Lesson From Big Dog Defendants: Insist On An Evaluation

I counsel and defend both small and large companies, mostly on employment issues and cases. I see many differences in how a larger, more established company handles its role as a defendant in civil litigation, and I think there are important lessons a smaller entity can learn from these “big dogs,” even if they never plan (hope!) to get sued again. Chief among these lessons is the value of a well-considered evaluation report.

Smaller companies might view any kind of written evaluation as a frivolous, unnecessary expense. I sympathize with this view, but I think it is misplaced. First, as you’ll see, I’m not advocating the kind of “term paper” report demanded by large corporate defendants. For a corporate client or insurance carrier that is regularly involved in litigation and knows what it wants to know, I’m happy to provide the most detailed report in the world. Why would I object–I get paid to do it?

But when I counsel a company that rarely finds itself in civil litigation, I don’t think it’s necessary to incur the cost of a 20 or 30 page tome. Rather, something that is between 2 and 4  pages total balances cost-efficiency with the importance of a written evaluation.

Before I get to what to look for in an evaluation, I want to cover timing. Large corporate clients for whom I’ve prepared evaluation reports typically require a comprehensive initial report anywhere from 90-180 days after the suit was assigned. Thereafter, most corporate clients like to see an update every 90-120 days, with some kind of even more comprehensive pre-trial evaluation about 60-90 days before the scheduled trial date. There’s no reason a smaller company should deviate from this timing. It is important to understand that an update is just that, it’s not a re-writing. I simply bold any information that is new since the last report. If there are things from prior reports that no longer belong, they can either be scored or deleted altogether.

Here are the elements I would, as a client, always expect from an evaluation of a case in litigation:

1. Brief statement of operative facts. Brief means brief. The point is to make sure both the client and the lawyer have a common understanding of the operative facts. These might be both what is alleged and what the defendant is expected to prove. The last thing any client should want is for its lawyer to start trial without ever having run through a narrative of the operative facts on paper.

Also, even a very small company will likely have people involved at the management level with only a marginal understanding of the facts. This brief (did I say brief ?) statement can be shared with senior management, directors, investors or partners, to bring everyone up to speed. In addition to the liability facts, I would also include a list of the theories of liability and a brief statement of the damages sought, even if only in summary prayer, rather than concrete dollars and cents.

2. Very brief evaluation of the venue, judge, opposing counsel and plaintiff. (I mean brief dammit!)

3. Evaluation of each viable defense, including strengths and weaknesses. This is really the heart of the evaluation. This should be written in language that, to the extent possible, is devoid of legalese or confusing concepts. Clients who are not lawyers should be able to read this section and get a clear understanding of what will be proven at trial and how. On receiving this, clients should ask counsel to clarify any point that is not clear.

Now, while this section of the evaluation is written for the client, part of the value is in the composition process itself. In formulating this part, the lawyer will be forced to think through the client’s defenses, evaluate their viability and even develop a short inventory of what evidence will support the defense or make it challenging.

4. Exposure. How much, realistically, could the client lose if the case is tried and lost. In my field, employment law, this needs to include an estimate of the opposing side’s attorney’s fees since most federal and state employment law schemes permit a prevailing employee to recover her reasonable attorney’s fees.

5. Ultimate recommendation. Is this a case that should settle? Is it a trial candidate: i.e., one in which there is a 75% or greater likelihood the client will win (I prefer to think of it this way: a jury will return a defense verdict 7 out of 10 times)? Clients’ risk tolerances differ; some are more willing to gamble, others want to be virtually certain of prevailing at trial (there’s no such thing as virtual certainty of a verdict, by the way).

If the recommendation is to pursue settlement, what is a reasonable settlement amount, and what is the proposed path to get there?

6. Tasks and budget. Clients should be entitled, at every stage of any lawsuit, to a list of what is anticipated to be done in the next 60-120 days, and a reasonable estimate of what the cost will be. Hopefully clients understand that this is only a thoughtful estimate of what is required and the cost. None of us is omniscient.

Crucially, an evaluation should be considered a living document. Cases evolve. If every single fact, estimate and nuance of an evaluation remains the same from the beginning of the case until the start of trial, something is missing. Again, I advocate an approach that simply adds new developments to an old evaluation in bold.

Many lawyers will provide some kind of evaluation as part of their ordinary practice. If you’ve hired one that does not, ask her not only to provide an evaluation, but to provide it early enough so that a bad case can be settled before so much time and money has been invested that settlement is not a viable option for one side or the other.

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