How to assess case facts to evaluate risk and settlement value

Introduction: No Time Like the Present 

A recurring nightmare for many legal professionals involved in civil litigation is cost control. Litigation has a tendency to consume a lot of people’s time, and that time is rarely cheap. Cutting corners isn’t an option, as the process requires thoroughness and comprehensiveness as a matter of course. Minor errors along the way have a tendency to snowball out of control surprisingly fast. 

For any business operating in the United States, litigation is a fact of life. In the 2019 Litigation Trends report, Norton Rose Fulbright noted an expected year-over-year increase in expected litigation. In simple terms, corporate legal professionals shouldn’t expect a decrease in their workload any time soon. 

In an earlier blog, we discussed the intricacies of Legal Hold. One of the key aspects of these is the starting point. According to the Federal Rules of Civil Procedure, parties are required to begin collecting evidence early in the process. The exact phrasing is “reasonably anticipated litigation”. This can mean a lot of things, but it certainly doesn’t mean: "start collecting evidence only when a complaint is filed. 

In this blog, we’ll dive into Early Case Assessment (ECA). With workloads building and case complexity (in terms of data involved) growing, ECA is key to limiting legal expenses. A thorough assessment of the case allows you to gain an advantage. This comes in the form of an understanding of the risk, expected expenses, possible outcomes, and potential future issues. A well-loved statistic by many legal professionals is that over 90% of cases filed never make it to trial. ECA allows you to know when to hold and when to fold. 

Here's what's in: 

What is Early Case Assessment?
Early Case Assessment in the Era of Big Data
Game Plan: evaluating facts and mapping expenses
Hold or Fold: Using ECA for outcome charting
Conclusion 

What is Early Case Assessment? 

Early Case Assessment is the process through which legal professionals estimate the risk of prosecuting (or defending) a legal case. In this context, ‘risk’ refers to the costs in terms of time and money. The advantage ECA provides is two-fold: 

1. Early Case Assessment allows for the weighing of costs and benefits of moving forward with a case. When expected costs outweigh expected benefits, settlements may become preferred options. When expected benefits outweigh expected costs, settlement offers may be withheld or denied.
2. Early Case Assessment can be used to more accurately predict the legal cost of a case. Regardless of the outcome of the cost/benefit analysis, it is a boon for budgeting. Understanding the expected costs of litigation helps prevent legal budgets from ballooning. 

Performing ECA is never a cookie-cutter operation. The outcomes depend on a wide range of variables. For example, the need for external counsel, the amount of data involved, and the types of data involved. Early Case Assessment allows legal teams to ask the obvious question: “Can we win this?” but also the more important one: “Is this worth winning?” 

Once in place, the usefulness of Early Case Assessment has been thoroughly established. In 2007, a survey found performing ECA resulted in favorable outcomes in 76% of cases. What’s more, 87% of respondents found ECA beneficial to determining the best way to proceed with cases. 

Early Case Assessment in the Era of Big Data 

In that same survey from 2007, 87% of respondents admit their form of Early Case Assessment was ‘informal.’ By informal, they mean they used no tools or specific methodology. Datastores were already big in 2007, but have truly exploded since. Today, even minor litigation means combing through many gigabytes, if not terabytes of data. It follows that the math of ‘is this worth doing’ tracks the cost of review quite well. 

In the era of Big Data, Early Case Assessment begins revolving around the question of reducing the cost of review. The 90%+ cases that never make it to court are a result of these costs: going to court is incredibly expensive. Unless a party is near certain they will win a case, the incentive to go through the process often isn’t there. Even when they are sure, a settlement still might be a greater (read: more efficient) victory. 

None of the above aims to argue against settlements. As the FRCP reminds us, the goal of civil procedures isn’t to win, it’s to resolve a conflict. A settlement is a resolution: mission accomplished. At the same time, when expected cost, not resolution, prevent litigation continuation, the goal is missed. The result is then obtained for the wrong reasons. 

