Episode 21. Litigation Budgets

A request for a litigation budget strikes terror into any lawyer’s heart. So many questions. So many unknowns. Litigation is so uncertain. And no one has taught you to create a budget. What’s a lawyer to do?

In this episode of Coverage Counsel Is In, Robert Sallander explains that litigation budgets are a natural extension of the litigation plan and the plan and budget together provide many benefits for client and lawyer. He provides a simple, detailed approach for creating and updating litigation plans and budgets.

If you'd like Bob's templates for litigation budgeting, reach out to him on LinkedIn or via email at rsallander@gpsllp.com.

Have a topic you'd like Bob to cover? Submit it to questions@gpsllp.com, or connect with Bob directly on LinkedIn.

And if you'd like to know more about GPSL, check out our website.

You can also find us on LinkedIn, X, and Facebook.

Transcript

Hello everyone. This week I'd like to talk about litigation plans and budgets.

It seems like most insurers and sophisticated corporate litigation management teams

require budgets. No one ever taught us how to create a litigation plan or a

litigation budget, but I figured out a way of doing it that has worked for me for

several years and I'd like to share it with you.

The first thing to understand is that a litigation plan in a budget go hand in

hand. They're actually quite useful. I talked earlier about doing jury instructions

early in a case because it provided some guidance for where you needed to go to

get where you want to be from where you are. Well a litigation plan is the same

thing or it fulfills the same purpose and a budget is simply an easy extension once

you have the litigation plan. So as I said, a litigation plan consists of really

five predictions. Those predictions are, what do you expect to do?

When do you expect to do it?

Who do you expect will do it? How long do you expect it will take, and how much

do you expect it will cost?

So if you think about it, the planning part is what's going to be done,

when is it going to be done, and who do you expect is going to do it.

The budgeting part overlaps the who you expect to do it concerns that person's

hourly rate, then how long you expect it will take

defines how much it's going to cost to do that task.

So what you want to be able to do is figure out who,

what,

when, where, why, and how and once you do those things you've got your litigation

plan and your budget all you really need to do now is format it and to do the

formatting I use an Excel spreadsheet.

The way I organize the spreadsheet is I look at phases of litigation. I've derived

much of this material from the ABA's task -based billing code guidelines.

So some of this may be familiar to you, but the litigation phases,

there are five of them. Sometimes they're sequential,

sometimes they're not, sometimes you have to circle back, But, as a rough order of

things, you're going to begin with a phase called case assessment development and

administration.

The next phase after that is going to be pretrial pleadings and motions, followed by

discovery, then trial preparation and trial, and finally appeal.

Within each of those phases, there are things that are unique to the phase and that

you want to kind of focus on and thinking about it. So for example,

in the case assessment development and administration phase, what you're doing is fact

investigation and development that is not discovery. Basically,

things you can do on your own, talking to your client, gathering documents from your

client, doing independent investigation, and thinking about how all those facts and

how that evidence will then factor into your case.

The lingua franca of lawyers is really analysis and and that's a an essential

component of case assessment development and administration. You're probably going to

put a lot of time into the analysis and strategy aspects of the case because that's

what you're hired for. You're hired to think about what do these facts mean in

terms of the applicable law. In many cases you're going to need to work with

experts or consultants, because there's going to be some scientific medical or other

technical aspect of the case that you really need to know something about.

You've got document and file management, budgeting falls into the case assessment

development and administration category, And also we put settlement or non -binding

alternative dispute resolution within the case administration part of the budget.

So those are six things, six activities that we include within that phase.

There are tasks that you do in connection with all the activities.

I'm going to get to those at the end because that's a further way of chunking down

what you need to do, but they apply across all activities in all phases.

So let's talk about phase two, pre -trial pleadings and motions.

Obviously if you're defense counsel you're going to be looking at the complaint to

determine whether you want to file a motion to dismiss, whether you want to demur,

whether you want to answer, whether you have some other plea and abatement that you

want to file. So there's the pleadings. It may include preliminary injunctions or

other provisional remedies. Within pre -trial pleadings and motions,

you have court mandated conferences, status conferences, case management conferences,

mediation compliance conferences,

any kind of thing that the court mandates where you have to show up or file

something is a court mandated conference. There are dispositive motions,

motions for summary judgment or summary adjudication. Again, motions to dismiss,

motions for judgment on the pleadings. These kinds of motions fall within pre -trial

pleadings and motions. There can be all sorts of other written motions and

submissions, so if you identify those, they go in this section of your analysis.

