McElhaney on Litigation

The Tangle

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Energy Czar McReynolds Farley walked into the office Tuesday afternoon. No letter, no call, no advance notice. Just walked in off the street.

I recognized him from seeing his picture in the newspapers, so I knew better than to ask wheth­er he had an appointment “Good mor­ning, Mr. Farley,” I said. “How can we help you?”

“I want to see Angus,” he said, looking grim.

I was going to come up with a story about some emergency hearing that had taken Angus out of the office when in he walked with a box of apple-walnut bear claws from the Donut Hole.

“McReynolds,” he said, “what a pleasure. Your timing is superb. These bear claws were baked this morning.”

“Angus, you still have your priorities straight,” said Mr. Farley with a smile. “There are few urgent matters that can’t wait for a cup of coffee.”

Three bear claws later and behind closed doors, Farley told us why he came. “You know about my new project?” he said. “A massive energy ranch out in New Mex­ico. Hundreds of thousands of acres. Huge fields of solar panels and windmills connected with a state-of-the-art grid. There’s a lot of sun and wind in the mountains of New Mexico. Besides, this is something we’ve got to do.” “So what’s the problem?” said Angus.

“You can’t believe the massive interference I’ve gotten from the federal government, four different states and the fossil fuel people,” said Farley. “Oil, gas and coal. And mind you, I’m still primarily in natural gas. But the future is a lot closer than most people realize–especially those in the energy business.”

“What have they done?” said Angus.

“Formed an unholy alliance against me and the energy ranch,” said Farley. “The fossil fuel folks have gotten a number of gas and electric companies and big ranchers to join in a huge fraud case charging that I lied, cheated and swindled to put together the necessary land and power deals to start the project. They’re asking for $500 million.

“So my lawyers have filed a counterclaim charging them with conspiracy as well as intentional interference with all the deals I’ve made.”

“Is Mike Torres still your chief house counsel?” said Angus. “Yes,” said Farley, “with a staff of eight other lawyers.” “You’ve got outside lawyers working on the energy ranch dispute?” said Angus. “A whole cadre of litigators from four of the best firms in the country,” said Farley. “Then why do you want to see me?”

“Several reasons,” said Farley. “Mainly because of the team’s lack of sparkle, commitment, enthusiasm. I watched a practice round of the opening statement for our coun­ter­claim–which is worth more than $1.2 billion–and I wasn’t impressed. It seemed too mechanical, technical, legalistic. Typical big-firm litigators. So I thought you might be able to help them focus on how to talk to a jury.”

“Is Mike Torres OK with getting us involved?” said Angus.

“What can he say?” said Farley. “I’m the client. But yes, I talked to him about it, and he thinks it’s a good idea.”

The Clock Is Ticking

Two days later, Angus and I went to the 16th floor of the Farley Energy Building and met with the “cadre” of lawyers who were working on the energy ranch dispute–all 28 of them, including Mike Torres, who introduced us to everyone.

“McReynolds isn’t here today,” Mike said. “He’s up in the mountains investigating some sabotage to the windmills and solar panels at our testing site. It’s a terrible thing to happen, but it does tend to show that these guys are really playing hardball.”

“How do you know they’re people who work for the other side?” I said.

“Mr. Farley believes in sophisticated surveillance equip­ment,” said Torres. “I’ll fill you in later.”

When we all sat down around the big oval table in the conference room, Angus didn’t waste any time getting started.

“You’re 93 days away from trial in Judge Padilla’s court,” he said. “Who’s lead counsel?”

“That hasn’t been decided yet,” said someone at the far end of the table. “But we know who’s representing the power companies and the ranchers: ‘Killer’ Konrad. We just found out last week.”

“You mean Kevin Konrad, who got that huge verdict in the bottled water case?” I said.

“That’s the one,” said the lawyer at the far end of the table. “He’s the main reason you’re here. Up until then no one thought this case would ever be tried.”

“We’re mainly here because we were asked,” Angus said. “And since Jimmy and I are the new kids on the block–the rest of you have been working on discovery in the case for anywhere from 18 months to three years–why doesn’t someone give us the story of the case, tell us what it’s all about?”

“Cash” Markus, who was sitting at the middle of the table and who sounds like a Wall Street Brahmin–start­ed talking about all the different legal theories as well as the procedural posture of the case.

Angus gave a pleasant smile when he cut Markus off in less than two minutes. “I think we understand what the claims, counterclaims and defenses are,” Angus said. “What we want to know is, what’s your story?

How are you going to explain this case to the jury?” A few of the others took a stab at telling the story, but most of them just kept quiet. Someone said, “It’s all because a group of crazy ranchers who thought this was a new kind of range war decided to battle some genuine windmills.”

A couple of others chuckled until someone pointed out that the ranchers and power companies had been carefully picked because they were home folks, while the corporate giant, Farley Energy, had its headquarters in New York City.

In 10 more minutes it was obvious that no single person had sufficient command of the case to give a simple explanation of what it was about.

Angus didn’t look the least bit surprised. He just started asking a whole series of very specific questions, and they did pretty well as a group. Collectively, they had a wealth of information even though they hadn’t grappled much with putting it together.

Breaking up The Team

At the end of the day, Angus turned to Marsha Simpson and asked her why the local electric power com­panies had sided with the ranchers and the fossil fuel folks against the development of a new power source.

“I don’t know,” she said. “Why don’t you ask someone on the Green Team?” “Green Team?” said Angus. Mike Torres gave a nervous little laugh. “That’s Mr. Farley’s approach to corporate governance. Teams are created for different parts of a project and report on their findings and recommendations to management. And he has, uh, asked us here in legal to follow the same general approach with significant problems that may result in litigation.” Angus smiled.

The next morning, McReynolds Farley was already in the office when Angus and I walked in. “Angus,” he said, “I talked with Mike Torres last night. You made quite an impression yesterday. Mike wants both you and Jimmy to work on the case and wants you to be lead counsel. I’m here to offer you the job.”

“Thanks, McReynolds,” Angus said. “The truth is, you’re in a real pickle. I think I can help you get out, but not by taking over the case. People who are brought in to take over at the last minute–and 92 days to trial is the last minute in a case like this–may be quick studies, but they can never master the information the way someone can who has been working on it from the beginning.

“The difficulty is, you’re dealing with legal problems the same way you run your corporation. Big problems are broken down into individual projects that are given to little groups that report to management. People talk with other members in their groups, but the groups don’t talk with each other. You’ve taken a great trial team and divided it into little block houses instead of building the pyramid it takes to try a case.

“I’m just shocked no one has told you this before,” said Angus. “They did,” Mr. Farley said, “but I guess I didn’t believe them.” “Anyway,” Angus said, “I can help you and Mike Torres pick your lead counsel. There are three or four people who have been on board since the beginning who could do a super job.”

“Great,” said Farley. “Just one more thing. Where do you get those bear claws?”

James W. McElhaney is the Baker and Hostetler Distinguished Scholar in Trial Practice at Case Western Reserve University School of Law in Cleveland and the Fred Parks Distinguished Lecturer in Trial Advocacy at South Texas College of Law in Houston. He is a senior editor and columnist for Litigation, the journal of the ABA Section of Litigation.

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