Making the Case for Change
Recent developments are affecting how commercial cases are litigated in the federal courts
Posted Apr 1, 2008 4:05 PM CDT
By Robert L. Haig
ABA members can listen for free to this month's CLE, "Current Developments in Business Litigation," recorded from a live program on Wednesday, April 16.
When it comes to litigation, an old adage must be turned on its head: The more things stay the same, the more they change.
Consider discovery, a crucial element in the business and commercial cases that are a significant component of the civil dockets in the federal courts.
The basic principles of discovery are long-standing. But within the past decade, a revolution has taken place in corporate record-keeping and communications that has changed the nature of discovery in lawsuits involving businesses.
That revolution is, of course, the pervasive use of computerized record-keeping and electronic communications. The need to adapt to this revolution led to important amendments in December 2006 to the Federal Rules of Civil Procedure relating to discovery of electronic information.
More than a year later, the impact of the amended rules is still being absorbed by lawyers and the federal courts. Meanwhile, the prodigious amounts of time, money and contentiousness devoted to electronic discovery threaten to obscure the merits of many business disputes.
How courts deal with incivility among counsel is another example of how recent developments are affecting long-standing litigation concerns in business and commercial cases. Concerns about the rise of incivility among counsel are not new, but in the past few years courts have shown a new willingness to address problems raised by uncivil behavior, and the impact is felt by attorneys and their clients.
E-discovery and incivility are two of the topics addressed in the following package of articles by experts on business and commercial litigation in the federal courts. This package also includes articles on techniques for evaluating cases, the use of technology to present evidence, and tactics for streamlining litigation.
The articles are adapted from chapters in the second edition of Business and Commercial Litigation in Federal Courts, published in late 2005 by the ABA Section of Litigation jointly with Thomson West.
Significantly, none of these topics was included in the first edition of the treatise when it was published in 1998, but they represent only some of the changes that have occurred in business and commercial litigation in the past decade. To help address those changes, the second edition has added 16 chapters to the 80 that were contained in the original publication.
Many of the new chapters address subjects that were either less important or virtually nonexistent when the first edition was published. In addition to the issues covered here, those topics include litigation avoidance and prevention, director and officer liability, mergers and acquisitions, broker-dealer arbitration, commercial defamation and disparagement, and e-commerce.
The chapters from the first edition also have been updated, incorporating much of the material from annual pocket parts that totaled more than 1,800 pages. The second edition contains the contributions of 199 authors, including 17 federal judges and the cream of the commercial litigation bar.
Change is a constant in business and commercial litigation. Many of the new chapters in the second edition of Business and Commercial Litigation in Federal Courts reflect the current focus on the increasing importance of technology in commercial litigation, along with the efforts of courts and business clients to manage litigation more efficiently and proactively. Predicting what new issues will arise in the next decade or so is impossible, but there is little doubt that new chapters will have to be added to any third edition.
Robert L. Haig, a partner at Kelly Drye & Warren in New York City, is editor-in-chief of Business and Commercial Litigation in Federal Courts, 2nd edition.
Case Evaluation: Too much emphasis on a quantitative approach often misses key factors
BY LOUIS M. SOLOMON
At critical junctures in the course of litigating a matter, case evaluation is an indispensable technique that clients must have and litigators must provide.
Two approaches to case evaluation are most common: “Formal case evaluation” rigorously tries to estimate, from all relevant perspectives, various possible outcomes. But qualitative, even heuristic categories of evaluation are often employed even in a formal evaluation process—in part because they have to be, and in part because it is easier. Is that all a client can reasonably expect?
Illustration by Stuart Bradford
Formal case evaluation is sometimes confused with the second, more numerical or quantitative approach to case evaluation. The perceived benefits of a quantitative approach can be enticing. After all, says the client, since any seasoned trial lawyer knows the risks of winning and losing, and the potential payoffs—or “payups”—of all possible case scenarios, isn’t it just a matter of building some form of decision analysis model that will point the way to the most rational or optimal strategy?
