Winning patent litigation on a budget

October 11, 2011

Michael N. Rader

(as published in Inside Counsel)

In a comic strip famous in the legal field, the lawyer says to the client, “You have a good case. How much justice can you afford?” Quite simply, cases cannot be won if they cannot be afforded. Efficiency is critical to making patent litigation a successful part of your business strategy.

Keep the Team Lean

The surest way to control cost in any litigation is to keep the team lean. In budget-conscious times, it is surprising to see law firms staffing patent cases with large numbers of lawyers. At a recent ITC trial, the courtroom was so overflowing with lawyers that the judge decided to sequester expert witnesses (not just fact witnesses) as a crowd control measure.

While there are certainly outlier cases involving many patents, particularly complex technologies, or huge amounts at stake that require a larger legal team, most patent cases can be successfully handled with a team of two to three lawyers and a paralegal.

A lean team makes budgeting easier because the team has an inherently limited number of hours in which to get the job done. Budgets can be estimated based on the proportion of each attorney’s time that is available for the case, the applicable hourly rates, and the expected activity on a monthly or quarterly basis.

A staffing model that spreads lawyers’ time over multiple cases is more efficient than one in which lawyers are dedicated to a single litigation. Strong litigators know how to juggle and will do an excellent job on each matter to which they are assigned.

Regular Case Budget Reviews

A detailed quarterly or monthly case budget should be prepared as soon as the court enters a scheduling order. The case budget should be revisited and updated every month or two as the case progresses. While the distribution of billing over time may evolve (e.g., savings may be achieved early in the case due to deferrals of work that will need to occur later), the overall cost should remain the same, absent a game-changing event.

Time should be entered promptly and the lead attorney should check the billing at least twice a month—at the middle and end of the month—to ensure that the case is within budget. If the team is in danger of exceeding a monthly budget, outside counsel and the client will know immediately. Corrective steps can promptly be taken, including decisions to streamline the case. Litigation billing should not involve surprises.

Establish Priorities

Case themes should be developed from the outset and updated regularly to keep the legal team focused. Chasing down leads that don’t relate to how one plans to win the case is a luxury that most litigants (and hence counsel) don’t have in today’s economy.

Tasks must be prioritized. If the judge disfavors summary judgment, striving for a summary judgment motion is not worth the effort. Motions to dismiss that will merely require the plaintiff to re-plead are not a sensible strategy either. Demanding that the opposition implement an electronic search protocol that yields millions of pages of documents may leave you worse off than a more targeted search with a fraction of that yield.

Cooperating with opposing counsel is always more efficient than scorched-earth tactics. Motions to compel should be rare. They are almost never necessary and judges dislike them.

Abiding by deadlines and holding the other party’s feet to the fire pay dividends. Time extensions almost always lead to greater overall cost.

Involve the Client

A client business manager and in-house counsel should be involved in supervising the case from the beginning so that litigation strategy matches business goals, and to ensure that legal fees do not balloon out of proportion to those goals. Regular meetings or calls, on a weekly or even daily basis, ensure that outside litigators understand their marching orders.

Position for Settlement by Preparing for Trial

Settling is the surest way to reduce legal expense, but positioning the case for settlement requires clear commitment and planning for trial. An opposing party that knows your case is being prepared well for trial is going to be willing to pay more as defendant in a settlement (or accept less as plaintiff) than one who only sees paper being pushed around without a clear trial strategy.

Common Sense Steps

Other steps for controlling costs are common sense. For example, patent litigators should read every patent-related decision of the Federal Circuit within days of its issuance (and not on a client’s dime). Preferably, the entire firm (if an IP boutique), or the patent group (if a general practice firm), should regularly meet to discuss the more important cases.

These practices ensure that attorneys are up to speed on the current state of the law and don’t need to burn a lot of time figuring out which arguments will work in court. Knowing the law not only makes for a more effective advocate, it also boosts efficiency.

The efficiency of your counsel is a key factor in making patent litigation a successful part of your business strategy. The common sense steps outlined in this article can change patent litigation from a burdensome endeavor to an asset that adds business value.