Metrics for Success in DuPont’s Legal Risk Anaylsis
A corporation faces employment litigation. A complaint has been served alleging discrimination and wrongful discharge. The seriousness of the case is unclear. Among the variables are potential damages, adverse publicity and the considerable time needed to resolve the lawsuit. At the same time, faced with a 120-day deadline and a fixed-fee budget, the busy outside trial lawyer assigned to the case ponders how best to satisfy the client and meet his professional responsibility to apply his best skills, experience and judgment. The lawyer needs to get it done without the usual extensions of time—and without the comfort of the usual billable-hour fee arrangement.
Ten years ago there was little formal guidance for how inside and outside trial lawyers might proceed when faced with impending litigation. In 1992, that changed when the DuPont Legal Model was designed and implemented throughout the United States. The Model imposed an obligation on in-house and outside counsel to develop clear methods and procedures to save time and money on DuPont lawsuits, while maintaining or improving the quality of legal services. Both inside and outside counsel were closely monitored as they sought to meet these obligations.
Seeking to further improve the cost and quality of its litigation efforts, in 1994, DuPont’s in-house litigation function—with significant support from Thomas L. Sager, vice president and general counsel for litigation—began to emphasize a litigation-management process known as early case assessment. ECA methodology has been a cornerstone of DuPont’s success in reducing its docket, its legal defense budget and in reaching faster and better resolution of lawsuits.
“The key to successful litigation management is increased business discipline applied to legal matters,” Sager explains. “As the Six Sigma study shows, ECA is a lynchpin to that business discipline.”
ECA in a Nutshell
Within 120 days of the first defensive pleading, ECA requires outside trial counsel, DuPont in-house counsel and the designated DuPont business representative to produce a detailed analysis of the lawsuit. The details and procedures needed to meet the Model’s express guidelines have evolved over the past decade and have forced both DuPont corporate lawyers and outside trial counsel to rethink how to handle the first segment of defending a lawsuit. It has taken enormous effort on all sides, but the positive results have been recently confirmed by an independent study using the Six Sigma quality initiative at DuPont, which was verified by the national accounting firm of Deloitte & Touche. The result? The DuPont cases where ECA was rigorously followed resulted in higher satisfaction from the business unit, faster cycle times and an average of 28 percent less cost.
The Deloitte study analyzed 18 litigated labor-and-employment cases to determine two things. First, it studied the correlation, if any, between the quality of the early case assessment and the quality of the results. The second focus was the potential savings to DuPont when defects in the early case assessment process were eliminated. The elements used to measure ECA quality included whether the assessment was timely and comprehensive; whether the strategy and the budget were expressed; and whether the whole process was well documented. The quality of litigation results was determined on the basis of client satisfaction, the size of outside counsel fees, the case cycle time, and the size of the plaintiff payout.
By carefully quantifying the elements and assigning point values to the client ratings, the Deloitte study found that high ECA quality generally resulted in lower indemnity/plaintiff payouts and higher client satisfaction. On top of that, the potential savings in outside counsel fees in the 18 cases were dramatic: $852,802—more than a third of the total fees of $2.3 million. Over the seven years covered by the study, the average potential annual savings came to $121,829.
The Stakeholders
ECA is applied to a variety of cases, including litigation of employment, intellectual property, commercial, personal injury and toxic torts, but the stakeholders are the same: the business client, the in-house counsel and the outside trial lawyer. The fourth and fifth stakeholders, whose expectations must be understood and managed, are the plaintiff and his or her lawyer.
For all of these stakeholders, the tension points are basic: money, time and control of litigation. As the Six Sigma analysis confirms, using the ECA process on a consistent basis results in a more involved and happier business client. In addition, it lowers the cost of litigation, both in terms of legal fees expended and resolutions reached. Finally, the business and the in-house legal staff spend less time away from the proper focus of growing DuPont’s business.
In the Beginning...
At the outset, the tools and methodology to achieve this change barely existed. There was enormous pressure. Some missteps and floundering occurred. There was a good deal of pushback, both inside and outside, to this novel but structured approach.
