Client Expectations In Major Litigation Projects

Author Richard Solomon is a conflicts and crisis management lawyer with 50 years of experience in business development, antitrust and franchise law, management counseling and dispute resolution including trials and crisis management.

A recent experience has caused me to reflect upon the variances in client behavior and expectations in major litigation matters. The client profile in this article is one or more "small" business owners and their companies. Representation of larger, more professionally managed companies presents a somewhat more detached attitude about it all. In publicly held companies, client reactions are frequently more nonchalant (unless someone's position is at stake) as they are not playing with their own money. No one will admit to that, however. Stockholders and insurance companies are picking up those tabs.

A major point that has to be made here is that any client has the right to expect one's best work under any circumstances. Except in an emergency situation, any client is also entitled to deference at every possible opportunity. In emergency situations, deference may have to be set aside and the client must tolerate intrusion by counsel whenever the client's assistance is required. Most clients understand that. A few, however, do not appreciate the seriousness of an emergency in which a lot of work must be accomplished in a very short time. You can hate me later, but help me out now.

The sentence about nonchalance is not always reliable. The company's general counsel is personally concerned because she has to account to her management for the conduct and consequences of the case. Company managers are quick to point fingers at the general counsel's office to deflect responsibility, especially in things like price fixing investigations and antitrust litigation. If the then current administration is into insisting upon jail sentences for price fixers, feelings run quite hot.

Potential individual defendants in criminal antitrust or securities/investment cases are usually otherwise as clean as the driven snow when it comes to having any criminal record. There might be a traffic ticket or two and maybe a DWI, but never anything that might put them behind bars. Pillars of the community suddenly facing the risk of prison time, losing prestige in their communities and worrying about the stigma that may attach to their families have occasionally taken their own lives in such circumstances. High profile divorces put callouses on clients. Fighting over a lot of money with one's soon to be former family quickly becomes a war of attrition, much to the delight of the lawyers for the parties.

It is almost never a client's personal experience to have been involved in major litigation on which the future of her company is on the line. Most have experienced either no litigation history or disputes that are easily manageable with the lawyers doing all the work (sometimes with the aid of their CPA). They may have to show up for a deposition in which they are asked potentially embarrassing questions like "Where did you hide the money" or "Who have you been sleeping with", but those transcripts are usually sealed.

It would be a much easier adjustment to being in major litigation if there had been advance planning and the client had not waited until the very last minute to retain specialist representation, but such luxuries are not often the situation in which the major case business litigator enters the picture. Where there is going to be an issue of preliminary injunctive relief, the urgency of really great case development work presents immediate and often continuous involvement of client and counsel. Clients hate this and who can blame them. It is worse than a root canal and it takes longer and costs more.

In franchise emergencies there are often groups of potential clients with a common problem, like, for instance, a soon to go into force covenant not to compete perhaps the most commonly encountered situation. By the time you are called in as the specialist litigator resource, there has been a great deal of wheel spinning and resource wasting. This means that even the very first meeting is with very upset people who already feel like a law firm they previously retained has just ripped them off and produced nothing positive.

The reason for this emotional mise en place is always that clients always want to believe that they can present a righteous case to their opponent who will see the merit of their position and come to terms they like and decide they are entitled to. The lawyers they loathe are almost always attorneys who make their living "negotiating" rather than fighting. "Negotiators" are never warrior personalities. They are usually country club types who find it difficult to accept that anyone would ever disagree with them and therefore give unspoken reassurances that with a reasonable business approach the matter will be resolved through correspondence and meetings leading to a cum ba ya conclusion. This is so often not so. The end of the wishful thinking stage of dispute resolution is fraught with operatic opprobrium in a froth of loathing and gnashing of teeth. This is often what the major case litigator walks into.

Because this is so frequently the situation, I always devote an entire day to the retention discussion meeting. Before you can get to the real point of the meeting you have to allow the clients to vent about the opponents and about their previous unproductive attorneys who, having produced nothing positive, are characterized as "obviously the wrong lawyers" and usually much worse than that. Use your imagination.

When the spleen venting subsides, we get to the point. The point is often that the opening salvo is expected within 30 days or less; the dispute has been brewing and discussed for over a year; the opponent has no inkling of what is afoot (Yeah, right); and we are not in a rush. Telling them that none of that is reliable is a test of determination. They came to you because of your reputation, but they expect to tell you how this ought to be handled. This is a teeth gnashing moment. This is the beginning of a tutorial in which, if you are going to be able to help them, they have to understand that you are the person with the tactical skills, not them. This will be difficult for them to accept. They are used to being the boss, not having to subordinate their decisions and desires to the opinions of others. And this is not the only point at which teeth will gnash in this all day first meeting.

