The Case of the Secret Formula

Law Tales #5

My firm was hired for a multimillion dollar contract and intellectual property dispute. We didn't replace any previous lawyers, we were just brought in to add to the team, which already had multiple law firms. It was state and federal court in a different state, as well as in another country. The client had already paid over a million dollars in legal fees on the case between the 4 or so law firms involved. And it was going nowhere fast. Both sides thought the other owned them tens of millions of dollars.

It was all over some “secret formula” that might be worth billions, so both sides were very interested in fighting it out.

My boss told me to get up to speed and that we were going to start discovery so I needed to come up with a plan. Working with the client I found every possible person that could play a role. We had around 150 witnesses we wanted to depose across the country. Some were in state and federal government. Each possible witness, especially the government ones, would likely fight the subpoenas and notices.

It was going to cost millions to do this and take every day of my life for several years. I was excited. The client was excited.

But then the client said, “If only this case was over. I could sign a deal tomorrow that would give me 10 times what this case is over.”

This was shocking as I had been told that resolution was impossible. Being the clever guy I try to be, I explored the topic with him. Yes, there was a deal pending. Yes, this litigation prevented the deal from being finalized.

So I asked him, “Why are you letting this case prevent you from making even more money?”

He was a very smart guy but he had not thought of the case in those terms. He had let his anger at the other side cloud his judgement.

I let him know that I believed we could win in the end, that he was right, but that he cut his losses and we might be able to settle this case then. We continued to discuss this and it became clear he wanted this resolved as soon as possible.

At the next meeting with the team, I mentioned this and suggested some tactics to move forward. These other attorneys hadn't even considered the tactics I suggested. “We don't do that much in this state.”

I came up with a two-pronged attack: push for settlement and threaten the other side with millions of dollars of discovery. A settlement conference was scheduled not long after they saw the 150 people I planned to depose. The case was settled with both sides basically walking away from the dispute. Client moved on with the much bigger deal. All was well.

And that is pretty normal. Almost every legal dispute is at its core a question of emotions. Someone feels someone else did they wrong. The other side feels the same. They litigate until they are willing to settle. In civil cases, going to trial is usually a bad choice and means the parties are too emotionally involved. Rational people can usually work things out. Sure, sometimes I had a very rich client willing to pay millions to prove a point or to just mess with someone else, but even they get tired of paying legal bills, eventually.

It really isn't that different from diplomacy.