“Everyone has a plan until they get punched in the mouth.” —

Mike Tyson

Any in-house counsel who has managed intellectual property litigation knows that even after you receive a budget, there can be significant sticker shock once the bills start coming in. Then it is left to that in-house counsel to break the bad news to the CEO of spiraling litigation costs that could wreak havoc on a company’s bottom line. Some of the common culprits are discovery, expert costs, protracted motion practice, and scheduling that far exceeds original estimates. We have handled dozens of IP litigation matters for a wide variety of clients and industries. Through that experience we have gained valuable insights that have helped our clients bring predictability to their litigation budgets and reduce the stress associated with the costs of IP litigation.

Here are nine tips that will help in-house counsel work with outside counsel to minimize surprises and keep spending in check.

1. Work Out Fees Up Front:

There are a number of creative fee arrangements that you can negotiate with your outside counsel at the beginning of a matter. Blended rates and fixed fee arrangements are the most common, but there are some creative alternatives. For example, you can arrange a fixed monthly fee for the stages of litigation, i.e., claim construction phase, written discovery, trial, etc. You can also arrange various holdbacks with success bonuses wherein the firm charges a lower hourly rate with a bonus paid upon achieving milestones such timely completion of discovery, or obtaining/defeating summary judgment. In addition, you can use hybrids of these arrangements, such as a fixed monthly fee for certain periods and then an hourly rate for trial.

2. Control Ediscovery Costs:

The key to keeping ediscovery on track and within budget is identifying what needs to be proved in the case up front (this will define what evidence is needed) and where these documents might be found. You should meet with outside counsel before the case is filed and map out your discovery game plan. Direct them to meet with opposing counsel shortly after the responsive pleadings are filed to define who the custodians are, search terms that each side can agree on, the format in which the electronic documents will be produced and the manner in which the electronic documents will be preserved by the parties.

In today’s environment most documents are stored electronically. In 2006 the Federal Rules of Civil Procedure were amended to address discovery of electronically stored information, or “ESI.” The rules that were amended include FRCP 16, 26, 33, 34, 37 and 45.

Make sure outside counsel finds an ESI vendor who is both cost conscious and uses predictive coding. Predictive coding uses artificial intelligence during the review phase to find the key documents, substantially reducing the time spend in the review process.

3. Be Strategic with Motions:

If your outside counsel thinks that motions need to be filed make sure they are thinking strategically and selectively. Everyone needs to be on the same page here. Your counsel should know what a successful resolution is for your company along with any positions that could cause a business conflict. Once this clarity is reached, your counsel should evaluate if a “win” in the short term on the motion will help or hurt the ultimate success of the case and your business.

Once it has been decided that a motion should be filed, your counsel should write the motion with the following in mind: (1) be concise; (2) be careful; (3) act professional; and (4) be focused. The motion needs to be written as a means to an end for a successful resolution of the relief being sought. The more concise and focused the motion is the less the judge will lose sight of what relief is being requested. Any motion should have two or three themes to keep it focused.

4. Cooperate with Opposing Counsel:

Without a doubt you want your outside counsel to be zealous advocates. However, working cooperatively with their opposing counsel can have huge benefits by keeping litigation costs down. Rules of professional conduct and many local court rules already require cooperation with regard to continuances, discovery and motion practice so those rules should direct cooperative conduct. In patent cases, several district courts have their own patent rules that structure the pretrial timing of the case in terms of infringement and invalidity contentions, and expert disclosures. In courts without such rules, your counsel can cooperate to work similar timing into a scheduling order. That structure can move a case along and keep the costs down.

5. Rein in Expert Witness Costs:

Expert witness fees in IP litigation are another cost that can quickly get out of control. Similar to negotiating alternative fee arrangements for your counsel, you can structure their fees in ways that are controllable and foreseeable. First of all, providing opinions and testimony is high margin work for experts. From the outset, it’s highly likely that you can negotiate a lower hourly billing rate. You can also employ similar billing structures such as blended rates, monthly flat fees or a hard cap of fees.

6. Plan Ahead for Mediation:

Mediations are often an effective low-cost alternative to resolve IP cases; in-house counsel needs to make sure they and outside counsel understand the rules of the particular forum before attending. Being prepared will increase the chances of success at the mediation. Prepare a substantive pre-mediation or settlement conference statement and create a case road map to follow during mediation. Also, make sure that your counsel informs you of the opposition’s strongest arguments. This will help you keep perspective during the mediation. Lastly, be sure to enter the mediation with more than enough authority to settle the case.

7. Keep the Trial Manageable:

By the time you get to trial you’ll already have considerable sunk costs. You can keep these costs manageable by helping your outside counsel develop a theme early on and then shaping your company’s story around that theme by obtaining the documents and witnesses to support it. Sticking with a theme prevents your internal clients and your outside counsel from chasing their tails while the clock is running.

And this raises another hidden cost that impacts your company’s bottom line related to IP litigation: internal business interruptions.

Undoubtedly, your counsel will need significant access to key witnesses in your company to help prove or disprove a claim. The fewer witnesses needed however, the better. Your knowledge can help to identify key company witnesses who can: (1) represent the best aspects of your company; (2) tell your company’s story with conviction; and (3) harmonize different pieces of evidence. Identifying the right company witness, preferably an experienced manager, can allow outside counsel to streamline the presentation of evidence at trial. This should also help to minimize any internal business interruptions.

Lastly, within four months of trial you’ll want to make sure that you are conducting regular meetings with the trial team to ensure proper communication and organization. Also, while it’s an added cost, you may consider authorizing a mock trial or focus group. This can give your counsel invaluable insight on what potential jurors find important and what they don’t.

8. Control Appeal Costs:

IP cases, especially patent cases, are frequently appealed, win or lose. There are different strategies that you can work with your outside counsel to keep costs reasonable. If you’re the appellant, you’ll want to narrow your issues to as few as absolutely necessary; more than two or three is probably too many and a waste of money. In patent cases, the best appealable issues involve claim construction and damages. If you’re the appellee there are fewer options to keep the costs down. First of all, you want to preserve your hard-earned victory. But, you will also be at the mercy of the issues raised by the appellant. The ideal strategy here is to negotiate a flat fee with your outside counsel.

9. Communicate!

Consistent and clear communication with your outside counsel is critical throughout every stage of litigation, from initial fee setting through appeals. You have to convey your company’s litigation objectives and how any litigation result would impact your company’s business. While emails and other written communication are necessary, be sure to have regular telephone conferences to discuss your case. Even if you can’t arrange a weekly conference, having a 10-minute call at least every other week is important. You’ll get a better feel for what’s happening in the litigation and you can get quicker responses to any questions you may have. You will also be able to better justify your legal spend if you have a firm grip on exactly what’s happening in your case.

There are no guarantees when it comes to litigation. There are often costly surprises lurking in the background. But, these steps can provide some degree of reassurance and allow your company to make reasonable predictions and budget during the long process ahead.

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This article originally appeared in the Los Angeles Daily Journal.