Controlling Litigation Costs: Some Proposals for ReformAuthor(s): Ronald L. OlsonSource: Litigation, Vol. 2, No. 4, THE ECONOMICS OF LITIGATION (Summer 1976), pp. 16-19Published by: American Bar AssociationStable URL: http://www.jstor.org/stable/29758271 .

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Controlling Litigation Costs:

Some Proposals for Reform

by Ronald L. Olson Swift resolution of civil disputes at minimal cost, one of the major goals of the judicial process, no longer appears possible. The delay, expense and frustration which one

regularly encounters in the judicial system generally are

beginning to be accepted as facts of life by most members of the public.

Courts simply have not been able to keep pace with the massive increase in the number of lawsuits being filed. The loss of a sense of community, which has accompanied rapid urbanization, has contributed to the erosion of

emphasis on non-judicial dispute resolution. Most

disputes will occur between people who do not know one another and who feel no impetus to resolve disputes without resort to the courts.

Furthermore, there has been a proliferation of substantive and procedural rights and remedies. Last

year, more than 7,000 bills were introduced in the California legislature alone and more than 26,000 in

Congress. In the last 15 years, more than 290 major federal agencies, bureaus and commissions have been created. Sufficient funds have not been made available to

expand the judiciary to keep pace with the additional caseload that has accompanied these developments. The administrative officer of the Los Angeles County trial court recently reported that only an immediate addition of 33 new judges and related support staff and facilities would avert a major breakdown in the operations of the

171-judge court, which is burdened with a backlog of more than 40,000 cases. Equally debilitating backlogs exist in federal courts.

Steps can be taken to ease this crisis short of an unlimited allocation of resources to the judicial system. First, many matters now burdening the courts perhaps could be better handled elsewhere. Treatment of public intoxication as a public health problem and not as criminal conduct is one example. Traffic offenses,

Mr. Olson is a member of the California Bar and a member of the Los

Angeles firm ofMunger, Tolles & Rickers haus er. He is also Chairman of the Committee on Litigation Management andEconomics of the Section

of Litigation.

uncontested divorces and routine probate matters might be handled administratively, with a minimum of judicial intervention?and then only in the most serious or

complex situations. In addition, alternative mechanisms for settling disputes should exist. Mediation and

arbitration?possibly compulsory in certain types of cases?would help to lessen the current staggering burden on the courts. Encouraging experiments already are being made in all of these areas.

However, even short of widespread adoption of these

proposals?which could entail extensive legislative activity and funding?changes can be made within the

present judicial system which would significantly increase its responsiveness to the needs of the average civil litigant.

Two premises are fundamental to any attempt to reform the existing judicial process. First, the system must be made more flexible. Due process guarantees essential to the fair resolution of certain more complex cases may strangle simpler disputes. Second, the judicial system is not the private playground of parties to lawsuits, and reforms of the system must take into account the broader

public interest in a fair and efficient judicial process.

Recent Report These premises underlie a recently issued report of the

Economical Litigation Committee of the Los Angeles County Bar Association. The program developed by that committee proposes to simplify the judicial process in the

Municipal Court system (where the jurisdictional limit is

$5,000). It is aimed at providing meaningful access to the

judicial system for those presently barred because the

expense and complexity involved is simply not worth the effort.

The report includes model legislation which would allow the parties "to modify by stipulation, subject to

approval of the court, any existing procedure or

pleadings, trial or pre-trial." While such a right is a rather

simple notion, it previously has not been available to California litigants. The rigidity of the present judicial system interferes with the innovation and experimenta

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tion essential for improvement of the system. Another

part of the model legislation sets out a format of simplified procedure which may be used as a guide to litigants wishing to stipulate to a simpler process.

