Editor's Note: Many general counsel and their CEOs are not aware of the total costs of litigation because typically defense costs are expensed annually by the legal department while liability costs are expensed by the business unit at the time a payment is made to the plaintiff. Based on information available to it, eLawForum estimates that in 2006 for all Fortune 500 companies the total cost of litigation ($210B) was equivalent to approximately one-third of their after tax profit ($610B). See page 27.
eLawForum on the basis of an analysis of 20,000 cases found that only 1.8% of the cases brought against Fortune 500 companies actually proceeded to final judgment with 97% being resolved before trial and 1.2% being settled during trial.
DRI is marshalling its membership of 22,500 defense counsel as well as that of other national and local defense counsel organizations and LCJ in support of judicial independence and its current President, John Martin, will be putting great emphasis on this issue during his term in office. The DRI Task Force Report on Judicial Independence "Without Fear of Favor" (see link to the Report in the version of this article on www.metrocorpcounsel.com) suggests needed reforms which would be supportive of judicial independence, including addressing such issues as poorly funded courts.
Editor: In which courts do you practice?
Balser: I have a national practice. Probably 70 to 80 percent of my work is in federal court. But, I am actively engaged in litigation in state courts all over the United States. I frequently find myself in the state courts here in Atlanta as well as California. I am presently defending a class action in the Superior Court in San Francisco and handling a very large case in the Superior Court of San Diego. I frequently handle cases in the Superior Court in Los Angeles and have litigated in the Delaware Chancery Court.
Editor: What is the principal problem in state courts?
Balser: Clogged dockets. It is a common experience for those of us who litigate complex business matters in state courts around the United States that overcrowded dockets are a barrier to getting expeditious and proper resolution of cases.
It is not uncommon to find a view from the bench that a business case just isn't as important as other cases. Judges view criminal and family cases as involving issues that impact real people's lives. Given limited court resources, cases that involve corporations seemingly just fighting over money are not surprisingly placed at the end of the line - which leads to extended delays throughout the life of a case. Costs mount any time that it takes longer to get your motions decided or the discovery period gets extended. Delays provide an opportunity for plaintiffs to generate additional discovery, resulting in additional cost to the clients.
Editor: How does the condition you describe affect the ability of the judge to seek help from law clerks?
Balser: Most of the state courts in which I practice are in large metropolitan areas and the judges tend to have law clerks whom they may share with other judges. But, typically these law clerks are most knowledgeable about the subjects that pertain to the cases most frequently on the courts' docket - for example, criminal law, family law or personal injury law. Very few of the law clerks that we encounter in state courts have any experience at all in complex business litigation unless it's in a metropolitan area where cases are assigned to judges along subject matter lines. One development that offers a ray of hope is the creation of business courts that is gaining traction around the country. These courts are staffed with judges and law clerks with expertise in the issues involved in sophisticated business litigation.
Editor: I gather that you feel that it is important to attract more judges with a business law background. Is salary the problem?
Balser: Judges make far less than lawyers at private law firms with comparable experience. Even a first-year associate at a large private law firm makes more than most state court judges. As a result the pool from which the typical state court judge is drawn no longer includes those who are highly qualified to serve - people who have enjoyed a successful career in private practice.
Because of the salary disparity, what we are finding is that more and more state court judges are drawn from the ranks of prosecutors and public defenders, many of whom are very talented lawyers and who make very good judges, but typically do not come to the bench with any experience or interest in complex business disputes and, if there is no diversity or federal question, the disputes end up in state court to be adjudicated.
The systemic problem facing state judicial systems is attributable to lack of resources. State governments have limited funds which have to be allocated among various governmental activities. Because judges don't have lobbyists and can't marshal the support to get their fair share of the pie, funds don't end up in the state courts. The result is that most state courts usually lack the wherewithal to handle large, sophisticated business matters. Some do it better than others, but they are not geared up to handle the kinds of cases that Fortune 500 companies face.
Editor: I gather that you endorse a merit selection system.
Balser: Clearly I do. To me, one of the most frightening challenges to the independence of the judiciary is the increasing politicization of the selection of judges. It is distressing to see judicial elections that require raising money, buying TV ad time or otherwise campaigning and having to appease or mollify vocal special interest groups. Judges should not have to worry that attacks by these groups will affect their tenure.
Editor: Looking at some of the problems of overburdened state courts, I am told that many state courts do not have enough time to pay much attention to the qualifications of expert witnesses.
Balser:Every state has its own rules governing the admission of expert testimony. Many have gone towards the Daubert standards. Georgia very recently has adopted the same standard as Daubert. I do think that in the past the default position in most state courts where I have tried cases is to let everything go to the jury.
Some state courts do not have the requirement of a gatekeeper function like you have in the Daubert paradigm, or, even if there is a gatekeeper function in the jurisdiction you are in, the typical trial judge will take the position that the jury should assess the credibility of the witness and the weight of the testimony and the judge should not interfere.
Editor: Given clogged dockets, are state court judges able to control the efforts by plaintiffs to pile up the expenses of e-discovery in order to force a settlement?
Balser: My experience with state court judges and e-discovery is that they are way behind. Federal judges have done a very good job of getting up to speed on what the issues are and how electronic discovery actually works - what the challenges and pitfalls are. My experience has been that most state court judges are not yet up to speed on electronic discovery. It's a phenomenon we are all going to have to live with. State court judges are going to have to understand it because fortunately or unfortunately it is the world in which we now live.
Editor: Another point that has been made is that it's more difficult to get summary judgment in the state courts because overburdened judges just can't take the time and tend to let a case flow to conclusion rather than taking summary judgment motions seriously.
Balser: My experience would bear that out. And, it is a problem. When we have a case in state court, whether it's here in Atlanta or somewhere else, the first thing we do is look very hard at who our judge is and we assess what the likelihood is of that judge granting summary judgment.
Editor: How does this affect the strategy used to defend a complex business case in a typical state court?
Balser: In planning the strategy for handling serious litigation brought against corporations in state courts, you are forced to take into account the uncertainties generated by the fact that for lack of funding they may not be able to provide the quality of justice needed. As a result, you have to make decisions about how to pursue the case based on considerations unrelated to the merits of your client's case.
These include how long it is going to take the judge to rule; how likely is it that the judge will actually take the time and effort to consider critical motions; how confident are we that the judge will provide the proper jury instructions so that the case can be properly tried; and what's the chance that if we lose an appellate court will take a hard look at the case and correct errors made by the trial court.All those issues now are significant inputs into the calculations used by our clients to determine whether or not to settle - and when and for how much. It's unfortunate that often the decision to settle is not determined by how strong we are on the facts and law, but rather on the considerations I mentioned.
Editor: Let me ask you generally, how do you feel about the DRI effort? Do you think that it is timely and will be helpful in effecting change?
Balser: I was very impressed with the quality of thinking in the DRI Task Force Report. We need to raise the bar in the state court system, and to really try to get it on a par with the federal court system. We need to make sure the name on the door of the courthouse doesn't affect the quality of the justice that you receive when you walk through the door.
Published February 1, 2008.
