Pre-Litigation Considerations

As I have discussed in other blog posts, communications with in-house counsel that are not for the purpose of obtaining legal advice are not privileged. But what happens when outside counsel is hired to investigate a claim of harassment in the workplace and a second outside counsel is hired to provide legal advice?  Anyone who thinks that the subsequent communications involving those outside counsel will automatically be privileged had better read the recent decision by Magistrate Judge Kenneth P. Neiman (District of Massachusetts) in Koss v. Palmer Water Department.… Keep reading

When an employee talks to in-house or outside counsel for the purpose of obtaining legal advice for the company, that communication will be privileged and can be protected from disclosure.  Likewise, when in-house counsel is meeting with several employees at the same time for the purpose of gathering information to be used for legal advice, the communication that takes place will be privileged.

Notwithstanding the fact that the attorney-client privilege applies to communications between a lawyer and a client, many people still believe that communications amongst employees are protectable even if no attorney is present, as long as they are discussing an ongoing or potential litigation.  That is a misguided notion, and looking at the facts of a 4th Circuit case, US v. Tedder, reveals how dangerous having such a misconception can be.… Keep reading

It should come as no surprise that making a false statement about a competitor’s product or service is actionable.  Similarly, albeit slightly less obvious, repeating a false statement that someone else makes about a competitor also may be actionable if you have reason to believe that the statement is false or if you recklessly repeat it without making any effort to determine if that statement is true or false.  In Genzyme Corp. v. Shire Human Genetic Therapies, Inc., however, the District of Massachusetts took the concept of holding someone liable for republishing another’s unbiased statement to a whole new level. … Keep reading

Sometimes, when business people can’t directly negotiate (or re-negotiate) favorable deal terms, they are tempted to withhold a payment or some other obligation in an effort to leverage the other party into an agreement it otherwise would not make.  In-house counsel should be wary of endorsing such conduct, as this could result in exposing their companies to liability going far beyond simply having to lose face and/or doing what they should have done in the first place.  Take, for example, the following scenario:

Acme engaged Alpha as its exclusive manufacturer for widgets and gidgets for two years.  Four months later, Acme tries to negotiate a similar deal with Beta to manufacture didgets, and, if consummated, such a deal would provide Acme with ten times the revenue that the Alpha contract was expected to provide.  While Beta expresses interest, it eventually makes clear that unless it also can manufacture gidgets, there will be no deal.  While Acme tries to buy out of the gidget portion of the Alpha contract so that Acme can give Beta what it wants, Alpha refuses.  Acme’s CEO realizes that the Beta deal is going to fall apart if something does not change quickly, so she Keep reading

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It is pretty standard fare to have what is commonly known as an “integration clause” in a business contract.  Such clauses generally state things like the following:

This Agreement constitutes the entire agreement between the Parties relating to the subject matter reflected herein.  All prior negotiations, representations, agreements and understandings between the parties with respect thereto are merged into, extinguished by and superseded by the terms of this Agreement.” 

While many in-house counsel would like to think that such a clause provides bullet-proof assurance that whatever the contract says will control, that is not always the case.  Even the most well-crafted and comprehensive integration clause may not prevent a disgruntled former business partner from claiming that he or she was fraudulently induced into entering into the contract.  Further, if such a fraud claim can be established, that party then can steamroll right over the parol evidence rule and seek to introduce evidence of supposed agreements that supplement or contradict those in the written contract between the parties.  As the Massachusetts Supreme Judicial Court said over 20 years ago in McEvoy Travel Bureau, Inc., v. Norton Co., “[i]t is well established that the parol evidence rule does not apply … Keep reading

Litigation is time-consuming, is costly and, even in a business context, can be emotionally draining.  Thus, it makes perfect sense that in-house counsel and business people, alike, often try to implement mechanisms to avoid having to file or defend suits.  One such method, about which I posted earlier this year, is the use of a liquidated damages provision.  Another that has become increasingly popular is to include a requirement that the parties meet and confer before they can file suit. A typical version of such a clause that I periodically see in contracts is one like the following:

Before a party may file suit, it first must give the other party written notice of the dispute.  After notice is received, representatives of each party shall meet within 5 days in a good faith effort to resolve the dispute.  If the dispute cannot be resolved within 5 days after such meeting, suit may be filed.

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Over the past 15 years, Alternative Dispute Resolution (ADR) has become all the rage as parties try to limit the time and expenses they might expend if forced to litigate disputes in court.  One of the ADR mechanisms whose use has exploded in growth is mediation.  Indeed, it seems that every month or two I see an announcement that a recently retired judge is joining one of the big mediation firms, such as JAMS, or is starting his or her own mediation practice.

While I often engage in mediation as a way to try to resolve my clients’ disputes, it is important to understand what mediation is, and what mediation is not, so that you can evaluate whether it might be an appropriate vehicle to use in an effort to settle a particular dispute that you or your business might have.

Although people often confuse mediation with arbitration, the only real similarity is that parties generally cannot be forced to either mediate or arbitrate a dispute; they must voluntarily agree to engage in either process.  Substantively, however, mediation could not be more different than arbitration.… Keep reading

In an earlier post, “Is Arbitration Quicker, Cheaper and Better for You?” I discussed why having a faster and less expensive dispute resolution mechanism may not be in your best interest.  Make no mistake, however, the differences between traditional litigation and arbitration go well beyond the time and expense it takes to complete the respective processes.  The following are a few of the more notable substantive distinctions between these two dispute resolution mechanisms:

  1. Litigation allows for extensive “discovery” (e.g., depositions, document requests and interrogatories) from parties and non-parties.  Discovery in arbitration often is limited to document requests, but can be broadened by the arbitrator or agreement of the parties.
  2. Because arbitrators are not required to abide by any Federal or State Rules of Evidence, they routinely consider information that never would be admissible in court.
  3. A “bad” decision in a court of law almost always can be appealed.  An arbitrator’s decision, on the other hand, rarely can be appealed – even if it obviously is contrary to the applicable law.
  4. Notwithstanding a lack of empirical data, most litigators agree that arbitrators are much more likely than a judge/jury to issue a compromise decision and/or one based on fairness principles
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As many in-house counsel are painfully aware, litigating a dispute in court is generally time-consuming and expensive.  Further, given a losing party’s right to appeal an adverse verdict, and with all due respect to Yogi Berra, litigation ain’t even over when it’s over.  As a result, some companies choose to include arbitration clauses in their agreements, believing that this will greatly reduce the amount of time and expense their company will have to incur if a significant dispute arises that cannot be resolved.

While it usually is quicker and less expensive to arbitrate a dispute rather than to litigate in court, that is not always the case.  For example, while it only would cost $375 to file a $5 million claim for breach of contract in the Federal District Court, the fees for commencing commercial arbitration before the American Arbitration Association (“AAA”) are $14,600 – even if the case is extremely simple. (Fees under the AAA Commercial Rules are tied exclusively to the amount of damages being claimed.)… Keep reading