By Henry Baskerville
Fortis Law Partners
Pursuing litigation, along with much else these days, has become increasingly expensive. Various contributing factors include rising costs for law firms that get passed along to clients, such as malpractice insurance, increasing salaries, high rent for offices in big cities and last but certainly not least, the expenses associated with discovery. The depth and breadth of metadata reviewed during the discovery phase of litigation, even in fairly routine cases, can run to hundreds of thousands of pages, making it a time-intensive and, therefore, extremely costly process.
Why is Discovery So Pricey?
Discovery is the process whereby both parties seek to uncover relevant information needed to present their case and is often the most time-consuming component of pre-trial litigation. While the discovery methods have not changed, the amount of information disclosed certainly has. Previously, documents exchanged in discovery consisted of written agreements, letters, paper files, etc.. But nowadays, a significant amount of discovery relates to electronic communication — emails, texts, photos, documents, social media and internal work messaging platforms like Teams and Slack — of which there can be vast volumes requiring review.
The rules of civil procedure regarding discovery have been updated over the years; however, they still do not adequately account for the high volume of information electronic communication that the average person or company generates on a daily basis. The cost of gathering all that information, storing it in a database and then paying a lawyer to sift through it is prohibitive for most people. It also means that today, a typical lawsuit can easily run over $500,000 in legal fees alone, with a complex one potentially costing ten times that amount. That price tag certainly deters the average person or small business owner from being capable of protecting their rights through litigation, even if they have an excellent claim.
Does AI Have a Role in Lowering Litigation Costs?
Some have argued that AI can take on the role of doing the costly and time-intensive work of electronic discovery or legal research. Recent debacles, including attorneys who cited fake cases, judicial opinions and legal arguments pulled from ChatGPT during litigation have been fined and sanctioned upon the revelation that the information gathered by AI was purely fictitious.
Another suggestion is that AI review for and flag key phrases or words in electronic discovery, thereby lessening the cost per hour to have an attorney do the same work. Still, there is significant and valid skepticism around whether AI can genuinely understand the context of all the shorthand that humans use in texts and emails. Texts in particular can appear innocuous until they are placed beside other communications, such as emails or phone calls occurring at the same time. It can be an incredibly complex, detailed process to connect the dots, and as of now, it still requires a human to separate the wheat from the chaff successfully.
When is Contingency an Option?
The issues with the criminal justice system are well known, but the civil system has its problems, too. Big companies with big coffers sometimes try to play legal hardball and take advantage of the smaller companies or individuals who can’t afford to pursue litigation to protect their rights. Those may be times when contingency (where the attorney receives payment only if the client wins or settles their suit) is a viable option for those with an excellent claim but without $1 million in disposable income.
The first step is to speak to a lawyer with experience handling the specific type of claim. Finding firms willing to take business cases on contingency can be challenging. Large law firms often don’t want or need to take the risk because they have plenty of other paying clients. Small firms generally don’t have the financial wherewithal to take on a case where they aren’t paid monthly. Mid-sized firms are more likely to be able to consider pursuing a strong contingency case. Attorneys are usually quite selective about the types of cases they will take on contingency because they put their own time and money at risk. Still, it is worth reaching out, as cases that meet key criteria can be winnable.
Advice on How to Avoid Litigation
In an ideal world, clients can avoid litigation by taking protective steps upfront. Sometimes, business owners, particularly startup entrepreneurs, are penny-wise and pound-foolish. In attempting to save a few hundred dollars on legal consulting fees early on, they spend many thousands of dollars in litigation costs down the road.
It is well worth it to utilize an attorney to provide specifically designed contracts and agreements (vs. online templates) and to help formalize partnership agreements in writing, specifying each party’s roles and responsibilities and dispute resolution methods. Minority business owners should also protect themselves with buy-sell agreements and other safeguarding measures.
In addition, it may be wise to obtain good directors and officers insurance, errors and omissions insurance and umbrella insurance policies that cover employment or other potentially financially devastating business issues that may otherwise fall through the cracks. Buying insurance is not a revenue generator, and no one likes to do it. However, when catastrophes happen, having an insurer step in and pay the legal fees can be the difference between life and death for a company.
Overall, determining whether or not to pursue litigation is a difficult decision. Litigating for sport is seldom a good idea. But allowing your company to be taken advantage of can be a problem, too. It’s prudent to seek counsel from an experienced lawyer who can help evaluate the probability of success and advise on the best course of action. Clients who enter litigation with a full understanding of the potential costs and hurdles will be better equipped to navigate the process and achieve a favorable outcome.
– Henry Baskerville is a managing partner at Fortis Law Partners and head of the firm’s litigation department, recognized by Martindale-Hubbell, Super Lawyers, Best Lawyers in America and National Trial Lawyers. Baskerville is an experienced trial lawyer who focuses on complex commercial litigation. Baskerville has received an AV Preeminent Rating from Martindale-Hubbell, the highest possible rating for both legal ability and ethical standards. He also frequently serves as an outside general counsel or in an advisory capacity, helping small businesses and startups.