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Litigation management Part IV – costs of litigation generally

Costs of litigation counsel, the largest external expense of law departments, causes constant worry among general counsel (See my post of Feb. 26, 2008: total cost of litigation for Fortune 500; June 6, 2006: more detail on Fortune 500 litigation costs; June 22, 2008: litigation ranks highly among management challenges in law departments; and Aug. 12, 2008: rank of litigation as a concern in European law departments.). I have already collected various sub-topics related to litigation (See my post of Oct. 2, 2008: 12 topics in metaposts; and Oct. 2, 2008: 9 more savings techniques for litigators.)

Costs especially hit the headlines in large and expensive law suits or clusters of law suits (See my post of Feb. 20, 2006: major litigation’s characteristics; Nov. 15, 2005: definition of major litigation; Feb. 28, 2006: bet-the-company litigation; Nov. 25, 2006: massive coordinated defense; June 6, 2006: most litigation and costs are not frivolous; and Aug. 27, 2005: how to gauge complexity of litigation.). Patent cases especially have garnered a number of postings (See my post of Oct. 2, 2008: the costs incurred during patent suits, with 13 references.).

This blog has covered many tactics to control litigation costs (See my post of Aug. 13, 2008: cost controls over motions, depositions, and attendees at conferences or depositions; Aug. 15, 2008: eleven blunt suggestions to reduce litigation costs; Sept. 28, 2007: cycle time and costs; Aug. 31, 2005: litigation burn rates; Feb. 20, 2006: burn-rate calculations; Aug. 5, 2005: share some costs with adverse parties; and March 29, 2005: weed-wacking litigation costs.). Other savings techniques apply to litigation just as well as they do to other expenditures on outside counsel (See my post of Aug. 21, 2008: techniques to save costs with 24 references.).

The financial drag of a lawsuit goes far beyond law firm fees and disbursements (See my post of July 20, 2005: full costs of litigation; Nov. 14, 2005: total cost of outcome; July 16, 2005: settlements and judgments as a percentage of litigation expenses; Oct. 4, 2005: in-house litigators and their influence on corporate cash; Feb. 13, 2008: connection between defense costs and liability costs; and June 15, 2008: trends that point to lower litigation costs.).

Accounting and benchmarking concerns have shown up in several blog posts (See my post of Feb. 20, 2008: general counsel don’t spread litigation costs over fiscal years; Dec. 10, 2005: wildly varying estimates for Merck’s litigation; March 12, 2005: reserves for litigation; March 15, 2006: litigation recoveries; Jan. 1, 2008: recovery of in-house attorney’s fees; Oct. 27, 2005: Fulbright & Jaworski data on litigation costs; and Jan. 30, 2008: DuPont and asbestos recoveries.).

Some data is available about the comparative expense of particular kinds of lawsuits (See my post of Nov. 19, 2005: D&O claims; Nov. 19, 2005: employment litigation; Feb. 12, 2006: employment lawsuits and their costs in Europe; and Oct. 2, 2008: patent litigation costs.).

Many posts focus on the litigation firms representing the company (See my post of May 19, 2006: differences in expenditures between plaintiffs and defendants; Sept. 17, 2006: prices are not competitive in litigated matters; Oct. 24, 2005: primary litigation firm absorbs local counsel costs; and April 6, 2008: profitability of law-firm litigation practices.). These posts and others offer ideas about fee arrangements for litigation (See my post of Sept. 10, 2005: fixed fees in litigation; Oct. 29, 2007: litigation and fixed fees; and Aug. 4, 2007: discounts and bonuses in litigation.).

Loser pays jurisdictions have gotten attention (See my post of Oct. 22, 2005: insurance proceeds in a loser-pays jurisdiction; May 31, 2005: insurance where the loser pays the other side’s fees; May 10, 2006: why US litigation hasn’t spread to Europe; and Aug. 21, 2006: Florida experience with loser pays.).