If you ask this question to an antitrust lawyer, you will receive some form of “it depends” in response. That’s true. It does depend. And you will inevitably follow up with, “What does it depend upon?” Let’s see if we can begin to answer that question.
What we are discussing here is not a class-action antitrust lawsuit, but an antitrust claim by one business or individual against another. Class-action antitrust cases usually incorporate some contingency-fee approach and are lawyer-centered rather than client-centered cases. That is, the plaintiff law firms act as “private-attorney generals” to enforce the antitrust laws through the class-action vehicle. Those cases are very different than the typical case brought by a company against its competitor, supplier, or customer. You can read our article on defending against class certification in antitrust cases here.
Antitrust cases are expensive. Usually. But if managed effectively, they don’t need to cost nearly as much as they did when big law firms held a virtually monopoly on the cases by convincing clients that only they had the requisite resources to file such a massive claim.
With the combination of technological advancements and third-party providers, I believe that, in many instances, hiring a big law firm to run your antitrust case is a costly mistake. We’ll get into that more below.
I am not going to get into actual numbers here because fees and other costs vary and will change over time. But if you are considering antitrust litigation, studying the components of an antitrust lawsuit will help you (1) understand what you are paying for and (2) figure out how to reduce your costs.
Below are the primary-cost drivers of an antitrust case. Of course, every case is different and a lot can come up in litigation that is unexpected and unusual. That keeps it interesting, but also increases cost variances. The list below doesn’t hit everything, but I hope it helps you.
Keep this in mind: In most cases, you are striving toward a strong settlement as much as victory, so you can stop the costs at any stage by settling.
- Preparing the Complaint.
This is crucial. The complexity of the claim will dictate the costs here. But don’t let an attorney talk you into just putting something together and amending if the judge dismisses in the first round of motion-to-dismiss briefing. You want to put your best foot forward, so it is worth the extra resources to get it right.
Don’t rely on the cost estimates of a complaint to decide whether to hire a law firm. A lawyer could bid low, knowing that if the court dismisses, you will likely have a chance to file an amended complaint (allowing the lawyer to collect more fees later). Also, be suspicious of a lawyer that says you can file a weak claim for very little then collect an easy settlement. It usually doesn’t work out that well.
This is your first chance to tell the court, the defendants, and the world your story. Take the time to do it right. It is obvious why you want to tell the court and the world your story effectively, but why the defendants? Settlement. By presenting a strong claim from the start, you substantially increase your likelihood of a strong early settlement (and avoiding the costs below).
- The Motion to Dismiss Stage.
Since the U.S. Supreme Court decided Bell Atlantic v. Twombly, a motion-to-dismiss motion after an antitrust claim in federal court is gaining ground on death and taxes in the race for certainty. Unless the defendants are fools or the case is quite unusual, you will certainly face a motion to dismiss.
Some cases are fact-intensive and the motion-to-dismiss briefing is relatively light. Those are the cases where the legal theories are straightforward or standard, but the real question is whether the defendant or defendants did what you alleged. The “Twombly” issue of whether plaintiff has sufficiently and plausibly alleged a conspiracy might add some costs and detail to the briefing.
In other cases, the parties may or may not seriously dispute the material facts, but the legal theory is controversial or creative or the law is not clear. In those cases, the motion-to-dismiss briefing may cost much more because the stakes are higher and the legal analysis is more complex. The court’s decision on the legal issues at this stage could dictate the ultimate result (and settlement leverage). So you better make sure that you put in the resources to fully educate the court on the law.
In most instances, if the court grants the motion to dismiss, it will allow the plaintiff another shot. That is, you can amend your complaint within a period of time, which will (inevitably) invite another motion to dismiss.
If you lose again, the court might allow you to amend your complaint another time. Otherwise, you have to appeal. The appeal of a motion-to-dismiss is less labor-intensive than the appeal of a summary-judgment or trial ruling. You will pay for an opening brief, a reply brief, and an argument (as well as any appellate motions that might arise).
You survived the motion-to-dismiss stage. Congratulations! That is a big deal in an antitrust case. You might consider exploring settlement now because the costs for both you and the defendant will rise dramatically from this point. And you have some leverage since you have the opportunity for discovery.
If you hired a traditional big firm and won the motion-to-dismiss, you might see them high-fiving each other. Part of that is because you won and everyone likes to win. The other part is that discovery is THE profit center for the litigation departments of big firms.
An appellate practice is prestigious, creates good press, and helps to recruit top law students. But it doesn’t make a lot of money. Complex litigation, however, is a big money-maker for firms because of discovery.
There is a lot that has been said and can be said about discovery, but let’s break it down to this: It is about managing enormous amounts of information. As you might imagine, there are a lot of approaches you can take. Some of them are more costly than others.
The traditional approach—still followed by many firms—is to line up a bunch of junior and mid-level associates, often charging several hundred dollars each, and have them review each and every document, entering codes on each one. This is a great deal for the law firm because this will take many billing attorneys many hours and days to review all of the documents, including emails, power-points, spreadsheets, word documents . . . everything.