You should have done quite a bit of homework before this meeting. They will expect you to be ready to speak about substantive as well as tactical matters. If you don't do the work pre first meeting you are a fool and will not be anywhere near as impressive or as likely to get retained as their counsel. Here is where most lawyers make the mistake of stinginess. They don't want to do the work because they haven't been retained yet. They go into that meeting touting their standing in the legal community, the articles they have written and the prestige of their client roster. All that is meaningless to people who want to be given insight into their likelihood of success. That alone distinguishes between the real specialist and the lawyer just looking to get a fee. That can be a problem. If you do the work and don't get retained you will not be paid for it. But if you do the work you will be far more impressive and more likely to be retained. If retained you can bill for the work because it is work relating to the matter. It is not "business development" or any other kind of freebie. The same goes for expenses incurred.

A lawyer who obviously knows what he is talking about is the lawyer who will leave the meeting with a room full of new clients.

The next question is "How would you handle this?" This is where the rubber meets the road. Let's use a situation where the dispute is going to be about the enforceability of a covenant not to compete as our discussion example.

I have done enough advance work to know something about the history of the overall business as well as the history of the relationships between the franchisor and those in the room. This will not be person specific, but will be a fairly reliable historic body of information. Without that being done, there is no way in hell you could ever tell anyone what your idea about how to proceed would be.

First issue is that you are not yet retained and there is no confidentiality duty between or among anyone in the room. You dare not be specific. Anyone in the room, as of that moment, could be a Judas franchisee, and you don't want specifics to be able to be repeated to the franchisor. I tell them that I will happily discuss it in generalities, but that there is no confidentiality obligation yet and I would be remiss to discuss an actual game plan going forward. While I may not say it, the risk of spying also propels the need for speed in trigger pulling.

They will still be of a mind to go "Talk" to the franchisor about it, and I tell them that (1) they have already done that and been rebuked, and (2) it is not reasonable to expect any franchisor to give up any right that his lawyers have told him is enforceable just because we think that would be the "right" thing to do. If there is to be any such additional meeting, it will have to be very short (as in two hours) with something in writing on the way out of the room, or else. As that is highly unlikely to produce anything other than bluffing and stalling by the franchisor, I tell them to place a zero value on that meeting.

In truth, I oppose all such additional meetings. I know what NO means. This negative, less than enthusiastic response makes them even more upset, because now the litigator is telling them what they don't want to hear. It contradicts their wishful thinking and also makes them feel like they were foolish ever to have believed some office lawyer could talk his way out of their having to comply with a contract provision that on its face at least seems enforceable (except in California).

I explain to them that I have done this many times and that I speak from a great deal of realities level experience. They already know that because that is how they came to me in the first place. That is not a hard sell and it helps a great deal.

Then, of course, they want to know how much it will cost. This is where you find out if your potential clients are for real. Assuming a group of about ten clients in a covenant not to compete case, with essentially the same operative facts, I tell them that they should count on sharing expenses of at least $250,000, ranging to $500,000 plus if it has to go to trial or arbitration. There may well need to be "experts" to give analytical opinion testimony based upon facts that are actually in the record of the proceeding. They have to be paid. There may need to be a local counsel if the venue for the dispute proceeding is in a state where I am not a member of the local bar association. They need to be paid also, albeit much less. I also tell them that in my experience it becomes evident rather early on what the risks of enforceability are going to be and that the likelihood is that it will be closer to the lower end of the scale. However, I do explain that that is a mere guess and they should neither expect nor count upon early settlement. Settlement occurs when you have done a lot of work building your case. You can't just call up and make a demand and scare anyone out of what they perceive to be an advantageous position.

I also tell them that the case will be very front end heavy because dispositive motions and injunction motions are likely to be brought on early, and the case must be sufficiently developed before it is filed that we are prepared to do what is called for whenever it is needed. I hate asking for extensions of time to meet major issues. That tells the court or arbitrator that you filed the case without having done your homework. The first two bills may be as much as $80,000 each and resources have to be there in front.

