For this post, I am shooting from the hip a bit to get a conversation started – I will return with some actual statistics once I’ve had time to research the issue more.  Basically, it is commonly accepted in the profession that litigation is way too expensive (well, my friends in the law firm world might not agree, but we can all at least agree that litigation is extremely costly.  This hurts everyone – it certainly raises the cost of business, and it also makes it impossible for many individuals to protect their rights.

One of N-Map’s goals is to help settle cases early that really ought to be settled.  Even just simple video can make it very clear, very early in a case, what the prospects are for each side.  In an earlier case (one that I can’t discuss the details of because of a confidential settlement order) I used a movie made from deposition videos to persuade the mediator and the defendants that the defendants should settle on the terms that our clients felt was fair.  Before the movie was made, the defendants were offering us nothing.  After we showed it to them, we settled shortly after for pretty much exactly what our clients wanted.  We were able to show the mediator and the defendants what the case would actually look like if it went to trial, and how it would play in the media – clearly, none of this came through in the legal filings.

We got a great result for out clients – that’s great.  But what about both sides’ lawyers? The movie gave everyone involved a great deal of information about the case, including how it would look at trial.  This information is normally not available in the middle of discovery, well before summary judgment.  Without this information, we may well have pressed forward with discovery.  How much would it have cost? Geeky calculations below the fold.

Here is my back-of-a-napkin calculation: the defendants were represented by a big DC law firm.  The non-profit law firm I was working for “billed” at similar rates for purposes of attorneys’ fees.  Note that these costs are at top end DC/NYC rates:

1)      Fact Discovery: A conservative estimate is that the Defendants had about 10 more depositions to take and we had about 8 for a total of 18 depositions at, say 7 hours each.  Assuming two attorneys taking the deposition and one defending, you are looking at about $1200-$1500/hour in attorneys fees, say roughly $3000 for the court reporter for each deposition and another $1000 for the video (I know that it can get much higher), and, say $10,000 for travel, assuming that the depositions are taken efficiently during two trips.  Total: $271,000. Note that this does not even include attorney prep time – this just for taking the depositions.  This seems incredibly low to me, but let’s go with it for now.

2)      Expert discovery.  This case was pretty light on the experts.  Just one expert on each side.  Figure costs for consultation, preparing the expert reports and expert depositions.  I am just going to assume $30,000 for simple 2 reports and 10 hour depositions ($500/hour for the expert) giving us $54,000

3)      Summary Judgment.  For a relatively simple case, I am going to assume that the motion, opposition, and replies would cost a total of $400,000 (simple assumption of $100,000 each).  Note that for each motion, that’s 170 mid-level attorney hours.  This number could easily be four times that.  But let’s just say that this is a simply summary judgment motion.  If there is a hearing, add $50,000 for the hearing.

We have not even had a ruling on summary judgment yet and we are at over $765,000.  Let’s assume that at least one claim gets through and we head to trial.

4)      Motions In Limine/Pre Trial Conference: Let’s guess $100,000

5)      Trial Prep: Let’s say $200,000 per side, for a total of $400,000.

6)      Trial.  This particular case had 13 plaintiffs and a good number of witnesses.  So let’s say there’s a 10 day trial.  Let’s say 3 lawyers per side (at $400, $500, and $800), 8 hours trial days, 5 hours of prep in the evening ($221,000) plus travel ($10,000) logistics/duplication/contracting costs ($50,000) and we are at $281,000 for the trial.  Also, extremely conservative.

7)      Someone loses and they appeal.  Let’s say that the appeal (brief, opposition, reply, and oral argument) costs $100,000 per side, for a total of $200,000.

Assuming that the case is not go back to trial and that no one files a cert petition, we’re looking at $1,756,000.   And this is not including the unquantifiable costs of stress, rancor, humiliation – the ordeal of depositions and trial for all of the litigants and witnesses.  As anyone who has been deposed or cross-examined at trial will tell you, these costs are very real.

So, arguably, N-Map’s techniques saved both sides of the case $1.75 million.  Well, that’s not exactly true, because some of the money paid at settlement was technically attorneys’ fees.  So call it $1.5 million in attorneys’ fees.  The short movie that I made (this was before N-Map existed), in combination with some amazing lawyering by my colleagues, helped save both sides a combined $1.5 million.

How? It gave both sides information that most lawyers do not have – an audio-visual approximation of what trial will look like.  It also likely scared the defendants from a public relations standpoint as well – if the video got out, it could have cost them lots of business.  But PR considerations often enter into settlement decisions.  Yes, we were pressuring the defendants to settle – but we were also giving them information that they used to save their clients lots of money and stress.