation events are important, in-house counsel and executives may have trouble alleviating employees’ frustration about the time and stress involved with pursuing or defending the litigation. This means more lost opportunities and more business disruption.

These are just a few potential consequences. Obviously, any time you are moving through a stressful, risky, expensive situation that threatens the viability of your business, it would be better to understand the basics and be an engaged participant rather than feeling like the litigation is sweeping you along.

How the Reader Will Benefit From This Book

This book is a detailed overview, just right for quickly creating a level of understanding that remedies these problems.

To make a simple analogy with Google maps, this book presents litigation procedure at the approximate level of countries and U.S. states. No counties or cities in this book!

Now, most law books only cover one state or one county, and then the entire book deals with intricate cities and streets. This level of specificity is not accessible to most company personnel. Even in-house counsel may not have the time or inclination to make such a deep dive.

This book deliberately stays at a higher level. It is intended to give anyone a solid and understandable overview of how the process works and what the basic litigation tools are and how they work.

Armed with this understanding:

Executives or in-house counsel will be able to start taking proactive steps the minute a dispute begins to brew. If they are generally familiar with litigation, they can be thinking actively with their outside litigation counsel about creative ways to head off the conflict.

They will not have to be dependent on outside counsel for an understanding of where the process is leading at any given time. Instead, an executive that has read this book will understand the process, what stage the company is in, and how each stage relates to the next.

Being meaningfully engaged from the start, the executive or in-house counsel will be in a better position to select litigation counsel and have better, more sophisticated questions for their litigators. They will recognize helpful evidence and bring it to the litigators’ attention because they will be thinking more productively about the litigation.

They will also be better able to articulate to others at the company the significance of litigation activities coming up. They will counsel employees more effectively because they are in a better position to explain the significance of events in the litigation, easing stress and disruption.

In turn, this means others at the organization will become more creative in thinking about litigation-related problems and aware of opportunities they would have otherwise missed. They too will be in a better position to ask meaningful questions of outside litigation counsel or of