Saving Money in Patent Litigation: Case Management Strategies

I’ve litigated patent cases for over ten years and I’ve always been keenly interested in how clients manage their cases.  Some clients, even mega companies with billions, are very strict and closely monitor litigation costs.  Others don’t.

If you’re a small company facing patent litigation, it’s important to act like the former rather than the latter.  Patent litigation is one of the most expensive types of litigation in our judicial system.  Attorneys’ fees and costs can quickly spiral out of control.  Patent lawsuits typically cost millions in litigation fees, with most of the money going to the attorneys.

Whether as the plaintiff or the defendant, you don’t want to go bankrupt because of litigation costs before a final decision has been reached on the merits of the case.  As a startup, you ultimately lose if you run out of money.

There is an unspoken taboo in big law firms about explaining to clients how to pay the law firm less money.  It’s not in the firm’s best interest.  But with a few strategies and close case management, a company can significantly decease litigation costs without hurting the odds of winning.

After picking a small litigation team with a pragmatic lead attorney, here are my top ten tips to decrease litigation costs in a typical patent case:

1. Insist on a budget and review it monthly

Insisting on a budget and regularly monitoring it can save money and prevent unpleasant surprises.  Attorneys are more thoughtful about what they do when they know they need to keep to a budget.  It encourages them to be more pragmatic.

2. Stop musical associates

Limit the number of attorneys who work on the case.  Some law firms seem to play a game of musical chairs with the junior attorneys.  This can be extremely expensive for the client.

Although the senior attorneys may balk and complain that it cramps their style, require pre-approval before any attorney or paralegal works on your case or stops working on your the case.  Shifting attorneys can hurt the case from the brain drain from exiting attorneys to the expense of getting new attorneys up to speed on the facts and issues.  The law firm’s bill will reflect how many attorneys are billing to the case and increase accordingly.

Moreover, develop a good relationship with the core attorney and make sure she’s happy about working with you.  You want the core attorney to be energized and excited about your case.  Her work is central to your success.  If the core attorney leaves the case, it may be difficult if not impossible to replicate the former work and expensive to get someone else up to speed.

To decrease the potential harm to the case if an attorney quits or has to be removed, encourage the attorneys to write brief litigation memos for the file that summarizes their knowledge and work.  Don’t get a copy, just make sure they are being written and put in the case file.  You want to preserve the work that you’ve paid for.  You don’t want to pay for the same work more than once if possible.

3. If your company is the plaintiff, consider the jurisdiction carefully

If you’re a plaintiff, where you sue is important.  There may be a broad range of places where you may file the lawsuit.  It’s important to get a smart judge who likes patent cases.  Some judges hate patent cases and drag their feet about deciding anything.   Some jurisdictions specialize in patent litigation and have special rules for patent cases that smooth out the litigation process.  This can save a significant amount of money, especially in the event of an appeal.

It’s also important to know the average time from filing the case to trial in a particular jurisdiction.  The longer the case drags out the higher the bills.  Some former rocket dockets for patent cases have almost slogged to a standstill.  If you’re the plaintiff, you don’t want to run out of money before the defendant settles and you get a licensing deal.  If you’re the defendant, you want to minimize the overall cost of the case.  A faster schedule with the court will save you money and allow the case to be litigated on the merits.  Litigation disrupts the business operations of both parties and can be a time-consuming, financial drain for years.

It’s also important to find out whether the judge allows early summary judgment motions or whether he waits to rule on summary judgment until the eve of trial.  An early judicial decision disposing of the case can save everyone a lot of money.

It’s also important for plaintiffs to consider potential damages or settlements.  Some jurisdictions, like the Eastern District of Texas, strike fear in the hearts of attorneys who understand the potential jury pool.  Some people in rural, conservative areas are more prone to award a plaintiff damages just because they own a patent.  The location of the case matters.

4. Insist on playing nice with opposing counsel

Fighting with opposing counsel on non-essential issues can cost the client a lot of money and not help the case.  Moreover, many judges get angry when lawyers fight over trivial matters or act nasty, which many do.  Demand that your lawyers act nicely and it can save money without hurting the case.  You want the judge to have a favorable opinion of your lawyers.

