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How law departments adjust to bone-crushing (major) litigation

The budget-busting lawsuit – the one (or few) that has a seven-figure reserve, glowers from the annual report, drains millions each year from the budget, drags on for years, and causes stress at the Board level – the “bet the company” litigation, demands measures that differ greatly from those that suffice for run-of-the-mill law suits. (See my post of Nov. 15, 2005 about Altria’s definition of major litigation.)

What are some of the differences?

Team approach. Inside lawyer or lawyers dedicated to the lawsuit (or family of suits); outside law firms; advisors and consultants; client representatives, IT personnel, financial advisors – all of these have to contribute.

New practices. Temporary staff, virtual law firms (See my post of Dec. 5, 2005 on Cisco.), elaborate budgets, project management (See my post of April 18, 2005.), extranets (See my posts of Aug. 27 and Oct. 21, 2005), war rooms – all these practices are called into play.

Brand-name law firms. Law departments choose well known, successful and therefore expensive partners from large firms (See my post of June 12, 2005 on cachet firms.). Departments may use multiple firms.

Reports. The major litigation ratchets up the obligations of the law department to report progress, fees, and prospects. More people get the reports and more people care about what they report.

Off-budget line items. Special budget treatment may be needed to account separately for the litigation, apart from the normal operational budget of the department. The law department must keep reserves up-to-date (See my post of March 12, 2005 on Merck’s Vioxx reserves.)

Discovery costs. These costs can balloon so quickly that the department might create one-off processes (See my post of Nov. 24, 2005 on Cisco, Aug. 5, 2005 on Sears, and Feb.1, 2006 on Verizon and Altria.)

Disbursements. These major lawsuits trigger unusual kinds or amounts, such as jury research, graphics, technology support, expert witnesses, photocopy and blowback charges, forensics experts, consultants, and an army of others.

Corporate executives testify. If so, this requires extraordinary preparation and care.

Public relations. High profile cases demand sophisticated communications and sensitivities (See my post of May 20, 2005 about what to do when journalists call.).

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