Be smart in your litigation defense: avoid the common mistakes that not just make for an inefficient defense when you are in litigation but can be a recipe for disaster.

• Author: Coffee, Gordon A.
• Position: Boards and Litigation

WE'RE BEING SUED. Sooner or later, every corporate counsel has to announce that news to management. What follows, typically, is a well-rehearsed drill: In-house counsel reviews the complaint, talks to the employees who dealt with the plaintiff, and gathers key documents. Armed with this information, counsel taps an outside law firm to defend the suit, sends the background information to the firm, and discusses a defense strategy and an overall budget.

The case then proceeds along a well-trod path. There are claims and counterclaims and motions. Each side gathers and exchanges documents and interrogatories. Disputes arise over privilege assertions and the scope of document requests. Witnesses are prepared and deposed. Experts are selected. A trial date is set. The case settles or, occasionally, goes to trial.

All too often, neither the process nor the ending is entirely satisfying for the company. In the aftermath, many companies are left shaking their heads and asking: "Could we have done better?" The answer frequently is yes. Often decisions and choices are made that seem innocuous at the time but which ultimately hamper the defense, leading to increased settlements, adverse verdicts, and unhappy employees.

More productive than chronicling past mistakes is providing recommendations for avoiding them. Here are a few ways a company can sidestep some of the more common pitfalls in complex litigation.

1. Gather all documents relevant to the suit at the outset

   Many executives and attorneys do not fully appreciate how significant a factor internal documents are in a civil case. While live testimony may make more of an impression on judges and juries, documents--especially e-mails--shape that testimony. Even the most polished witness can stumble in trying to explain away bad documents or less-than-flattering e-mails. Conversely, contemporaneous, corroborative documents can make the most inept witness appear credible. A company accordingly needs to pull, organize, and review all relevant documents and e-mail traffic at the outset of the case. Armed with the results of that analysis, corporate counsel can make an informed judgment about the seriousness of the case and how best to defend it.

   The temptation to avoid this process is great. Gathering, organizing, and analyzing documents and electronic data is time-consuming and expensive. Not surprisingly, defense counsel commonly choose not to begin the process until their litigation opponent serves a set of document requests. The document requests are then circulated to company employees, who are charged with finding responsive documents. This path is appealing because the document requests define what needs to be pulled and why. It also provides cover for counsel--the employees perceive that the litigation opponent, not counsel, is causing the intrusion on their time and the need to rummage through their files.

   The problem with this approach is that it may be too little, too late. The company may have staked out a legal position that turns out to be ill-advised once certain documents are unearthed. Equally troublesome, documents may get lost or destroyed between the filing of the suit and the time company employees are asked to turn over their files in response to a document request. When that happens, judges and juries are rarely sympathetic, no matter what the explanation.

   Waiting to pull and analyze the files may also cost the company a chance to settle cheaply. In every case, the company's files contain bad documents (or, more typically, bad e-mails). In some cases, the documents are toxic. Too often, companies blindly turn over the toxic documents and only fully appreciate them when they are used with devastating effect at the deposition of a company employee. By that point, the cost of settlement has escalated. Knowing about the...