There’s a reason why some judges view class actions as a means of extorting settlements: they can be expensive to litigate. But settling just for the sake of settling likely will only lead to more class actions down the road. If the suit is not one that should be settled, the most important thing a company defendant can do when faced with a class action is set a defense budget and stick to it. While each case is different, there are certain things a company defendant should consider to make the defense as cost-efficient as possible:
- For most cases, the internal investigation is key to determining the budget as well as case strategy. Don’t skimp on this part, but do make sure that the investigation by outside counsel is conducted as efficiently as possible. Determine potential witnesses within your organization as a first step not only for the purposes of sending out litigation hold notices and isolating potentially relevant documents, but also to set up witness interviews for outside counsel. Facilitate those interviews and keep outside counsel on tight deadlines for the interviews and interview summaries. The summaries need not be edited to death (and thus costly), but instead, should put the interview notes into prose. While it is typically best for two lawyers to conduct witness interviews, in most cases, it is fine, if not preferred, for one person (the one taking notes) to be very junior. As this person will be summarizing the notes and reviewing documents, all the more reason for this lawyer to be junior and less costly.
- After the investigation is completed, work through different strategic scenarios with your outside counsel, and get comparative budgets based on the likelihood of success of the different strategies. Don’t be afraid to ask for a flat rate. At this point, most defense counsel have a good sense of what the pre-trial phase of a class action will cost. Yes, there can always be surprises, but outside counsel may be amenable to accepting a flat rate for certain stages of a case, such as a motion to dismiss.
- Of course, discovery is typically the most costly phase of a case, pre-trial. Needless to say, strategic options that delay or limit discovery are preferable. If discovery is required, make full use of new e-discovery capabilities that limit searches, and don’t be afraid of court conferences and motion practice to push back on overly broad discovery. Just make sure to pick your battles and do try to resolve differences with opposing counsel prior to any court involvement.
Bottom line: Stay in control and be involved.