Pick your battles: The art of reducing litigation costs

By Aidan Parsons, Group Business Development Director

In-house lawyers are always under pressure to do more with less. The good news is that, with a few small changes, most legal teams can free up a lot of time to focus on the matters that will deliver the most value for the business.

However, many in-house teams are so busy dealing with everything that, rightly or wrongly, ends up on their desk, they don’t have time to stop and think about how they could work more efficiently and effectively.

One of the key areas in which in-house counsel can realise cost and time efficiencies is litigation management. However, for many in-house lawyers, disputes work is one of the first things that is outsourced to a law firm.

Many in-house counsel are not from a litigation background and, as such, contentious matters can be unfamiliar and confronting. There can be a tendency for in-house counsel to brief the whole management of a dispute to external counsel and cede control of the strategy and budget to a law firm. Costs rack up quickly, pressure mounts on the in-house team and matters drag on for far longer than necessary.

But it doesn’t need to be this way. The traditional approach to dispute management- in-house team instructs law firm, law firm instructs barrister- is just one method of conducting litigation, and rarely will it be the most cost effective or commercial approach.

1. Engage an expert

Most organisations will not require a full-time litigation counsel (this isn’t America, after all), but many would benefit from having the option to bring in an experienced litigator to provide strategic input and guide the other lawyers in the team through the process when litigation does arise.

The first port of call for many companies involved in litigation is often to engage a law firm, but this should not necessarily be the default course of action. Engaging an interim litigation counsel or briefing a barrister directly will ensure that the company has access to the relevant experts at an early stage, without involving a law firm. If the matter is of sufficient size to warrant instructing a law firm to assist, an experienced in-house lawyer or barrister will be able to assist in managing the firm and negotiating an appropriate fee structure for the dispute.

2. Turn to tech

Another key consideration for in-house legal teams engaged in litigation is the management of the discovery process. Document review typically makes up around 70% of the costs of litigation and therefore any savings and efficiencies that can be realised at this stage will make a significant impact on the overall cost of managing the dispute.

Traditionally, this process is managed almost entirely by law firms, whose approach tends to be to throw bodies at the problem. Most lawyers cut their teeth on such exercises, meaning in-house teams are often paying premium rates for junior lawyers who have little or no litigation experience to justify the price tag.

Nowadays, advances in eDiscovery software and analytics technology mean that in-house legal teams can dramatically reduce the number of documents to be reviewed before sending them to their external advisors. It is not uncommon to reduce data volumes by 50% or more using targeted search terms, de-duplication tools and email threading software, meaning that matters that at first appear too big to handle internally can be dealt with by in-house resources. Data analytics tools also make it easier to find key documents, which may completely alter the litigation strategy or convince an organisation not to pursue the matter at all. Having this sort of insight can provide significant commercial benefits and puts companies one step ahead in the litigation process.

3. Horses for courses

In order to reduce litigation spend, or any aspect of legal expenditure for that matter, it is important to break a project down into its constituent parts and decide how best to manage the different elements. Many of the aspects of a dispute that are normally managed by lawyers do not necessarily need to be and bringing in team members with a different skill set can often lead to efficiencies and savings. The IT team within a company will play an integral part in any dispute, as they are often those best placed to identify and access relevant data, which will ensure the legal team can progress the matter quickly. From a document review perspective, engaging a team of paralegals or an LPO company to work at the direction of the in-house team or law firm on a first pass relevance review will usually be more cost-effective than using law firm paralegals or junior lawyers for the review. The targeted use of technology can amplify these cost savings still further.

Whilst the prospect of managing any kind of dispute can strike terror into the hearts of in-house counsel, outsourcing litigation work in its entirety represents a lost opportunity for corporate legal teams looking to reduce their external spend. With the right guidance, litigation can be managed in a commercial and cost-effective manner, whilst also expanding the professional experience of the lawyers in the in-house team.