The suggested simplified procedure provides for notice

pleading, a prohibition against amendments and most

pre-trial motions, except motions for "failure to state a

claim," motions for summary judgment and motions to

clarify and amend "the statement of the case." Discovery is not permitted, except for requests for admissions of uncontroverted facts. Instead, each party is required to submit a "statement of the case." This statement is to include a statement of facts, a statement of the party's legal contentions and supporting case law, a list of all known witnesses, and a summary of the evidence to be

presented. These statements constitute admissions. The model legislation does not require pre-trial

conferences. Instead, counsel are expected to consult with each other to narrow issues and reach stipulations. Trials of cases which are conducted under this procedure are to be given priority. At trial, the judge is to take a more active role in the general conduct of the trial, including interrogating witnesses and determining the order in which evidence is presented. Narrative testimony and written statements are allowed when these devices would save the time of court and counsel. The rules of evidence are to be relaxed to allow all relevant testimony, except where there would be a conflict with recognized privileges.

An analysis of this scheme raises several questions. First, one might ask whether litigants will subscribe to it on a voluntary basis. Discovery is necessary in many cases, or at least is believed necessary by many litigants who would be opposed to stipulating to a procedure that would

deny its use. Some might well refrain from stipulating because the mere use of discovery can be an effective, if

inappropriate, method of obtaining settlement leverage or

delaying resolution. Finally, there would be a class of

litigants who might not anticipate the need for discovery initially but who would not waive that right without being assured it would not be needed later. Of course, the inertia, caution and suspicion ingrained in all trial lawyers cannot be ignored. Giving priority on the trial calendar to

subscribing litigants is unlikely to overcome these con? siderations.

The report recommends that the simplified procedure be instituted on a mandatory basis in four municipal courts in California for a two-year test period. Those

procedures would apply to all civil cases, except where a

jury trial is demanded. Cases could be withdrawn either

by the court on its own motion or upon motion of any party showing good cause. Given the unlikelihood of significant numbers of litigants voluntarily subscribing to the alternative procedure, mandating a test program appears necessary to obtain adequate data for evaluating the soundness of the proposals.

It is also fair to ask how simply this so-called

"simplified procedure" really is. The "statement of the case," which is to serve in lieu of discovery, may simply be

substituting one expensive form of pre-trial practice for another. An adequate statement of the case, as required by the model statute, would require a considerable

expenditure of attorney time and money. Would such a

procedure be responsive to the needs of most litigants in the municipal court, who must necessarily have less than $5,000 at issue? One active municipal court judge reports that a sizeable number of cases already go to trial in courts of such limited jurisdiction without any discovery; the

parties simply want a trial determination as quickly as

possible. The mandatory test program would impose on this class of litigants the expense which the new

procedures are trying to minimize.

Questionable Value

De-emphasizing the role of the court in initiating or

stimulating settlements by eliminating pre-trial conferences is also of questionable value. It is doubtful that requiring the attorneys to consult with one another will prove as effective a means of narrowing issues,

reaching stipulations, and settling cases, as a pre-trial or settlement conference where a judge or magistrate can often provide the stimulus.

Yet, the basic thrust of this report is sound. It

recognizes the need to offer flexibility in how a wide range of cases are processed through the judicial system. For those smaller cases in which the parties want a quick trial date and a minimum of discovery, if any, the trappings of

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pre-trial and trial become prohibitively expensive, time-consuming and, as one noted jurist observed, "cause many disputants to drown in a sea of due process."

Simplified procedures, however, are not the solution for

expeditious disposition of larger, more complex cases.

Rapid and efficient resolution of complex litigation generally demands increased judicial supervision. Most

jurisdictions have two- or three-tier systems of courts, distributing cases according to the amounts in dispute. In courts of unlimited jurisdiction where the large and

complex cases are filed, the method of assigning cases to

judges should be consistent with the goal of achieving greater judicial supervision over such litigation. Many state court systems still employ a master calendar system (different judges for various pre-trial matters and trial

judges not assigned until day of trial) instead of the individual calender system which is generally used in the federal courts.

Under the individual calendar system, a case is

assigned to one judge from the filing of the complaint through its disposition. Such a system gives judges much

greater control over the progress of cases. Approximately five years ago, the United States District Court for the District of Columbia switched from the master calendar system to the individual calendar system. Initially, many of the judges were wary of the proposed changes. But the

judges gave the new system near unanimous approval after they had worked with it for a while. Delays were minimized and backlogs diminished, in part because the

backlogs of individual judges were visible to other judges and the public.

