Every director or general counsel responsible for managing litigation is tasked with achieving better outcomes for less. In essence, the task is to achieve better value for your company’s litigation spend. However, you can’t achieve better value without an objective sense of what value looks like – how do I know when I am getting good value for my litigation spend?
This is NOT value
The problem is we use crude proxies for value that disguise rather than illuminate questions of value. In particular, in the absence of a more objective and sophisticated framework for understanding value, we resort to two poor proxies for value: result and price.
The result (by result, I mean whether you win or lose at trial) is a poor predictor of value for at least two reasons. First, the biggest predictor of the outcome of litigation is the actual facts and the legal consequences of those facts. Not even the most effective lawyer will achieve a result that is at complete odds with the facts. Which is not to say that lawyers do not play a critical role in achieving a particular result, it’s just to acknowledge that no lawyer can control the outcome. There are always factors that will affect the outcome of a dispute beyond the control of the most brilliant lawyer. Secondly, you may achieve a successful result in a dispute but spend substantially more than was necessary to achieve that result. That can arise for a whole host of reasons – undertaking work that was not necessary, duplication or general inefficiency. As Finkelstein J said in Black and Decker v GMC  FCA 623 at , “a case that is reasonably well prepared is just as likely to be decided correctly as a perfectly prepared case”.
Thus, the result alone is a poor indicator of value.
Price is often used as the most basic measure of value.
In my experience, price is one of the poorest indicators of value. Using price alone, how can you make any realistic assessment about whether you get better value out of the lawyer charging $500 per hour compared to the lawyer charging $800 per hour? The cheaper lawyer by price may take twice as long to perform the same task as the more expensive lawyer. The more expensive lawyer may offer valuable insight and experience that the cheaper lawyer does not bring. The problem is, the reverse may hold true (and, indeed, I have seen it hold true on far too many occasions) – the cheaper lawyer may do it in half the time as the expensive lawyer and offer insights and experience of far greater value. (This also highlights one of the many absurdities of time-based billing.)
Thus, price alone is a particularly poor indicator of value.
This article was written by Nigel Evans and was first published on the Aptum Legal website.
This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Legally Yours Pty Ltd accepts or assumes responsibility, or has any liability, to any person in respect of this article.