Not quite. An overly numerical approach to case evaluation has serious limitations. Formal case evaluation seeks to achieve an optimal identification of possible outcomes, but perfection in the process cannot be achieved. An unthinking use or overuse of mathematically driven case evaluations does not serve clients well.
One reason is the sheer complexity of most commercial litigation in the federal courts.
In North River Insurance Co. v. Ace American Reinsurance Co., 361 F.3d 134 (2004), the New York City-based 2nd U.S. Circuit Court of Appeals observed that an insurance company’s preliminary decision-tree analysis—a visual diagram of decisions and possible outcomes used to justify allocating settlements—“set forth 83 different, probability-weighted damage and coverage scenarios.”
How helpful can even a highly skilled litigator be in guiding the client through such a skein?
It doesn’t help that the complex mathematical modeling abilities required for quantitative case evaluation are not invariably associated with good litigation skills.
There are additional limitations to a quantitative approach to case evaluation:
• Social scientists have identified the tendency to overemphasize those aspects of a problem that can be quantified and to minimize the significance of factors that cannot easily be quantified. These tendencies skew any result of a quantitative analysis of possible outcomes of litigation, especially since a typical case includes few variables that can be easily quantified.
• There is another natural human tendency to discount small probabilities. If a particularly unfavorable outcome—say, a potential $500 million judgment against your client—has a 5 percent likelihood of occurring in a case, it is questionable whether a quantitative analysis adequately conveys the implications of that possibility, even though it is numerically small. We need to assess such numbers in a way that makes sense and allows the client to make reasonable decisions. Usually, that requires us to retranslate the numbers in some qualitative or comparative way that allows the client to appreciate their real meaning.
• The quantitative approach generally does not account for attitudes toward risk—a client’s level of risk appetite, risk tolerance or risk adversity. Two different people can assess a situation and both assign a probability of 5 percent to 10 percent for a particular negative outcome. Yet one decision-maker might immediately embrace the risk, while another would immediately reject the very same strategy. A quantitative analysis is incomplete without accounting for variable attitudes toward risk.
Despite its limitations, a quantitative approach can be an important means to achieving a thorough case evaluation. At the very least, doing the work required by quantitative analysis dispels the kind of fuzzy thinking that leads counsel to tell the client that he or she has “a pretty good” chance of winning the case.
Louis M. Solomon is a partner at Proskauer Rose in New York City, where he co-chairs the firm’s global litigation and dispute resolution department. His synopsis is based on a collaboration with Bruce E. Fader, former chair of the firm’s litigation department.
E-Discovery: Technology requires greater care in preserving evidence
BY SHIRA A. SCHEINDLIN AND JONATHAN M. REDGRAVE
Both the pace and globalization of modern business necessitate the increasing use of electronic communications and computerized data storage systems. Advances in technology have given further impetus to the trend.
But the widespread use of electronic communications and data storage also has become a significant consideration in litigation involving businesses. The nature of electronic data and records makes the issue of preserving evidence during the early stages of litigation—and even before a lawsuit has been filed—particularly important.
Illustration by Stuart Bradford
Accordingly, a company involved in or facing impending litigation should have a defensible litigation-hold process in place. This process sets forth what steps affected people and departments in a company must take to preserve certain categories of electronically stored information, which may require suspension of the company’s routine records retention and deletion procedures.
While a company may not be required to issue and implement a legal-hold notice, the Federal Rules of Civil Procedure call for parties to exercise due diligence and make reasonable, good-faith efforts to identify and preserve relevant electronically stored information.
The growing importance of ESI in litigation is apparent in the 2006 amendments to the Federal Rules of Civil Procedure.
The scope of Rule 34 was expanded to include electronically stored information on the list of what a party in a case may ask another party to produce as part of the discovery process. In addition, Rule 34 permits a requesting party to specify the form in which it wants ESI produced. If the producing party objects to the requested form, it must produce the information either in the form in which it is ordinarily maintained or in a reasonably usable form.