An individual calendar system also eliminates the need to educate different judges about the facts and issues of a case for each pre-trial proceeding and for trial. A judge who has had the responsibility for a case from its earliest

stages through trial becomes increasingly familiar with its issues and objectives. As a result, he is better able to influence pre-trial disposition or simplification of issues.

Policy Change The individual calendar system also represents a

significant policy change from that of the typical master calendar system. The letter generally provides that cases are assigned to trial when counsel indicate their readiness. This procedure relies on the initiative of the attorneys involved for moving a case along, a sure sign of weakness for any system whose goal should be speedy resolution of

disputes. It is not sufficient that our judicial system meet the needs and interests of the parties to a dispute. There is also a strong public interest in fair and efficient disposition of disputes to assure the public that the resources allocated to the judiciary are being used

effectively. This public interest is jeopardized if the

attorneys, whose primary obligation is to their clients and who frequently accept more work than they can handle, are able to delay indefinitely the disposition of cases. The individual calendar system gives the court a much more direct role in controlling the progress of cases and thereby advancing the public interest, if not also the individual

litigants' interest, in a speedy resolution. The discovery process is another aspect of the present

judicial system which causes considerable expense and

delay. Discovery is intended to prevent surprise, uncover facts and narrow issues. Too frequently, however, attorneys undertake discovery for purposes unrelated to those legitimate and commendable goals. Reform of the

discovery process is essential if the present abuses are to be curbed.

Historically, cases were tried without any formal, pre-trial discovery, an approach still followed in England. In recent years, discovery has come to dominate the

litigation process in this country. One experienced trial

lawyer has observed that for every witness most civil trial

lawyers put on the stand, 100 are deposed. The prevailing judicial attitude toward discovery has been one of "work out your problems and do not bother me with discovery motions." In part, this attitude is explained by the remote relevance of much of the discovery conducted today; the

judge simply is not interested. In addition, lawyers frequently approach discovery on the premise that they should avoid all surprises at any cost. This attitude

generally adds another layer of lawyers to each side of the

dispute, generally younger lawyers who use the process as a learning experience. We are even witnessing the emergence of the "litigation paralegals."

Fewer Trials While it is true that this approach results in fewer

surprises at trial, it also has produced fewer trials and added greatly to the cost of litigation. One reason for fewer trials is arguably that discovery has narrowed the issues sufficiently to make settlement possible. Too often, however, the incentive to settle comes from the client's desire to stop pouring his money into a bottomless pit of

discovery. In short, the client would rather lose his arm than bleed to death having it repaired.

Too many lawyers and judges ignore the fundamental issue of whether uncontrolled and endless discovery is a cost-effective and fair basis for resolving disputes. What can be done to redress the balance and assure that

discovery is used more judiciously? One approach would

place the onus on the party seeking discovery. Instead of

allowing a party to conduct as much discovery as desired, subject to the other party's efforts to obtain protective orders, the party seeking to conduct discovery would first have to file a motion outlining the information sought and the discovery techniques necessary to obtain that information. Admittedly, this is a radical shift from the current approach to discovery. It raises the potential of more delay and expense caused by parties rushing to court

seeking permission for depositions and interrogatories. However, requiring such motions would force attorneys and courts to consider the need for the discovery and to demonstrate its reasonableness.

Another, and perhaps more attractive, approach would

bring the court into the discovery process at the beginning of a case to shortcut some discovery and to take a more active role in managing the discovery that is permitted. After the case is at issue, the court should order the immediate production and exchange of all documents and other information used as a basis for the pleadings. Such a

procedure is now used by several federal judges in the

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Central District of California. In addition, the order can

require the parties to meet and submit to the court within 30 days a joint schedule for pre-trial discovery. Once established, the discovery schedule could not be modified without leave of court. The court also could establish a

schedule, setting the date for completion of discovery and trial, and insist upon strict adherence to the timetable.

When the Los Angeles County Superior Court instituted a firm "no continuance" policy, its backlog was significant? ly reduced.

These procedures could result in increased discovery orders. However, this effect might be avoided if the court

vigorously exercised its power to assign costs against the

party losing a discovery motion, except when there is a

genuine question of law. Such a policy has been employed by a federal judge in Colorado and has resulted in a

significant reduction in the amount of discovery disputes. An active role by the judge, combined with limits on the amount of discovery and the time within which it is to be

completed, can be effective methods of speeding up the

pre-trial process and reducing discovery expense.