With roughly ten clients, that means $25,000 to $50,000 a piece. If their businesses are not worth enough to justify that level of cost we are done and we all go home. When clients see costs and not value, you are wasting your time. Everything is about metrics, not "principles" If they are still in the room five minutes after that you know you are doing something right and probably have real client potential here.

At this point they also have to know that I am not going to be a bill collector. They will have to provide resources or I will stop representing them. I do not tolerate whining about the cost because the cost is fully disclosed before retention happens. I have no problems saying in just so many words that if this is too pricey they should seek other counsel. Usually they know that the resources required are not out of line, and if they suck in their breath when they hear the metrics that is considered just so much theater.

Large firms cannot compete with me on cost of representation. What's more, they don't want to. Other smaller firms usually lack the specific experience to enable them to compete or even appear to be up to snuff. I have only rarely lost a representation opportunity because of the expense.

In the instance of the worst case I ever saw, a client group decided they wanted a "Wall Street" law firm. They paid the big boys $14,000,000 by the time the Wall Street boys ran out of insight. This client group had been sent to me by another similar company that I successfully represented in an almost identical case. Too many folks have endorsed the quality of my results, openly and not so openly, for there to be doubt about what I will deliver. My reputation has been built up over 54 years of practice. I have published a great deal of material about how to do what is required. Oh, and did I forget to tell you I am not shy.

I explain to them the need for their participation helping me develop the evidence necessary to support the claims we will be making. This will be an imposition on their time, and if I have a very short shot clock I will kick butt to get it done ASAP, even knowing that they don't like my intrusions into their daily lives. I try to work with someone with a more merciful perspective on client relationships so that they have someone to go whine to about all the work I am asking them to do on very short notice. The consequences of not getting case development work completed before filing a lawsuit are not pretty to see. Their immediate business future can be determined in about 90 days. There is no excuse for not being ready. If I blow this, then they will have real reasons to hate me. It helps to have a Cardinal Dolan like personality working with you to provide comfort to the clients when they feel imposed upon.

I am not going to go into the specifics of how I build big cases on short notices. That is somewhat proprietary. Suffice it to say that I will do it no matter how much I have to impose upon my own clients.

In franchising there has long been a campaign for something called "good faith and fair dealing". Some lawyers claim it really does exist. The biggest cases that openly relied upon it were all reversed on appeal. There are a few situations where the franchisor has been so outrageously abusive that it appears to have been decided on some ersatz good faith and fair dealing rationale. Parsed carefully, however, the accused behavior was tantamount to breach of contract. Courts do not want to rewrite agreements for people who wish that what the signed actually said something different. The big versus little scenario rarely causes a court to change the product of open disclosed investment agreements entered into by adults with substantial business experience. In their applications to be accepted as franchisees, they always say that they are experience business executives with a history if substantial business accomplishment. When the franchisee tries to portray herself to the court as a victim, that document will destroy her on cross examination.

These folks did not bring their checkbooks to this first meeting. I always bring retainer agreements with me to this meeting. The governing document's appearance bestows reality upon the entire conference. They are going to go home and confer with each other about what to do and whom, to retain for at least a week, Even if they decide to retain me, the resources to fund the project will take another week or ten days to arrive. With a short shot clock running, 20 days will have been wasted. Their home town regular lawyers may suggest they shop around further before making up their minds. You would be amazed at the lawyers with little or no related experience that have no reservations about making recommendations about matters they know almost nothing about. On occasion, I have had these local attorneys call me up and actually tell me that their decision what to tell their client will depend upon my paying them a percentage referral fee. I always turn those down flat.

Even when you are ready to strike, some may not have prepared their minds to actually do it. That can take another ten days or so, and may even include another round of second opinion shopping. If the franchisor gets wind about what is about to happen and beats you to a court or arbitration you were hoping to avoid, you will be in a world of pain. The clients will not accept that their delay caused the loss of tactical advantage. That may in itself result in the end of the professional relationship. It almost certainly will with me, because I believe that once a professional relationship has become damaged, the best thing to do is to end it.

If you do beat the buzzer, so to speak, it is off to the races. The likelihood is that it will be over in 90 days, as at that point everyone will have a good feeling about the comparative risks profile. In some instances, however, maybe about 25 % of the cases, ego or desperation will drive the franchisor to go all the way. That can't be helped. But we do go hell bent for leather to get to an early trial. Big firms hate to have to deal with that. They want it to last forever so that it becomes an evergreen billing tree.

As you can well imagine, I am very unpopular in certain circles.