MANAGING THE COST OF BUSINESS DISPUTES
CD: In your experience, do parties involved in a dispute often fail to give enough consideration to managing the associated costs? What impact can early planning have on containing costs?
Droog: Most experienced parties have thoughtfully considered managing the costs associated with disputes and, in fact, have implemented various mechanisms for doing so. There are, however, limits on costs that can be eliminated without undermining an essential strategy or risking the outcome of a dispute. Early planning, including a case plan and budgeting process which incorporates feedback from business stakeholders, is very helpful. At a minimum, such planning can reduce surprises and unanticipated costs. If these plans include key decisions and milestones, they can help provide strategic direction, which in turn helps reduce costs.
Hellmann: Early planning can often have a significant impact on containing the costs of a business dispute. Not every dispute is a ‘bet-the-company’ matter. At the same time, a dispute may involve an important business relationship or corporate policy or present a potential public relations issue. To the extent possible, a party should assess the importance of these matters up-front, and forecast how the dispute is likely to play out and where opportunities to resolve the dispute may lie. With that framework in mind, a party can efficiently allocate responsibilities for the dispute within its own team and identify the external resources that will be needed. If outside counsel is to be used, a party should request a budget that estimates the costs at each stage of the dispute, including case assessment and planning, discovery and disclosure and motion practice, and strategise together on how to manage them.
Apr-Jun 2017 issue
Skadden, Arps, Slate, Meagher & Flom LLP