Rules 16 and 26 mandate early meetings of the parties to discuss discovery issues, including preservation of ESI, the scope of what may be requested, the forms of production and privilege claims.
Under Rule 26, relevant information designated by a party as “not reasonably accessible” is presumptively nondiscoverable without an additional showing of good cause by the requesting party. If good cause is shown, the court may nonetheless order discovery on conditions such as shifting costs to the requesting party or ordering the parties to share costs.
Under Rule 37, a court may not impose sanctions, absent exceptional circumstances, against a party for failing to provide ESI lost as a result of the routine, good-faith operation of an electronic information system. (A party cannot be acting in good faith unless it takes some steps to preserve information once litigation is reasonably anticipated.)
The fundamental duty to preserve clearly encompasses ESI. Fulfilling that duty presents special challenges in the case of ESI, however, because destruction of that information can occur through the normal operations of a business organization’s computer systems. Furthermore, interrupting those routine operations can result in substantial costs, impose burdens on information technology staff and disrupt normal computer operations.
An effective legal-hold procedure can help minimize some of the upheaval at the same time that it helps to fulfill the duty to preserve material for discovery. But a company must act promptly, and counsel must work closely with the client in monitoring the process to assure that a legal hold is carried out effectively.
It should be remembered, however, that just because electronic data can be collected does not mean it must be preserved and produced. Application of the traditional notions of relevance, need and proportionality to ESI, just as with paper records, turns on the knowledge and judgment of counsel.
Shira A. Scheindlin is a judge in the U.S. District Court in New York City. She was presiding judge in Zubulake v. UBS Warburg, a case that resulted in a number of authoritative decisions addressing electronic discovery issues. Jonathan M. Redgrave is a founding partner at Redgrave Daley Ragan & Wagner in Washington, D.C.
Computer-Generated Exhibits: First, get them admitted
BY DAVID BOIES
Advances in computer technology have significantly, sometimes drastically, changed how we live and work—and litigate. Attorneys seeking to present the most compelling case at trial on behalf of their clients cannot afford to ignore the growing capabilities of that ever-evolving technology.
The ultimate goal of a trial is to persuade the jury (and often the judge) to adopt your version of the case. Strong visual presentations often are crucial to reaching that goal, and computer-generated presentations using the latest technology in animation and visual arts can be particularly effective.
Illustration by Stuart Bradford
Even the best computer-generated presentation, however, does no good if it is never shown. That’s why admissibility issues must be addressed before counsel can bring computer-generated presentations before the judge and the jury.
Like all other trial exhibits, computer-generated presentations must establish that they are (1) relevant under Rule 401 of the Federal Rules of Evidence, (2) authentic under FRE 901, and (3) have a proper foundation. These criteria should be met if the presentation advances the case, if it “is what its proponent claims,” and if the supporting facts and information are available.
In addition, federal courts have a duty under FRE 611(a) to “exercise reasonable control” over the presentation of evidence. Although some judges are still suspicious of high-tech presentations, most federal courts are generally receptive to them so long as they help the fact-finder understand and ascertain the truth, do not waste time or harass a witness, and are not confusing or misleading.
The “purpose” of the presentation is important to determining admissibility.
Some computer-generated presentations are designed only to help explain or clarify evidence or testimony already offered. Such presentations—sometimes called animations—will not be admitted as actual evidence. Generally, if the computer-generated presentation meets the requirements of the Federal Rules of Evidence, and does not exceed the scope of the evidence it is intended to explain or clarify, it will be admitted at trial as a demonstrative exhibit.
Other computer-generated presentations, however, are offered as independent evidence to simulate or re-create a complex action, event or theory related to the case. Because of their evidentiary role, simulations are subject to a more rigorous admissibility standard.
Simulations usually are introduced in conjunction with expert testimony. Accordingly, they are subject to the requirements of FRE 702, along with the tests set forth in Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (1993) and its progeny for establishing foundation, fit and reliability. So as with expert testimony itself, the proponent of a simulation should be prepared to respond to questions regarding the facts and evidence on which it is based, its specific methodology, and any underlying technical or scientific assumptions.