And in some cases, you're going to be dealing with class action certification and

notice.

Phase three of this in the litigation process is discovery. There's of course written

discovery, interrogatories, requests for admission,

there's document production, depositions, you have expert discovery,

you also have site inspections in some cases. And finally you may have discovery

motions and you need to plan for those. The discovery phase not only includes what

you're going to propound, you have to take into consideration the things that you're

going to respond to. This is why in the prior

Development of the case you're identifying the witnesses and who you're likely to

have to prepare to give deposition Testimony or who you're likely going to have to

question. So all that goes into the discovery plan

Phase four of litigation is trial preparation and trial Well,

this is where you're bringing everything together Here's where a lot of the review

and analysis and development of strategy comes together because you have the fact

witnesses, you have the expert witnesses, you're gonna have trial briefs,

motions, and

pre -trial conferences where you have to appear and then in some cases if you're the

plaintiff or if you get some sort of relief in your favor you're going to have

enforcement issues and post trial motions and submissions.

Cost builds for example or attorneys fees requests that's all in the trial

preparation and trial phase. And finally there's appeal. You could appeal or the

other side could appeal. And if that happens there's going to be the notice of

appeal, there's going to be the appellate briefs and oral argument, and depending on

what happens after the appeal, maybe we're starting all over again.

I think it makes it a lot easier to chunk down litigation into these five phases

and into the things that constitute those five phases or the activities that you do

during them. But remember that I said there are tasks that you do within each

activity and these asks you're going to have to account for and when you think

about them,

they're really just what can you do with regard to discovery or with regard to

court mandated conferences. A lot of what we're doing is reviewing and analyzing.

I mentioned that analysis is the lingua franca of what lawyers do we we do the

review we do the analysis we look at the facts and the evidence in relationship to

the applicable law if you don't know what the applicable law is or you're not quite

sure what the areas of proof are or how you have to prove it there's legal

research that you're going to need to do

There's an opportunity to do analysis and do legal research together and in most

instances the litigation guidelines I've seen you're going to need to have pre

-approval to do legal research. You might as well just put that in your budget and

get approval for it early on as soon as you know it.

Other things, other tasks that you really do are communicating.

Well, there's written communication and oral communication. So if you're doing written

communication, you're drafting and revising pleadings, for example, or letters,

clients require status reports.

I'll put the status reports in your plan and budget.

Put the case management conference statements or status conference statements in your

budget. You're gonna have to draft those. And if you have a more junior attorney do

the initial drafting, the more senior attorney may have to spend some time revising.

Put that in. There's communications with the opposing counsel.

There's communications with the client. There's communications with the court. There's

communications in the firm. Now, one of the things that's a trap for the unwary is

some of these things, particularly in firm communications or conferences,

those are tasks that are often disallowed in a company's litigation guidelines.

So you're going to want to exclude those from your budget and not bill for them if

you do them. And then you're encouraged to really keep them to a minimum.

You have to do what's necessary to make sure your team is on track and doing the

right things, but that's often a non -villable task.

So you may have to do it, but it doesn't go into your budget. For motions,

hearings, case management conferences, and trial, you're going to have to appear or

attend these things. mediation. You have to appear for or attend mediation.

Settlement conferences. You have to appear for or attend those.

You also have to travel. In the, in this day and age of Zoom sometimes we don't

travel. A lot of times though, and I see the trend picking up, people are starting

to believe that in person is more effective than Zoom, not always the case,

sometimes the case. So you're gonna have to evaluate do you include travel?

And then there are guidelines about that. There's local travel, there's out -of -town

travel. Sometimes the litigation guidelines put limits on what you can do.

For example, they say if you're gonna travel, You can only charge half the actual

travel cost. Well, the idea is to be as efficient as you can But there's not that

much benefit To the client if you're just sitting on an airplane or driving a car

So these are the things that you break down and put into your litigation plan and

the more sophisticated or granular the plan is the more you're thinking about these

things the more detailed your plan is going to be and the more detailed your plan

is and the longer the time horizon for the plan the more it's going to be subject

to revision and modification.

It used to be that lawyers at least were concerned that if they predicted that

something was going to take eight hours and it took them 12, the client wasn't

going to pay for it, that they were going to end up working four hours for free

and that's a tough thing to do when you're paid by the hour.

