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Class Action Countermeasures Discussions of the Strategic Considerations Involved In Class Action Defense

Good News: Inside Counsel Must Do More With Less on Class Actions

Posted in Strategy

Last week, Carlton Fields published the results of a survey it commissioned, in which an independent consulting firm interviewed 322 corporate counsel about what class action practice would look like to them in 2012. The survey has gotten a fair amount of press, and rightfully so. Any time someone takes the time to collect actual data about how lawyers do their jobs, it’s worth paying attention.

The headline for the survey has been that corporate counsel are expected to do more with less. Specifically:

In 2012, corporate legal departments expect to handle slightly more of them—on average, 5.4 matters per company, up from 4.4 in 2011. At the same time, they plan to decrease their per suit costs, which average $776,500, by 17 percent this year.

(Emphases added.) The survey has a number of other important findings, from the three most prevalent practice areas for class actions (labor/employment, consumer fraud, and securities), to the importance of consolidating class actions with a single in-house lawyer (which yields average savings of more than $300,000 per case).

But I want to focus on the headline–more with less is the new normal for class-action counsel. That may sound like bad news in an embattled legal market. It’s not. In fact, I’m glad to see it, because it means that there is real opportunity out there for up-and-coming class-action firms. There are more matters out there, they’re being centralized within corporate law departments, and counsel who can show deep knowledge of Rule 23 and cost-saving strategies will be at a competitive advantage.

What does that mean specifically?

  • Settlements will likely be be fewer and smaller. While Carlton Fields reports that inside counsel are split on whether to settle cases early, it’s hard to dispute one central truth: if there’s less money available to spend on class actions, then there is less money for settlement. And that makes good litigators, as opposed to quick settlers, that much more valuable.
  • Aggressive defense–including early challenges to certification–becomes more important. If defendants can’t afford settlement, then they’re gong to fight harder. Motions to dismiss and to compel individual arbitration remain favored tactics, although those victories may not be as decisive as once thought. But there are other tactics as well. Regular readers are probably bored to death of my beating the drum for the motion to strike class allegations. But at a time when budget pressures are high, it’s a great way to force a debate on certification on the defendant’s–rather than the plaintiff’s–timetable. (Smart defense counsel will also consider tactics that may not be related to motions practice.)
  • Rule 23 nerds are more attractive. If corporations are consolidating class actions with a single in-house lawyer, we’re going to be facing clients with a deeper knowledge of Rule 23 across various practice areas. It stands to reason that firms that can offer individuals with a deep, broad-based knowledge of Rule 23–lawyers fluent in the language and familiar with the terrain–are going to be able to offer tangible benefits to their clients. (Which means it’s a good time to be a class-action blogger.) Not every member of a team has to be an expert in Rule 23, but smart in-house counsel will want to make sure at least one of their outside lawyers is.
  • Case management is critical. Look, I’ll be the first to admit it. Case management is not sexy. It will never get the clicks a good SCOTUS opinion will.  And lawyers who geek out over things like knowledge management or Getting Things Done tend to get funny looks from others in the office. But mastering case management yields real benefits in greater productivity [] and adaptability to unforeseen circumstances. That may be anathema to lawyers who bill by the hour, but it’s a big deal to inside counsel who pay by it.

The takeaway here is a simple one. The market is getting tougher. In-house counsel need lawyers who can work faster and cheaper, and are willing to try unconventional things to win quick and reduce costs–whether those are alternative fee arrangements or unusual arguments. It’s a bad time for business as usual in class-action defense. And that makes it a great time to be a class-action defense lawyer.