Litigation prevention

Cost-effective resolution of lawsuits

Oh My God ! I am S….UED!!!

I am a lawyer ..!

1.2 Million Lawyers in US today roughly the same as India which produces 80,00 a year

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

Negotiation

Mediation

Conciliation

Arbitration

Outright settlement for certain types of litigation

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

Classification :

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