5. Negotiate discovery boundaries early

Negotiating early and reasonably with opposing counsel can save a significant amount of legal fees.  If you want to save money, it’s important to negotiate reasonable parameters for discovery with the other side.

It’s possible to negotiate the scope of time for discovery, the number of people subject to search, whether backup tapes will be included, the key words for searching electronic documents, and the products or processes at issue.  Agree not to seek drafts of expert reports and have a claw back provision in the protective order that requires the other side to give back privileged documents that are inadvertently produced.  Narrow discovery is cheaper.  These simple steps can save hundreds of thousands of dollars.

6. Have regular, short status meetings and keep the attorneys accountable

Status meetings can ultimately save money and keep the case on track.  It’s important to know who is doing what and why.

Always ask how a proposed motion or plan is going to help the case and how much it is going to cost.

Make sure the attorneys are focused and that they don’t go off on wild tangents.  Some attorneys are not pragmatic.  A goose chase can cost a lot of money that doesn’t move the case toward victory.

7. Require pre-approval for motions, especially discovery motions

Patent cases are not like trade secret cases or other types of cases where plaintiffs need to find a smoking gun.  Patent cases are technical with complex law.  There are a limited number of documents that can significantly impact the case.

Unnecessary fighting over discovery can cost a lot of money without significantly helping the case.   Some lead patent attorneys are pragmatic and focus on litigating the case on the merits.  This is a much cheaper strategy for the client and focusing on the core issues can increase the odds of a victory.  In a patent case, it’s usually far more important to focus on the claim construction, the infringement analysis and invalidity.  Requiring pre-approval and justification before filing motions is in your company’s best interest.

8. Review the bills carefully

You can learn a lot of information by closely reviewing the bills from the law firm.  Keep a close eye on who is doing what and ask a lot of questions.  Require detailed descriptions, especially about what specific research is being done.  I would want to make sure that I wasn’t paying for the same work over and over because a junior attorney was sloppy or inept.  If you find discrepancies, ask them to cut the time.

9. Require pre-approval for large expenditures with outside vendors

Don’t get a nasty surprise with an enormous bill from a document service vendor.  Make sure that the attorneys get pre-approval before they spend more than a capped amount on outside services.  For example, the fees vary for document service vendors who can prepare documents.  Do the math and make sure you know how much will be spent.  Ask how to reduce the bill.  Sometimes an in-house IT person can help save costs in this area.

10. Be accessible and help with the case, especially during discovery

A company can actually save a significant amount of money by being organized and helping the attorneys.  Be aware of their hourly rate.  The attorneys may be charging $500 an hour to collect documents.  You can reduce their billable time in many ways.  First, have a high level executive communicate with the employees and emphasize the importance of cooperation during discovery.  Require the attorneys to prepare a discovery collection memo specifically explaining what they need and have the company president send it to the employees.

Second, appoint someone in the company to be in charge of document collection to specifically help the attorneys and find information.  An inside person can help identify who may have relevant documents, their positions and responsibilities with the company, and the types of documents they may have in their possession. They can also follow up with people and hound them to turnover their records.

Third, appoint an IT person to be responsible for helping segregate, search and collect relevant electronic files.  An organized IT person in-house can save a very large amount of money that would be paid to outside vendors.

Further, you can sometimes save money by helping the lawyers find consulting experts and expert witnesses.  Your company’s technical people can often find better and cheaper expert witnesses than the attorneys. Your company’s technical employees can also be a great resource to teach the attorneys about the technology at issue and answer their questions.

Careful selection of your litigation attorneys and close case management can save a company millions in litigation costs and actually increase the odds of winning by focusing on the key issues that will ultimately determine the case.

I’d love to hear more tips from subscribers, especially the IP attorneys who read this blog.  What can clients do to save money in patent litigation?

This is the conclusion of the series, Saving Money in Patent Litigation.  Here are links to the other posts in this series:

• Series Overview
• Hiring the Best Law Firm
• Hiring the Best Lead Litigation Attorney
• The Best Litigation Team