Lawsuits cost a lot of money. Civil litigation can take years to resolve, but most people and businesses involved in lawsuits do not have the financial resources to fund years of motions, discovery jockeying and the other costs of civil litigation. It is also the very nature of many cases that one party (usually but not always the defendant) has superior financial resources and therefore an advantage not only at trial but at the settlement table.
Small firm lawyers are constantly searching for strategies to level the playing field. But overcoming financial disparities is not unique to law or even business. Billy Beane, General Manager of the small-market Oakland A’s has consistently thrived in the ultra-competitive world of Major League Baseball, despite having one of the lowest payrolls in the League.
Michael Lewis’ bestselling book Moneyball: The Art of Winning An Unfair Game, details how Billy Beane’s Oakland A’s defeated teams spending over three times as much money on baseball players. Here is what the Oakland A’s can teach lawyers and their clients about beating a better funded foe.
- Challenge Conventional Wisdom To Cut The Fat. Beane implemented a system for evaluating baseball talent that amounted to a radical departure from the way other teams evaluated talent. Teams typically employed a legion of scouts who would scour the minor leagues and colleges in search of future major league players. The costs paying these scouts to travel and watch baseball games was exorbitant, but until Beane arrived nobody had ever bothered to figure out whether these costs were justified. Beane fired most of his scouts and instead focused on computer-generated baseball statistics that were previously ignored yet had tremendous predictive power over which players actually could help a team win more baseball games.
Many litigants make the same mistake as baseball teams, by relying on large numbers of individuals, despite the lack of any evidence that such individuals add value. By far the biggest legal expense is attorney time. Partners at large law firms now bill out at $700 an hour or more. While this is a lot of money, these partners are a bargain compared to the far greater number of inexperienced junior and mid-level associates billing out at anywhere from $400 to $550 an hour. The modern day large law firm actually bills more associate time than partner time, because the associate/partner ratios are 3/1 or higher. This means that every time a large firm staffs a case, its own interests are served by staffing it with as many lawyers as possible, and predominantly with associates.
Staffing a case with a legion of associates is almost always a bad investment. Associates leave law firms at an alarming rate. Civil litigation often takes more than two years from inception to trial, and every two years the large law firm will experience an approximately 50% turnover in associates. Associates may also change practice areas or lobby for different cases. An investment in any individual associate at case inception is therefore likely to be lost at trial. Moreover, associates have less experience than partners and often require partners to spend billable time training and supervising their work. Overstaffing increases a client’s legal fees and tends to discourage a single attorney from having a total grasp of the case. Critical aspects of a case may fall through the cracks as case responsibilities are shuffled from one lawyer to another.
In an efficient practice the same lawyer should work on a case from start to finish. Everyone else is brought in on an as needed basis.
- Focus On What Wins
The big money teams relied on scouts because that was the way Major League Baseball had evolved, not because there was any evidence that scouts helped teams win games. It turns out the scouts were overrating foot-speed, fielding ability, arm-speed in pitchers, and batting average, while underrating statistics like walks, number of pitches seen per plate appearance, and a pitcher’s walk/strikeout ratio. Beane turned the Oakland A’s into a (mostly) consistent, low-cost winner by using statistical analysis to value players. He bought or drafted undervalued players and sold those players if and when they became fairly priced in the market.
Similarly, lawyers often value a case for purposes helping a client determine whether to bring a case, or settle a case. But lawyers rarely evaluate which expenditures are highly correlated with obtaining a better result at trial, and which expenditures are either not necessary at all or can be minimized. Segregating the key expenditures from the less important ones is at the core of any effort to win with less. The analysis is going to be case-specific and subject to debate, but even asking the question is a dramatic departure from the way many lawyers practice.
- Do Not Swing At Bad Pitches
Based on their statistical analysis of what wins games, the Oakland A’s have elevated a previously-obscure statistic: Pitches seen per-plate appearance. The A’s loaded their teams with underappreciated hitters who did not have great power numbers, but had an uncanny ability to tell the difference between a ball and a strike, and to foul off pitches that were good enough to be strikes but not good enough to put in play.
Large firms too often resemble the power hitters who hit a lot of home runs, but strike out several times for every big hit. Many firms “swing for the fences” with long-shot motion practice that diverts from the task of getting ready for trial. The most expensive motion is the summary judgment motion in a case where there are clearly issues of fact that require the motion to be denied. If it takes 50 pages and $100,000 to describe how there are no issues of fact, than something is wrong.
Most cases are not going to be decided by a summary judgment motion. Accordingly, in most cases, lawyers should minimize expenses for motion practice and focus on trial preparation.