Effective litigation management during a trial depends on the company’s attitude toward litigation as well as its controls over the law firm that handles the litigation on behalf of the company. Trials, especially in the United States are quite expensive and could involve the future existence of the companies involved. In the US and elsewhere, trials by their very nature are costly. Especially in the US. Normally, lawsuits settle prior to trial, as both sides know that juries can be fickle. Some companies will, therefore, never want to go to trial (or try to settle during trial), and some will decide to fight and go to trial anyway depending on their risk appetite. Many times, it is more advantageous for parties in litigation to settle prior to trial, as trials have become extremely expensive.
Disadvantages of trials include:
• High transaction costs
• Length of proceedings
• Negative publicity
• Business interruption
• Unpredictability of juries
• Lack of finality—the loser will always appeal
If a company decides to go to trial, it must control the outside law firm, manage the litigation process, and understand the potential dangers (including costs and expenses) it faces. Prior to trial, a company’s in-house lawyer should ask trial counsel a number of questions, including:
• What is the true evaluation of the case?
• What is the approximate cost of trial?
• What are the chances of settlement before trial?
• What are the main strategies of litigating the case?
• What witnesses and experts will be needed?
• How long will the trial last?
• What are the chances of winning?
If a company knows it only has a 30 to 40 percent chance of winning at trial, is the dispute worth going to trial for, or is settlement a better option? Remember, when managing litigation you should ask yourself if it is worth it. Consider the costs.
Management of litigation, like management of most business processes, begins with a business plan and a budget. In this case, prior to trial, when a company seeks an appropriate law firm to represent it, it needs a realistic litigation plan and budget. Of course, some law firms may try to push back on the request of a budget, claiming legal costs are hard to predict. This, usually is not the case. Experienced lawyers, whether in the United States, Europe, or Asia, are very familiar with the legal costs in their own geographic region as well as costs and expenses associated with the particular issue, such as patent litigation or class actions.
Certain costs may be hard to quantify, such as defense litigation costs (which may depend on how aggressive a plaintiff is in trial), but for the most part, law firms can provide a litigation plan and budget using approximate or ballpark figures. Many of the larger law firms are experienced in providing budgets upon request. Don't be afraid to ask.
Effective management of litigation will depend on a well-prepared litigation plan and budget. This, in turn, depends on the proper identification of potential litigation issues and a plan for potentially adversarial proceedings.
Questions that should be asked when discussing the plan and budget with outside counsel include:
• Is this matter an actual or potentially adversarial proceeding?
• Will this matter result in potential commercial litigation?
• Will this matter result in potential regulatory litigation?
• Will this matter lead to governmental litigation?
Asking the right questions will help in preparing a realistic and effective litigation plan and budget.
To properly manage civil litigation, especially in the United States, companies need to implement LRM strategies and processes by use of an in-house Law Department that is capable of overseeing or managing outside litigation. Depending on the legal exposure of a company, it can be a full-time job. This management function will be key in properly coordinating litigation to avoid excessive costs, duplication of effort, and minimization of disruptions to a company’s business, as well as setting an effective trial strategy.
What many foreign companies doing business in the United States fail to appreciate is that an outside litigation lawyer does not necessarily have the company’s best interests in mind during litigation. Litigators want to win. Sometimes the desire to win is not in the best interests of the company. Many companies have paid a great deal of money to litigate a case when a resolution to the dispute was available had the parties tried to actively settle the matter. Remember, a trial lawyer’s business and primary goal is to win- not to settle.
An in-house legal manager, representing the company’s best interests, can help facilitate settlement once a legal risk assessment as to the validity, cost, and expense of litigation is made. In fact, during trial, a settlement is still possible and can be facilitated by in-house counsel. Therefore, the Law Department should maintain control and oversight of any litigation. A LRM program can be very helpful in managing the legal risk process as well as providing litigation oversight. Remember, litigation can result in a variety of negative issues such as:
• Loss of time.
• Potential interruption of business.
• The cost and expense of business interruption.
• Potential bad or negative publicity.
• Negative impact on the company’s brand image
• Potential loss of reputation.
As companies facing U.S. litigation are often exposed to excessive fees and costs, massive business disruption, lengthy litigation, and the unpredictability of the jury system, efficient management of the litigation process is necessary. Though, obviously, outside litigation counsel is necessary in most cases, an in-house Law Department can save the company great sums of money by managing the litigation process. Such management involves the assessment, management, and potential transfer of risk through various LRM strategies, including:
-Effective coordination of legal defense efforts in order for the company to avoid duplication of costs and effort from case to case
-Coordination of witnesses, answers and interrogatory responses, documents, and depositions
-Acting as the central site for all facts, positions, decisions on legal issues, and motions
-Development, implementation, and coordination of a defense plan
As part of an overall LRM program, a company’s Law Department must implement processes to control, reduce, and manage outside legal fees and costs. By utilizing legal risk management tools, a Law Department can proactively reduce legal fees and costs.