Finally, computer-generated presentations must satisfy FRE 403, which requires that the probative value of the exhibit not be outweighed by a danger of undue prejudice. A proponent should be prepared to articulate both the probative value of a presentation and its overall fairness. Counsel also should guard against possible objections by ensuring that animations closely follow admissible witness testimony in the case, and that animations are based on solid data and assumptions in the case.
Fortunately, courts have wide discretion to deal with objections seeking to exclude evidence under FRE 403. Courts have issued specific jury instructions relating to computer-generated presentations and even modified presentations for the sake of admissibility. Thus, even in the face of a problematic presentation, workable compromises often can be achieved.
Consider it another sign of the times in what is increasingly an age of computers.
David Boies is chairman of Boies, Schiller & Flexner; his office is in Armonk, N.Y. Among his trial work in recent years, Boies served as special trial counsel for the Justice Department in United States v. Microsoft.
Streamlining Litigation: Try to get along with opposing counsel
BY STEPHEN D. SUSMAN AND BARRY C. BARNETT
Maybe it’s just not obvious that one of the best tactics for streamlining litigation is simply to make an effort to get along with opposing counsel.
Some lawyers still conclude that the byproducts of contentiousness—higher costs and longer delays in particular—somehow work to their advantage and advance the interests of their clients. These lawyers may deliberately provoke opposing counsel in hopes of wearing them down, or at least distracting them and forcing errors. Lawyers may even resort to juvenile attacks and bombard opposing counsel with threats of personal sanctions.
By contrast, opposing lawyers who get along with each other make an enormous difference to the administration of justice. Their good relations translate into all kinds of benefits to the court and their clients: greater ease in scheduling conferences, discovery, hearings and trials; elimination of unnecessary motion practice and discovery fights; a focus on the merits; fewer misunderstandings and, as a result, less disagreement; far lower costs; a happier judge; and more confidence among the litigants in the fairness of the process.
Illustration by Stuart Bradford
Getting off to an amiable start doesn’t take much effort. Counsel on either side can encourage good relations simply by calling the opposing lawyers as early as possible to introduce themselves.
Make this a habit! That way you can truthfully tell opposing counsel that you always call regardless of which side you represent. You can propose, in every case, that both sides agree on a standard set of procedures before either side can figure out which will benefit more from any particular procedure. Offer to send opposing counsel a draft, and promise to consider any additions or changes they suggest.
The worst possibility is that the opposition says no. But you will have started the process of setting a cooperative tone and promoting trust. Those efforts increase the likelihood of entering into agreements that will streamline and expedite every phase of the case.
The court has a key responsibility for relations between counsel. While many judges hate the idea of refereeing arguments between counsel—and tend to think both sides share equal blame for their disputes—letting poor relations between lawyers fester creates more problems for judges in the long run. Abuses multiply. Communication vanishes. Justice suffers.
The judge must strongly discourage disputatiousness, personal attacks and displays of anger. And he or she must grapple with the problem early and consistently. Adopting codes of behavior helps, but it can’t substitute for personal intervention by the judge when appropriate. Indeed, judicial aloofness gives the appearance of sanctioning boorish behavior and worse. Consistently bad conduct by counsel reflects poor management by the court.
But persuading the judge to take action can be a challenge and may become impossible late in a case. As soon as you see a chronic problem, therefore, consider asking for a brief conference with the judge to establish expectations about professional behavior. Do not, under any circumstances, attack opposing counsel, even if—especially if—you believe they richly deserve it. A neutral but earnest request for the court’s assistance has the best chance of success. Most judges will take the hint.
Stephen D. Susman is managing partner of Susman Godfrey in Houston. In February, he was the subject of an ABA Journal feature article titled “The G-Man.” Barry C. Barnett is a partner in Susman Godfrey’s Dallas office.
