A new perspective for litigation costs

AUTOR: Rafael San Bruno

FECHA: 30.07.2019

Litigation implies legal action and much responsibility.

In case of conflict, as litigation lawyers we advise clients in order to prepare and develop the proper strategy according to their positions and, of course, to submit the corresponding procedural motion (claim, injunction, preliminary measures, etc.), in order to obtain a satisfactory solution for their problems or goals.
This implies per se a lot of preliminary work and paperwork of which as litigation lawyers we are aware and we must supervise.

On the other hand, we are observing New Economy systems, where financial basis are changing and companies and clients in general are amending their inclinations and expectations on how to accept and bear their litigation costs, especially in big or high amount cases, trying to avoid surprises such as excessive or unexpected costs.

From our experience in the litigation department at Rödl & Partner, we refer below to some alternative ways to maintain high standards in our litigation practice, without abandoning new financial inclinations from clients.

1.- Technology.-

Litigation is one of the legal areas where technology can be used in a more efficient way.

Benefits are multiple, and can be appreciated for all tasks, for example to improve document management and review of the case (by means of programs that allow indexing and location of papers immediately), to improve the taking evidence processes (there are now numerous internet tools and block chain has been accepted as an appropriate source of evidence in some countries) or even to carry out the documental, witness or expert examinations during the trial or proceeding hearings.

Obviously, all of these benefits resound in a competitive advantage for the client, whose lawyer is able to maximize their time, always limited at the Courts.

Another example is the implementation of the Lexnet system in Spain, which consists of a public program than binds all professionals to attach digitalized documents, storing them in a protected justice system cloud. At the beginning it was criticized because it supposed a huge change in comparison to traditional paper methods, but after four years of its implementation, civil and commercial proceedings have been improved by the system and furthermore, most judges and Courts begin to use such with normality and effectiveness.

From the client’s perspective, a law firm that chooses how to take advantage of technology, reduces working time and allows their representative to address with efficiency their interests at Court.

2. Alternative payment methods.-

Nowadays, businesses are developing more descriptive financial budgets and establishing different fees for addressing the proceedings in which the company has to take part.

One possibility is to limit each step of the proceeding, so that the company is able to identify each concrete moment, and decide in a better way when to reach an agreement or, on the contrary, go ahead with the proceeding and finally hold the trial.

Such possibility is connected with the significance of technology, because if the document and evidence review process is carried out in a rigorous way, a good agreement is likely to be reached during the first moments of the conflict and not when there is no other option than to wait for the decision from the Court, where the positions are discovered.

Besides, this separation or individualisation of the proceeding steps, offers better transparency of the complete procedure, and allows taking care and being aware of the complete expenses scenario.

On the other hand, not recommended (and only rarely allowed in Spain) are complete success fee payment systems, given that this affects free competition and also, in some ways, creates risks between the client and the Firm distorting the interests of their own client.

An alternative system would be to limit the number of working hours or limit the sum of fees, and only in case of occurrence of additional events or conditions (successful Court decision or agreement), to agree an additional sum. This facilitates reaching a financial balance for both parties, and why not, it implies significant respect to the client’s possibilities and is an important incentive for the Firm.

3. Compliance systems to reduce Risks.-

Companies must evaluate their risk-management systems to reduce or focus real litigation costs.

By checking cybersecurity, compliance systems and applying new processes and tools to oversee and reduce business risks, it is possible to manage litigation costs better or even avoid such occurring in the first place.

On the other hand, law firms must focus on offering the client prior counselling to guide their process, in order that projects, conflicts and business strategies are addressed in the correct way, and are reliable from the beginning.

At Rödl & Partner we try to establish our litigation services practise according to the client’s expectations and wishes in each specific conflict.