Settlement Such measures also create an atmosphere conducive to

settlement. While most courts are aware of the significant percentage of cases which settle before trial (most report well over 50 percent), too few courts make any effort to assist in pre-trial settlement. Those courts which make such an effort do not do so soon enough. One of the most

opportune times for a court to explore settlement with the

parties?a time now ignored by most courts?is after the

parties have submitted discovery proposals, but before

they have embarked on and incurred the expense of their

discovery. In most jurisdictions with formal settlement conference procedures?such as the California State Court system and the United States District Court in Minnesota?settlement conferences are not conducted until shortly before trial. The usual rationale for deferring the settlement conference is that the parties are better

prepared following discovery and while engaged in trial

preparation. Moreover, the parties are then feeling the full pressure of an imminent trial date. While that rationale justifies holding a settlement conference on the eve of trial, it does not justify failing to call a settlement conference earlier.

An earlier settlement conference, soon after the case is at issue, could lessen the number of cases that are settled on the courthouse steps. It would permit an independent third party to assess the settlement potential after the scope and cost of discovery is projected but before either

party invested a great deal of time and money. Too often the response to a seemingly reasonable settlement

proposal is that "I cannot afford to settle at that figure; I have too much invested."

Seasoned litigators report that most settlements take

place in one of three time periods?before any pleadings are filed, immediately after the pleadings are filed but before any extensive discovery, and after extensive

discovery but immediately before trial. While the judicial system cannot participate in the first opportunity for settlement, it should not lose either of the other two. One reason why cases are ripe for settlement immediately after

filing of pleadings, but before discovery, is that most

persons by then have regained control of their emotions and are better able to assess the economic advantage of

pursuing a lawsuit. The plaintiff has forced the defen? dant to respond to a civil process, and the defendant has had his opportunity to deny the complaint, and quite often, file a counter-claim. Moreover, an early settlement

conference at this stage would avoid the delay frequently caused by each party's posturing to have the subject of settlement first raised by the other side. There is thus

ample reason for the judicial system to explore the

strengths and weaknesses of a case and provide settlement direction shortly after the case is at issue.

In addition to focusing on the timing of any settlement conferences conducted by a court, thought should be

given to the structure of a settlement conference. Settlement conferences should be inexpensive, both in time and money. However, as a minimum, the parties in interest should be required to be present in person and each side to the dispute should be required to file a short statement of the case outlining his contentions and

identifying the principal issues for trial. Compulsory attendance of the parties promotes earlier settlement by avoiding the problem of counsel being unable to commit a client to a settlement offer and permitting settlement offers to be assessed before the atmosphere for settlement

dissipates. The statement of the case forces preparation upon the attorneys and serves to educate the court. Both are prerequisites to any meaningful settlement

negotiation.

Avoiding Prejudice Finally, the settlement conference should be conducted

by a judge other than the one before whom the matter will be tried if settlement negotiations fail. To have the trial

judge conduct a formal settlement conference raises the

possibility that, as a result of his role in promoting settlement, the judge may become prejudiced regarding the merits of the case. There also is the danger that the

judge's own interest in promoting settlement, whether for

ego satisfaction or the desire to reduce his workload, will

unduly conflict with the rights of the parties and thereby prompt the use of unfair settlement pressures.

To avoid these potential dangers, California requires that the judge who presides at trial be different from the one who conducts the mandatory pre-trial settlement conference. While California works on a master calendar

system, jurisdictions using the individual calendar system could give the responsibility for conducting a settlement conference to a judge other than the judge assigned to the case, or to a magistrate. For example, the United States District Court for Minnesota assigns compulsory settlement conferences to a magistrate who has broad trial experience.

These proposals merit consideration and discussion. Other ideas which recognize the judicial system's inability to respond to the present heavy caseload should also be

analyzed. Implementation of reform could ameliorate

many of the obstacles in the path of those who seek the aid of our judicial system at a reasonable cost. Achieving this

goal is more than a great challenge to the legal profession. It is the profession's clear obligation.

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