New Ways To Reduce Litigation Costs

The major cost driver in litigation is not the trial, but rather the many expensive and time consuming pretrial tasks. Those costs have ballooned in recent years, with e-discovery alone averaging millions of dollars in medium-size cases.

The author considers two recent developments that have the potential to significantly shorten the dispute process and reduce these costs: the Delaware Court’s adoption of a private arbitration fast-track option for certain business disputes, and the growing use of separate settlement counsel in selected cases.

In 2010, the Delaware Court of Chancery adopted a procedure that allows parties to have their dispute arbitrated privately by one of the regular judges of the court. This process is faster than courtroom litigation: The rules provide for an expedited arbitration hearing at the end of 90 days. There is a $12,000 initial filing fee and $6,000 per diem for each day of arbitration. The arbitrators are respected jurists with a sophisticated expertise in business disputes, more so than may be the case among general docket judges and private arbitrators.

The process has been challenged in federal court.

The practice of hiring separate counsel solely to negotiate a settlement is a relatively new development. The work of settlement counsel does not duplicate what trial counsel may be doing. It allows the company to send the message that it is serious about winning at trial, but is open to the possibility of settlement.