During this early period, many brainstorming and “what if we do things this
way. . .” conversations occurred. One of DuPont’s outside lawyers, who handled a large volume of employment litigation, developed a work-process flowchart that essentially mapped the required steps needed to accomplish a case assessment quickly and efficiently. The ECA workflow chart for employment litigation provides a clear, systematic 21-step process to guide the inside and outside lawyers for each individual plaintiff’s lawsuit (log on to www.lawexec.com to review this flowchart).
ECA Workflow Process Map
This process has been refined over time at DuPont, during practice group working sessions and at the Atlanta Knowledge Management conference in 1997. From the service of the complaint through the decision to litigate or settle the matter, the workflow process chart poses questions that must be answered and suggests decisions that must be made within the 120-day time frame. The issues include essential items such as Freedom of Information Act queries, the need for local counsel, analysis of local rules and venue, information from the plaintiff’s medical records and background, strategies for handling the depositions, and the need for possible other services, from databases to private investigators. It concludes by analyzing the client’s vulnerability and the potential for success, should the litigation proceed to trial. Time management is implicit in this structured process, but the judgment of experienced lawyers is the backbone of the ECA analysis.
Why is ECA a Good Idea?
“Time and money have always been the standard measures for any company evaluating the impact of defending litigation, regardless of the type of lawsuit or the jurisdiction where the case is filed,” Sager says. “What we have accomplished at DuPont, with the help of our partnering law firms, is a focus on a business approach to evaluating our lawsuits early and often.
“The results, as established through the recent Six Sigma analysis, are very impressive. Eighteen employment caseswere analyzed under the scrutiny of Six Sigma. Those that followed the ECA process faithfully resulted in a 28 percent savings to DuPont in total transaction costs and a much more satisfied business client as a result.”
Like most corporations with a large litigation dockets, DuPont was concerned about how much time lawsuits took away from managers who were responsible for growing DuPont’s business. It was also concerned about how much money it was spending on outside lawyers who tried cases and in-house counsel who managed large dockets of litigation.
As the Six Sigma study conducted by Deloitte & Touche established, using the methodology and discipline of ECA reduces business managers’ time away from their business goals, improves the corporate perception of the value of the law department and decreases the total cost of defending litigation per case. Among the various items captured in the ECA process are those actions, tasks, procedures and customs that drive litigation costs.
ECA focuses on such items as cycle time, paper touches, whether the lowest cost, most capable person is handling the task (paralegals versus young associates, for instance) and whether a case is being given the proper attention by a first-chair trial lawyer.
Another ECA requirement is that the trial lawyer responsible for the case, as opposed to less experienced members of a defense team, must articulate a theme to the jury early on, before discovery commences. This, of course, requires all evidence to be assessed and evaluated around a jury theme, central to the ability of the company to convince a jury that the plaintiff has not been wronged.
An unspoken advantage of the Early Case Assessment, according to Sager, is cases, which have been properly assessed with ECA methodology, usually have lower discovery costs, since only pertinent documents and evidence are collected and analyzed. In other words, when you have a plan to build a house before you drive the nails, the house goes up faster, at less cost, and the end result is likely to be close to the blueprint you developed. When the ECA process comes together, the best talent focuses on the most relevant information. The usual result is better decisions by all involved, made in less time and at a lower cost.
Holding managers accountable at DuPont is a long-cherished business tradition. Following the establishment of the DuPont Primary Law Firm Network, DuPont in-house counsel and their law firm counterparts are being held accountable in a way in which they can truly contribute to the success of the process without sacrificing their professional judgment and sense of accomplishment.
Gardner G. Courson is a partner at McGuire Woods LLP. gcourson@lawexec.com
Thomas L. Sager is vice president and associate general counsel of E.I. duPont de Nemours & Company. tsager@lawexec.com
Courson, Gardner and Sager, Thomas. “Metrics for Success in DuPont’s Legal Risk Analysis.” Chief Legal Officer, Vol. 1, No. 3, Summer 2002, p. 29-31.
