Corporations are showing an increased willingness to enter into or fight litigation than they were a few years ago, but only if their law firms can be very specific when it comes to the cost, Pennsylvania litigators have said.
Matthew Taylor, chairman of the litigation department at Duane Morris, said clients are demanding more detailed early case assessments that force attorneys to do a “gut check” on what a matter should cost.
“Whereas three or four years ago, they were not even asking. They weren’t thinking about litigation,” Taylor said. “They are at least thinking more about it.”
Early case assessments sometimes result in Duane Morris offering alternative fee arrangements, such as fixed or flat fees, while other times it’s an hourly arrangement. But either way, there is a budgeting element to the litigation.
“I’ve probably done more flat-fee cases or engagements … in 2014 than I did in the five years before that,” said Buchanan Ingersoll & Rooney litigation department co-chairman Craig Mills.
It’s something that the firm offers to clients as part of a menu of pricing options, he said.
While alternative fee arrangements is far from a new concept, it was one that got talked about a lot more after 2008 than it actually was implemented, Mills said. In reality, in the years after the recession, litigators in particular would simply cut rates to alleviate clients’ cost concerns.
“Lawyers have been pushed to the point where you really can’t lower your hourly rates,” Mills said. “So you have to come up with another way that delivers value and helps you retain the business.”
Firms are forced to do the math, he said. Mills now offers clients a range of pricing options every time he pitches for a matter and the clients are increasingly choosing some sort of alternative fee option.
Marc J. Sonnenfeld, Philadelphia securities litigation department chairman at Morgan, Lewis & Bockius, said even if clients aren’t asking for alternative fee options, there is a growing demand for budgets and forecasts. Some clients, he said, will ask for periodic updates on the costs as compared to those budgets.
Taylor said the business units within a client’s company are demanding this cost predictability. And Mills noted a big part of the cost predictability is lawyers having to curb the cost of e-discovery.
But it would appear that in some areas—particularly those in which proprietary data is on the line—clients are starting to open their checkbooks.
Labor and employment matters involving trade secrets, such as noncompete and nonsolicitation agreements, are a hot area right now, Taylor said. Stemming from that are business disputes such as tortious interference with contractual relations, he said. Trademark infringement suits are also a big area right now, Taylor said.
“Our lawyers are busy, not just in Pennsylvania but around the country, on trademark litigation,” Taylor said.
Mills said anything to do with patent trolls is hot right now. When Congress was about to pass a bill in April that would make it easier to put litigation costs back onto a so-called “patent troll,” Mills said, a number of his clients all got sued on one day, just before the bill was supposed to go through. Mills said that was an immediate reaction in the courts to something that was happening in the legislative branch.
For Buchanan Ingersoll, health care work has also been hot as health care companies remain targets of government regulators and individual plaintiffs, Mills said.
Taylor said he has seen a rise in national, multidistrict products liability litigation, particularly in the area of medical device manufacturers. At Duane Morris, those teams are being run out of the Pennsylvania offices, but the matters are all over the country, he said.
Class actions continue to bring in a lot of work for Pennsylvania litigators. Mills and Sonnenfeld said shareholder derivative class actions are keeping them busy. And with any uptick in mergers and acquisitions, there is an uptick in shareholder suits, Sonnenfeld said.
In some regards, he said, demand for litigation work is increasing because clients are being sued and have no choice but to defend themselves. White-collar defense and investigations, for example, is another hot area, Sonnenfeld said.
The split comes in terms of what firms are seeing on “elective” business litigation—that litigation that companies could choose to fight or could choose to forgo in an effort to save costs.
Mills said he continues to see a substantial drop in that type of litigation as clients look to bring more work in-house and resolve more disputes without having to resort to yearslong litigation or a trial. The slowdown that started in 2008 with litigation related to contract disputes, vendor issues and similar matters has continued, Mills said.
Taylor said he has seen an uptick even in the elective business litigation realm. But he noted that it is in those cases where clients are particularly interested in having cost predictability.
On the whole, Mills said, overall demand for litigation work is increasing—as are client appetites for data-driven pricing analysis.