Thinking Outside The Box: Litigation management program initiatives can substantially lower costs

By Marc Lanzkowsky – February 25, 2010

There is money to be saved by managing the litigation puzzle

Managing litigation is an easy way to save extra expense costs on claims files. A strong litigation management program designed to help foster improved communication, and streamline defense of insureds, benefits all parties involved. As I wrote about the cost savings benefits of out-of-the-box claims handling, using new and forward thinking strategies for litigation management is an excellent way to save money as well. This is even more important in complex litigation found in the areas of product liability, class actions and D&O claims where defense budgets can often trump the loss side of the claim.

A different perspective on how you can manage the larger litigation process

I was recently reading about cost reduction in the Sophisticated Litigation Support blog by Kevin Brooks, Managing Partner of Teris, a litigation support company. These types of companies provide eDiscovery and document management services that can significantly reduce expenses in litigation. Managing eDiscovery and other large document productions is a critical step to control defense budgets.

In his article, Is your outside counsel costing you time, money and case results?, Kevin explains why this vendor–provided service can be particularly beneficial:

You may believe that litigation support management is better left to your outside counsel. And in some situations, this may be true. However, in many cases your law firm could be costing you time and money, as well as affecting case outcome. Law firms are experts in the law, but very few have the resources and data expertise to manage your litigation life cycle properly.

If you take a more active approach by utilizing different types of vendors that compliment each other, you can considerably reduce spending while also having confidence that your operation is both efficient and effective. You as a claims person can proactively manage those services by leveraging specialized vendors instead, at a much lower net expense.

Kevin’s article continues with a list of ten important reasons for why your organization should hire a Litigation Support vendor directly. Four of the ten stand out as significant cost reduction opportunities:

Cost and Expense Forecast – Consult directly with data experts to more accurately identify costs for each project and keep expenses down. Vendors can also help cut future costs by proactively consulting on your data.

Budget Management – Identify points of savings by being able to initiate volume discounts. The service provider can extend volume discounts as they build long-term relationships directly with corporations. You can also avoid the markup from some law firms which could increase your costs for services from 25 percent to as much as 100 percent.

Streamlined Litigation Management – Reduce the number of vendors your corporation works with. This is especially relevant if your company works with several outside counsels and all have their own separate lit support vendors.

Resources – Access the most cutting-edge technology for handling data. Small and medium-sized law firms may not have an in-house IT department to manage large numbers of electronic documents.

I have been involved in a number of litigation projects that would have significantly benefited from support services provided by companies such as Teris, Xerox Litigation Support , Trial Solutions and others (as a side note, I have not worked with any of these vendors and cannot specifically endorse their services here). Litigation costs can get out of hand on large cases in a hurry so paying close attention to them is essential. The largest part of those costs can often be the handling and management of documents and eDiscovery, and not all attorney’s have the skill and technical capabilities to handle the types of services supported by these vendors.

In addition to those mentioned above and in Kevin’s article, there are many different kinds of vendors available to help lawyers streamline the litigation process. These include medical records retrieval companies, litigation graphics and video reenactments to name a few. Claims managers can and should suggest using additional resources to assist law firms which will also help lower litigation costs.

Evaluating your total litigation management process to streamline the procedures, understand the costs in advance, and ensure resources are effectively allocated, will allow for proper expense reserves to be set, and in the end reduce the amount of money spent.

A note on expense reserves

Expense reserves are often the forgotten stepchild of the reserve process. Many time claims handlers will adjust the expense reserve in the beginning of the claim and then increase it over time as expense bills come in. Good claim handlers will establish litigation budgets and evaluate expense reserves in a similar manner as a loss reserves. Regardless, ensuring expense reserves are accurate will help you manage costs across the board and enable you to truly understand the true expense exposure to your organization.