Saving costs on document review is a question that inevitably results in a discussion of technology. Human reviewers can’t go any faster than they were going two decades ago. Technology has gone from strength to strength in the meantime. In an earlier blog, we highlighted this 2018 showdown between AI and human reviewers (spoiler alert…the robots won). 

Technology doesn’t only refer to review, though. Data analytics can provide insights into the content of datasets. These insights allow users to make more informed decisions faster. As a general rule, more data means more evidence. Making full use of analytics tools can help save time in the decision-making process. 

Download the whitepaper to learn how eDiscovery helps you easily sift through huge volumes of data and find all relevant documents for a case in a fast and cost-effective manner.

Game Plan: evaluating facts and mapping expenses 

Once a litigation trigger has been activated, the twin processes of Legal Hold and ECA begin. In the early stages, these two overlap each other. The focus is on identifying sources of evidence in the organization and collecting that evidence. 

For early case assessment, the evidence collected serves as the basis for a number of key steps. The most important of these steps is to establish what goal the organization should strive for. The options are, as always: settlement, mediation, arbitration, or litigation. The assessment can be done through the evaluation of the available evidence. By estimating the time and resources needed to achieve results, this assessment can be made. 

As in-house legal teams become more self-reliant and the cost of eDiscovery is reduced, moving on to litigation becomes more viable. As costs rise, only the most obvious slam-dunk cases will be worth the expense. 

At this stage, the ECA workflow includes: 

• Collecting evidence;
• DeNISTing and deduplicating the data;
• Culling irrelevant data;
• Flagging important data;
• Using keyword-based and/or technology-assisted review for culling;
• Light review 

Evaluation of the evidence may include organizing it into an evidence matrix. In addition to providing an index of the available evidence, the organized material can be used to identify: 

• Applicable claims (for plaintiffs);
• Potential counterclaims;
• Third-party claims;
• Defenses (for defendants). 

At this stage, the evaluation of evidence also allows counsel at this stage to begin estimating costs. At his point, the evidence matrix is nowhere near ready for initial disclosure, but certainly, enough to weigh the pros and cons. 

Hold or Fold: Using Early Case Assessment for outcome charting 

Performing Early Case Assessment does not add work to the discovery process. The majority of the actions performed for ECA have to be performed for initial disclosure anyway. What’s added is a waypoint to take stock of the situation to ensure moving forward is the correct strategy. 

Returning to the Cogent Research Survey from 2007, the type of ECA lauded by so many respondents was virtually tool-free. Using the tools available to you a decade and a half later would yield much more reliable results. It’s the difference between feeling like you made a good decision to continue a litigation or not, and knowing you did. 

Technology use has a significant impact on Early Case Assessment. The majority of litigation costs stem from document review. In 2012, RAND noted that about 73% of litigation costs come down to document review. By using technology to speed up the document review process, the cost of the entire process comes down significantly. For ECA, those lower costs mean the cost/benefit analysis might provide a different result. For more information on how you can use ECA to lower discovery costs, it’s further discussed in this webinar. 

Conclusion 

While making use of Early Case Assessment was a boon in 2007, it is downright essential in 2021. Modern eDiscovery solutions have the tools needed to perform ECA built-in, meaning that users need only make use of them to reap the benefits. 

At the same time, being entirely tool-dependent for ECA is unwise. No tool can ever properly consider the potential reputational consequences of litigation. Those potential damages have to be factored into any cost/benefit analysis as well to avoid Pyrrhic legal victories. If a case is won at the cost of a company’s reputation, the end result might still be a negative when those factors are considered. As such, the expertise and sensibilities of the legal professional making the assessment remains key. 

Strategy aside, ECA provides a framework through which the litigation process may be improved and strengthened. ECA can help identify cost-saving opportunities after the fact (i.e. if the actual cost is not in line with the expected cost). 

If you would like to learn more about lowering your document review costs, eDiscovery tools such as ZyLAB ONE can help you save up to 92% of costs per case! Reach out if you would like to learn how.