Monday, December 12, 2011

Making the Other Side Pay

One of the maddening inequalities in employment litigation is the fact that attorneys fees are routinely awarded as part of damages to a successful plaintiff; a successful defendant must bear its own attorney expenses and normally is only entitled to recover so-called "costs", typically things like filing fees, or document copying expenses. Only in the rare case are recoverable costs significant enough to offset in any meaningful way the attorney expenses borne by a successful defendant. The unfortunate truth is that a plaintiff's attorneys fees are often a significantly greater financial threat than the award of back wages, or other compensatory damages, and can be a major factor for defendants in determining whether to move forward with the case, or simply settle to avoid the risk of a large award.

Electronic discovery, however, offers opportunity for defendants to level this playing field a little. Several recent cases, admittedly in more commercial settings, have held that a prevailing defendant is entitled to recover its electronic discovery costs, including the costs associated with converting electronic data into mutually usable file formats, and costs associated with electronic discovery project management.

Now the typical employment case does not involve the production of thousands of pages of information, or require significant e-discovery efforts. But in situations where a defendant is opposing a class-action with several hundred or even several thousand potential plaintiffs and their associated personnel files or wage payment records, recoverable e-discovery costs could easily top $30-$40,000. Confronting an employment plaintiff with a threat of having to pay that amount in the event of a loss would be a powerful tool for settlement purposes.

Several examples are here and here. And this case actually involved an employment claim; the defendants sought the award of discovery costs to potentially offset any award of attorneys fees as a result of the plaintiff's successful ERISA claim.

So keep track of e-discovery efforts and costs in litigation--they might be as useful a lever for resolution as a piece of important evidence.

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