The mounting layoffs, furloughs and job losses currently creating havoc in the US do not bode well for the US economy. But such job losses also force companies to face another stark reality – the potential loss of all of its ESI. Many companies in today’s economy require employees to use laptops, cell phones, tablets and other digital devices in the scope of their duties. What happens when massive layoffs take place? Companies lose control of the digital devices that contain the company’s ESI as former employees are now at home or looking for work elsewhere. Why is ESI so important to a company?
Electronically stored information (ESI) exposes a company to a myriad of risks. The multi-dimensional universe of data privacy of course comes to mind. Cybersecurity is also very important today as many companies and governments continue to get hacked. However, companies not only have to worry about getting hacked or running afoul of the latest data privacy laws and regulations, but also what data to even store, where to store it and how long to store it. Failure to take the where, when and how into consideration can expose the company to unforeseen ESI issues- such as violating US based ESI discovery laws as well as the associated document retention risks.
Electronically Stored Information- Document Retention Risks and Concerns
If a company is involved with litigation in the United States, it has a duty to locate all relevant information, data, and documents—including ESI that are relevant to the case. This can be quite onerous, as it requires:
Familiarity with document retention policies
Involvement with IT personnel
Communication to “key players” of the litigation hold
Location and retrieval of all relevant information wherever that information might be
The legal risks facing a company that fails to handle the above requirements in an economical/efficient manner can be tremendous. Companies have been sanctioned millions of dollars for failing to abide by ESI requirements or, even worse, have lost the respective lawsuits, costing even more. What can a company do to mitigate the legal risks surrounding document management to comply with US legal requirements?
1. Plan of Action
A company must take steps to develop an adequate data and document management plan. It is not too surprising that even the IT Department itself may not have an adequate understanding of where all of the electronically stored documents are considering the plethora of handheld devices that may store documents and other electronic information. Therefore, a company’s management and IT folks need to sit down and map out where all of the documents are located if possible. A document management plan should take the following steps into consideration:
Assess the company’s current use of technology documents.
Locate all in the company’s possession and as well as its employee’s possession.
Use technology to leverage legal requirements.
Retain experts or outside consultants to above or to help implement systems/processes.
Implement policies and procedures addressing all legal risks posed by ESI.
2. Risk Assessment of ESI
To implement an appropriate plan of action, a company must conduct a risk assessment of its processes and capabilities by:
Seeking proposals of vendors (outside experts)
A top-to-bottom analysis
• ESI and paper documents
• Hardware and software
• Management of data
• Retention of data
• Litigation holds
• Disaster preparedness
3. Current ESI Issues
The legal risks facing companies in today’s legal and regulatory climate, especially in the United States, are enormous. Failure to implement a data and document management program that not only addresses a company’s business concerns but legal obligations as well can be disastrous. Therefore, companies must be extremely proactive in this regard before laying off thousands of employees. Not only must companies implement processes to gain control of all digital devices or ESI related devices that it has given to employees, but companies must also take steps to prevent loss of ESI and IP as a result of losing control over such devices.
The main concern a company should have during the Covid -19 related shut-down is whether or not it controls all of the company owned cell phones and laptops prior to laying off its employees. The implementation of a LRM program addressing these concerns is not a luxury but a necessity. It is highly recommended that a company implement a data and documentation management program that addresses ESI and all of its issues.
In 2018, Korea amended its product liability law to allow among other things, punitive damages. These changes should be on the radar of every multinational manufacturer and supplier, selling or distributing products in Korea. A short summary of the changes is as follows:
1. Introduction of punitive damages
The current product liability law limits the claim for the damages to actual damages incurred and does not include punitive damages. The new amendment will provide for punitive damages (up to three times the actual damages or treble damages) if (i) the manufacturer knew about the defect of the product and failed to take necessary measures and (ii) the defect resulted in significant harm to a consumer’s life or body. The claimant has the burden of proving the fact that the manufacturer knew about the defect of the product and failed to take necessary measures.
2. Lessening of the claimant’s burden of proof
The amendment provides that if the claimant proves that (i) the claimant incurred damages while the product is used in the ordinary course of use, (ii) the damage was caused by a cause which is under de facto control of the manufacturer, and (iii) the damage does not customarily occur without the relevant defect of the product, it shall be presumed that the product was defective (existence of defect) and the damages are caused by the defect in the product (the causality between the defect and damages).
3. Shifting of the claimant’s burden of proof in case where the manufacturer is unknown
Under the current product liability law, in order for a claimant to seek compensation from the distributor in case where the manufacturer is unknown, the claimant had to prove that the distributor knew or could have known the manufacturer. Under the amended law, , if the manufacturer is unknown to the claimant, the claimant may seek compensation from the distributor regardless of whether the distributor knew or could have known the manufacturer.
With introduction of the punitive damages, manufacturers doing business in Korea should review their internal procedures regarding the handling of product defects. Distributors also should review processes on handling information on the manufacturers and distributors who supply the products. Companies are also advised to establish internal procedures for taking appropriate measures in case of consumer complaints in order to minimize product liability risks such as (i) immediate suspension of sales or recalls, or (ii) adding additional or appropriate warnings in the label for the product.