The associates rarely enjoy it, but you will hear some of them say, “well, they are easy hours,” and that isn’t illogical when you must bill a couple thousand hours every year.
The partners love it because it allows for great leverage—you need many associates to get through all of the documents—and the more leverage the more profits if you price right.
This is where big firms make their money in litigation. Now, some law firms are, admirably, reacting to client pressure and hiring contract attorneys or making other arrangements, but you can bet that they are still doing everything they can to try to optimize their profits with the document-intensive work.
Here is the problem for big firms: They have huge overhead, including and especially the junior to mid-level associates that they pay a lot, but nowadays often don’t have enough work to reach their targeted hours (which, of course, affects the firm’s profit).
So the law firms need to find a way to utilize their excessive capacity. Discovery and particularly document review is a match made in heaven for excess lawyer capacity, particularly at the junior levels. This doesn’t mean that firms won’t react to client-cost demands, but without client demands, firms have a major incentive to utilize their existing salaried attorneys on document review and similar discovery tasks.
In the current legal market with companies like Pangea3 and others that you can hire to do first-level and other document review at substantially lower rates (with often greater quality), handling discovery in the traditional way usually benefits the law firm rather than the client.
If you have an antitrust case, ask your attorney about how they are structuring discovery to minimize costs. If they are handling the document review in-house by their salaried and expensive attorneys, have him or her explain to you exactly why, when it can be done (usually more effectively) by third-party providers for sometimes less than a tenth of the cost per hour.
The answer probably won’t be, “we need to employ our associates so we can profit handsomely at your expense.” But that could be the real reason. This is a blog about competition as much as antitrust and I urge you to make sure that your antitrust attorney is answering to the competition of the market in running a case.
I better stop now or this post will turn into a book. I will talk more about this in the future as I think it is one of the most significant issues in how the legal market is structurally changing and how law firms and attorneys will compete now and in the future.
But, one final note, depositions can only last up to seven hours, but the preparation work is often many times that.
You need an economist expert, at the very least. You might also need a subject matter expert or two as well. And an economist that has expertise in the subject matter, like health-care or insurance, for example, is helpful. Your experts will likely bill at rates that are similar to your attorneys and they often have their own team of junior people at lower rates.
This is a crucial aspect to your case and I urge you not to skimp here. The quality of your expert reports and testimony can make or break a case. And a good expert will help you develop your strategy.
Also, hire the experts, particularly the economist, early because you will need some of their guidance in developing the record through discovery. They will talk about data, data, data because that is the lifeblood of economists. If you read antitrust journals, you will often see complex models that assume that you can accurately obtain all the data you need in the world.
That isn’t reality. Data is expensive and you often have to settle for indirect or second-best approaches. Having your economist advise you on what they need while you are requesting discovery and searching your own documents will dramatically improve the value of what they can provide.
- Motion Disputes.
There are always motions of various sorts that come up in litigation. They often result from discovery disputes. There are some that you will need to fight, but others that may not be worth the cost. Always consider the dispute in the context of your overall goals. Letting your attorney’s ego cost you extra money in a battle that doesn’t really advance your overall cause is foolish.
If you can resolve a dispute with the other side before it turns into a motion fight, everyone benefits.
- Summary Judgment.
It is a lot of work to put together an effective summary-judgment motion or opposition. After all of the documents, the interrogatories, the admissions, the depositions, and the expert reports, you take the best of what you have and incorporate it into a single compelling brief. Major decisions are made here because you don’t want to include everything—that is too unwieldy—so you have to decide what evidence is best and present it in written form.
One significant area of cost-savings in an antitrust case is to effectively organize your information as you or your reviewers collect it and review it. Using case-management software or other methods to categorize and organize useful documents, transcripts, and other information as you go will save a lot of expensive lawyer time later. You don’t ever hear about this because it is difficult to measure or predict, but it is a reality.
If you have effectively organized your information early, it won’t take quite so long to figure out what you need for summary judgment, or for that matter, depositions and other motions.
If you have reached this stage as a plaintiff, you can smell the treble damages by now. The defendants are probably worried because anything can happen at trial, particularly with a jury, and treble damages, plus attorneys’ fees, add up quickly. This is another good opportunity for settlement.
But if you go forward, you should be ready to pay for not only the time at trial for the attorneys and experts, but also the preparation time, which is substantial. If you did a great job organizing and managing your information, you will again see those benefits here. Other costs to consider here are Daubert or motions in limine, where you fight over the admissibility of evidence, particularly expert testimony. Also expect motions for judgment as a matter of law and, after the jury decision, motions for a new trial, etc.
No matter how the case ends, an appeal is likely. The standard of review, which is crucial, will depend upon where the case ended. If you lost at summary judgment, the Court of Appeals will review the decision de novo. But if you lost at trial, you will face a more deferential review standard. At this stage, I recommend that you add an appellate attorney. Perhaps you can find someone with both appellate and antitrust experience?
This is just the tip of the iceberg, but I hope it was nonetheless helpful. f you have any questions or want a second opinion on your pending case, please call me at +1 858-964-4589.