1970
1992
2010
0
50
100
150
200
250
300
Increase in Litigation
Time in case
disposition
1970
1992
2010
Strict Liability principle (Escola vs. Coca Cola)
Results in product warning labels “Remove child before folding”
On a child car safety seat
“This product moves when used” A motorized go-cart.
“Use of a headset that covers both ears will impair your ability to hear other sounds” On a Bluetooth headset.
“Harmful if swallowed” On a brass fishing lure
1960s – concept of Contributory Negligence becomes common (allows recovery despite plaintiff ’s fault but reduced to that degree)
Rise in “Punitive Damages” (Juries look to send a message –David vs. Goliath story!)
Increase in class actions (anti-trust, securities, consumer, environmental and employment)
Environment, Health and Safety Regulation & litigation
Corruption Enforcements
Globalization of commerce brings bigger challenges.
Technology is a contributor of costs !
World is suddenly being over-regulated.
How do we measure litigation risk?
No. of lawsuits?
Dollar costs in defense/prosecution?
Executive time?
Role of lawyers is to estimate what can be achieved and what are the likely financial costs. What can be achieved is a function of law, evidence, expected actions of adversary, and judgments of third parties (judges and juries).
However, lawyer must also identify and capture relationships between each liability and damages issue and assign numerical probabilities. Take help if needed !
Post SOX, focus on Governance, Risk and Compliance Policies & Procedures (code of conduct, gifts & entertainment, use of
company resources, etc.) Training & Communications Testing Due diligence – employees, vendors, counterparties.. Accounting and financial controls
Develop risk map & plan strategy Product risk Enterprise risk Customer & counterparty risk Regulatory risk Environmental risk Market risk Employment risk
Types of litigation the company faces (historical data analysis)
Frequency
Work with insurance and risk management teams to determine causes
Determine legal basis for liability and evidence that leads to damage awards
Business intelligence – internal and external
Implement preventive practices
Ongoing review (matter management applications can be helpful)
Situation: New retail banking business
Various product lines and territories added simultaneously
Deficient customer complaint redress system
Complaints growth exponential – early warning not heeded
Legal notices
0
50
100
150
Mo
nth
1
Mo
nth
2
Mo
nth
3
Mo
nth
4
Mo
nth
5
Mo
nth
6
Cards
Banking
Advisory
Types of litigation - bucketing
Delay in service
• Interest waiver
• Compensation
• Alternate reward
Activation
• Offer upgrade
• Personal service
• Compensation
Transaction dispute
• Waiver of charges
• Compensation
• Coordination with payment firms viz. Visa, MasterCard
Loan approval
* Reasoning
* Alternate terms or offers of service
* Templates of response
Training of customer service resources
Use of templates
Determine compensation levels – delegation of authority
Employ lawyers with different skills/attributes – create a special cell
Strategy predicated on settlement
Significant reduction in litigation – automation of process – saving of legal resources & costs
Objective:
Predictability & Certainty
Can satisfy each other’s interest
Better financial deal
Retain business relationships
How to?
Determine corporate objectives and bearable costs
Disclaimer: THIS DOES NOT AFFORD A ONE-STOP SOLUTION
Replication of model in HR area (Disciplinary Actions, Terminations, etc.)
Collections
Vendor disputes
Data collection and analysis is critical for any litigation management Outside counsel fees Out of pocket expenses Litigation budgets vs. actual costs In-house time spent in managing litigation (legal, finance,
human resources, operations, management..) Categories of lawsuits Estimated net present value Probability and reserves Final judgments – favorable/unfavorable
A good matter management application can be useful.
‘Phase &Task’ tool developed for litigation management Online tool to prepare detailed costs estimate broken down
in phases After client approval, Lawyers post their time against
“Tasks” with details of work performed Actual costs versus estimates are tracked in real time for
each phase Clients have access to review reports in real time Automatic email alerts are available for certain triggers viz.
costs hitting 75% of estimates Predictability and no surprises for client in billing Cost consequences known if case is not settled and drives
into next phase