Incivility: More courts are treating rudeness as a reason for sanctions
BY MICHAEL B. KEATING
It is a growing reality in the legal profession that encountering uncivil behavior by fellow attorneys is an unfortunate cost of practicing law—in the litigation field as much as anywhere.
Incivility is not a problem exclusive to the legal profession. American society generally has moved away from an ethos in which manners are considered to be important in any endeavor. Nevertheless, an uncivil opponent in litigation has the potential to add unnecessary cost and unpleasantness to all stages of a case.
Until recently, judicial redress against lawyers for acts of incivility against the court, other counsel and opposing parties has been rare. But that may now be changing. In several recent decisions, courts have imposed sanctions on attorneys’ behavior that before was characterized as “merely”—if lamentably—uncivil or rude.
In one case, counsel refused to accept service of a motion to dismiss a complaint because postage was due—in the amount of 39 cents. Counsel then filed a motion to strike a second copy of the motion as untimely filed. The court not only denied the motion to strike, but signaled its intent to sanction the moving attorney. “It is not in the best interests of any party to take an unreasonable and unprofessional position over technicalities and pocket change in order to prove a point,” stated the court. Gray v. Parry, No. 2:07-CV-00113-DB-PMW, (D. Utah Oct. 31, 2007).
Belittling the arguments of an opponent can be grounds for judicial sanction, stated the Chicago-based 7th U.S. Circuit Court of Appeals in Redwood v. Dobson, 476 F.3d 462 (2007).
“Mutual enmity does not excuse [a] breakdown of decorum,” stated the court in finding that uncivil behavior during a deposition warranted sanctions for multiple counsel, along with the attorney being deposed. The court found that the attorney who was conducting the deposition initiated the incivility through improper questions.
The other attorneys responded not by availing themselves of the protections of the Federal Rules of Civil Procedure, the court noted, but with, inter alia, inappropriate instructions not to respond. “Instead of declaring a pox on both houses” by refusing to sanction anyone, the court stated that “the district court should have used its authority to maintain standards of civility and professionalism.” The appellate court censured three attorneys for conduct unbecoming a member of the bar, and it admonished another.
An attorney’s behavior at depositions formed one of the myriad bases for judicial reprimand in a 323-page opinion decrying the “dismaying erosion of civility” in the legal profession. In cataloging the lawyer’s behavior, the court noted her refusal to allow witnesses to take breaks, to share documents with witnesses after quoting from them, or to provide copies of documents to other counsel. Wolters Kluwer Financial Services Inc. v. Scivantage, No. 07 CV 2352HB, (S.D.N.Y. Nov. 30, 2007).
Another U.S. District Court in New York ruled that unwarranted sarcasm and attacks on the legal experience of an opponent contributed to an unnecessarily contentious atmosphere at depositions. The court ordered that two witnesses be deposed again, with costs to be paid by responsible counsel. Sicurelli v. Jeneric/Pentron Inc., No. 03 CV 4934(SLT)(KAM), (E.D.N.Y. Dec. 30, 2005).
These recent decisions should not encourage lawyers to trumpet every slight with a motion for sanctions because many courts still are reluctant to enter the fray of incivility. The rulings do, however, suggest that many courts are becoming less willing to tolerate patterns of incivility, particularly when such behavior is shown to impede the progression of a case. Under tougher judicial scrutiny, litigation tactics based on incivility may become increasingly costly for both counsel and clients.
Michael B. Keating is a partner at Foley Hoag in Boston who chairs the firm’s litigation department. His article is based on Chapter 60 (Civility) of Business and Commercial Litigation in Federal Courts, 2nd edition.
Take Home the Tome
The second edition of Business and Commercial Litigation in Federal Courts is available in both traditional book format and online. To order the print version, call 1-800-344-5009 or go to west.thomson.com. The treatise also is available on Westlaw; to order, call 1-800-762-5272.
In "Making the Case for Change," April, two photo credits were omitted. Judge Shira A. Scheindlin's photo was provided by Redux/New York Times, and David Boies' photo was provided by AP images.
The Journal regrets the error.