So this was a, when budgets first came out, litigation guidelines first came out,

this was part of the tension that existed. What seems to have developed now is that

clients understand that there's going to need to be a revision, that your budget is

just a prediction, that your plan is just a prediction, and that the plan is more

likely than not going to change. This of course has to do with the area of law

you're in, the complexity of the case, some random of the mill cases you can handle

on a flat fee basis because you know what's going to happen and that there's not

going to be a lot of extra work to do and you're able to predict based on your

experience what these kinds of cases cost and there's a marketing and a client

relations opportunity for you there. It's best to keep revisions to a minimum so in

my budgets I usually just

things that may be suggested work that could be done, but talk to the client about

do you really think this needs to be done? For example, you can file an answer,

and if it's a state court answer, for example, in California, there are actually

forms where you just check the box, and the answer doesn't take very long.

If you're going to do a demur, though, you're going to do a brief and a notice of

demur and have a hearing, you may decide that the complaint is subject to a demur,

but the court is likely to, if it sustains the demur,

give the plaintiff leave to amend, and then what have you accomplished? So you can

talk to the client about well we have the opportunity for a demurr here but your

advice is we shouldn't do it because it's just going to educate the plaintiff and

help them put on a better case. You can save the arguments for later on when you

can file an effective motion for judgment on the meetings, something like that.

So these are part of the analysis that goes into the litigation plan and the

derivative budget. If you have to revise your budget and you're going to have to

revise your budget, you should do it early. Revise your budget in advance of doing

the task. As an example, let's say in a early case budget you've predicted that

there are going to be five witnesses that need to be deposed. And all of a sudden

you discover that there are eight. You need to get with the claims professional and

say, "Look, I thought there were going to be these five. I've learned about these

additional three. This is what I believe they know. This is what I believe is

important about them. If we don't take their deposition, here's what's likely to

happen. If we do take their deposition, this is what's likely to happen.

And my recommendation is as follows. And if you're going to recommend taking an

additional three, you have a good and valid reason for it. And so it shows that

you are aligned with your client in trying to be efficient and cost effective and

that you're not out there sort of ad hoc as the spirit moves you doing things that

may not even be important for the case. In fact,

claim and litigation management is really about trying to do the thing that gets us

to resolution sooner rather than later and for the least possible expense.

If you can show that you're doing that with the client and you do it regularly,

that builds up trust, it's just great for your practice and great for your client

relationships. They know you trust you. They want to work with you because they know

that you're not going to give them a budget of say $25 ,000 for a case that you

end up spending $200 ,000 to defend. It's better to give them an early budget of

$200 ,000 and bring it home for $25 ,000 if you can. So there's a client relations

aspect to it. Similarly, if you're the client and you're trying to keep the cost

down as you should, you don't want to demotivate your lawyers there's nothing more

devote demotivating and really disheartening than when a claims person for example has

said yeah I want you to go depose this person and you spend a total of 20 hours

preparing for the deposition traveling to the deposition taking the deposition,

reporting on the deposition, and then some bill review company comes in and cuts

your time by 50 or 75 % saying that you took too much time.

Well, you avoid that problem because you've got it in your budget, and you just go

back and say, "I said it was going to take 20 hours for this. It took 20 hours

for this. I'm challenging the deduction.

So that's an important part of managing your practice. It helps manage client

expectations. It gives you a basis for appeal of bill reductions. And frankly,

everybody's happier. So there are a lot of reasons to have a litigation plan and a

budget, and many of them are really good for lawyers.

So I encourage you to start practicing using litigation plan and a budget.

Start off simply, start off on a spreadsheet, list the five phases of litigation,

what you're going to do under each one of them, who's going to do it, what their

hourly rate is, predict the amount of time you think it should take for them to do

it, and then submit that budget to the client early on and say this is where we

think we're going. Then in your monthly or quarterly status reports,

use the budget and the plan as a way to report. We took the five depositions we

said we were going to take. We did it within the budget. We learned from those

that there are four more people that need to be deposed. This is why we wanted to

pose them and we're submitting a revised budget for your consideration and approval.

If they don't want you to take those depositions, That's up to them.

They know how much it's going to cost. You've told them you haven't incurred expense

for no reason. You haven't incurred fees that you're not going to be paid.

And it just makes the whole process run more smoothly. So there you go.

That's what I've learned about litigation plans and budgets. I have templates for

Microsoft Excel spreadsheets that make it very easy for me to put together a budget

and a plan, and I'm happy to share those with you if you want to contact me. I'm

happy to share my templates of my litigation plan and budget sheets.

So just drop me a line. You can do it through LinkedIn or whatever platform you're

using and we'll try to get that off to you or email me or give me a call.

That's it for this week's episode of Coverage Counsel is in and until the next

time, this is Bob Santlander, signing off.