Don't Let Unexpected Litigation Costs Impact Your Company's Bottom Line | Practical Law

Don't Let Unexpected Litigation Costs Impact Your Company's Bottom Line | Practical Law

Attorneys' fees, discovery-related costs, settlements and other litigation expenses are skyrocketing. Now more than ever, these costs are increasingly impacting companies' and financial institutions' bottom lines. To manage the tremendous risks associated with litigation, companies and financial institutions must be increasingly proactive by using early case assessment and budgeting tools to prevent fees and costs from spiraling out of control.

Don't Let Unexpected Litigation Costs Impact Your Company's Bottom Line

Practical Law Legal Update 1-580-5465 (Approx. 4 pages)

Don't Let Unexpected Litigation Costs Impact Your Company's Bottom Line

by Practical Law Litigation
Law stated as of 16 Sep 2014 • USA (National/Federal)
Attorneys' fees, discovery-related costs, settlements and other litigation expenses are skyrocketing. Now more than ever, these costs are increasingly impacting companies' and financial institutions' bottom lines. To manage the tremendous risks associated with litigation, companies and financial institutions must be increasingly proactive by using early case assessment and budgeting tools to prevent fees and costs from spiraling out of control.
Attorneys' fees, discovery-related costs, settlements and other litigation expenses are skyrocketing. These costs are increasingly impacting companies' and financial institutions' bottom lines, as evidenced by a number of financial institutions recently announcing dramatic increases in legal costs. One report confirmed a jaw-dropping 44% increase in legal costs for certain banks in 2013.
Although it is often difficult to predict when litigation may arise, how long it may last or how costly it may be, outside counsel and corporate law departments should use early case assessment and budgeting tools to manage and more precisely estimate the risks associated with threatened or pending litigation.
Aggressive and thorough case assessment before litigation begins may be one of the most important investments a company can make. Effective case assessment and evaluation consists of several components, including:
  • Collecting and verifying facts.
  • Analyzing potential claims and defenses.
  • Assessing the company's risk tolerance.
  • Considering electronic discovery issues and related costs.
  • Identifying key witnesses and documents.
  • Creating a budget.
  • Charting potential outcomes for each stage of the litigation.
When charting potential outcomes for each stage of the litigation, counsel should use qualitative and quantitative assessments to:
  • Determine risk.
  • Reduce expenses.
  • Terminate cases as soon as possible.
  • Reduce or eliminate further exposure to litigation.
Practical Law has a comprehensive collection of resources to help counsel and companies evaluate risk and rein in legal fees from the outset of litigation. These resources provide counsel guidance on:
  • How to assess cases to calculate potential fees and costs.
  • Developing and maintaining a litigation budget.
  • Reducing litigation costs.
  • Understanding and obtaining alternative fee arrangements and third-party litigation financing.
For more information on identifying the cost of a lawsuit, developing and managing a litigation budget and reducing litigation costs, see Litigation Budget Toolkit and Standard Document, Engagement (Retainer) Letter: Alternative Fee Arrangement.