Navigating Rough Waters: A Pre-Litigation Compass

• Published date: 01 April 2024
• Subject Matter: Insurance, Litigation, Mediation & Arbitration, Insurance Laws and Products, Arbitration & Dispute Resolution
• Law Firm: Butler Snow LLP
• Author: Alexander S. De Witt and Joel W. Morgan

I. Introduction

By one estimate, more than 40 million lawsuits are filed every year in the United States.¹ As noted by the English poet George Herbert, "[l]awsuits consume time, and money, and rest, and friends."²To be sure, lawsuits are often time-consuming, disruptive and expensive, which explains why President Abraham Lincoln famously counseled the legal profession: "Discourage litigation. Persuade your neighbor to compromise whenever you can. As a peacemaker the lawyer has a superior opportunity of being a good man. There will still be business enough."³ Inevitably, however, accidents, catastrophes and other injury-producing events beget lawsuits. It is therefore imperative that you (or your business) implement proper measures as soon as possible to assess risk and posture yourself (or your business) for the best possible outcome.

To that end, early retention of counsel can greatly increase the likelihood of a swift, positive outcome following an accident or occurrence. Developing and implementing a proper response and plan during the pre-litigation stage of a claim can be just as critical as the response and plan developed after litigation begins. Depending on the nature of the incident and the type of claim, a proper response may include:

• An early, pre-suit investigation, including interviews of key witnesses and review of relevant documents and data;
• Reviewing all applicable contract documents, including any mandatory arbitration / mediation agreements, as well as any hold harmless / indemnification clauses;
• Promptly notifying all liability insurers of a potential claim in accordance with the policy terms and conditions;
• Developing and implementing appropriate evidence / data preservation protocols to ensure that all relevant, discoverable facts and data (including electronically stored information ("ESI")) are identified, collected, reviewed and preserved for use in the case and/or production in discovery, if the need arises;
• Early retention of consulting experts who can assist with the pre-suit investigation and evaluation of the claim;
• Evaluating the strengths and weaknesses of the claim alongside any available affirmative defenses, depending on the laws of the relevant jurisdiction; and
• When appropriate, participating in mediation or alternative dispute resolution in an effort to resolve the claim before it proceeds to litigation.

Each case is different and may require consideration of other factors. As discussed below, the benefits of hiring an attorney soon after an accident also include the protections afforded by the attorney-client privilege and work-product doctrine, as well as the attorney's knowledge of applicable laws, experience handling similar claims and ability to evaluate the strengths and weaknesses of the claim. If litigation cannot be avoided, early retention of an attorney will help ensure you have made every effort to posture the claim for the best possible outcome.

II. Attorney-Client Privilege and Work-Product Doctrine

One of the primary benefits of hiring an attorney is the attorney-client privilege, which safeguards the client's ability to engage in confidential communications with an attorney. The attorney-client privilege protects "[t]he client's right to refuse to disclose and to prevent any other person from disclosing confidential communications between the client and the attorney."⁴ Under the Federal Rules of Civil Procedure, privileged communications between the lawyer and client are protected from disclosure in civil litigation, and unless the privilege is waived, will not be discoverable.⁵

Closely related to the attorney-client privilege is the work-product doctrine, which provides for "qualified immunity of an attorney's work product from discovery or other compelled disclosure."⁶ As defined by the Federal Rules of Evidence, "work-product protection" means "the protection that applicable law provides for tangible material (or its intangible equivalent) prepared in anticipation of litigation or for trial."⁷ The Federal Rules of Civil Procedure extend this protection to "documents and tangible things . . . prepared in anticipation of litigation or for trial by or for another party or its representative."⁸

These protections are by no means bullet-proof. For example, in Pennsylvania (as in most jurisdictions) the "[a]ttorney-client privilege will not ordinarily attach to communications made in the presence of a third party, and disclosing privileged communications to a third party waives the privilege."⁹ In Federal litigation (as in many States), privileged or protected material that is inadvertently disclosed may be "clawed back," assuming reasonable steps have been taken to prevent disclosure and to rectify the erroneous disclosure.¹⁰

Although the work-product protection generally shields documents and tangible things prepared in anticipation of litigation by or for a party's attorney, consultant, insurer, etc., determining when something is done in anticipation of litigation involves a fact-driven analysis. While Federal Rule of Civil Procedure 26(b)(3)(A) expands the protection to include activities performed by non-attorneys, courts have found that retention of counsel is a "highly relevant" factor when determining whether an activity was performed in anticipation of litigation.¹¹ The work-product doctrine is a safe haven that protects an attorney's mental process so that she or he can properly analyze and prepare the client's case.¹² There is a risk that the protection may be overcome once litigation ensues if the adversary demonstrates the information is otherwise discoverable and "that it has substantial need for the materials to prepare its case and cannot, without undue hardship, obtain their substantial equivalent by other means."¹³ Demonstrating "substantial need", however, is a difficult burden to meet. As noted by the Advisory Committee when enacting Federal Rule of Civil Procedure 26(b)(3), "the substantial need inquiry 'reflects the view that each side's informal evaluation of its case should be protected, that each side should be encouraged to prepare independently and that one side should not automatically have the benefit of the detailed preparatory work of the other side.'"¹⁴ A party seeking disclosure of protected work-product materials "must demonstrate that its need is truly substantial, and that there is no reasonable substitute for the documents."¹⁵

In practice, the protections afforded by the attorney-client privilege and work-product doctrine are real and courts will enforce them, subject to limited exceptions. For purposes of evaluating a claim and assessing risk at the pre-litigation stage, these protections generally afford both the attorney and client the flexibility required to properly investigate a claim, interview key witnesses, work with the client's insurers, work with...