As I mentioned a few minutes ago, the CEO of Blue Jeans Cable, a former litigator, responded pretty forcefully to a cease and desist letter from Monster Cable, alleging various forms of infringement. One of the things I liked about the Blue Jeans response was its detailed requests for additional information — “If you expect to persuade me, you had better start making full, open and honest disclosures; I will find out the facts sooner or later in any event ….” (Emphasis added; hat tip Jeff Nolan at Venture Chronicles.)
The horrors of lawsuit discovery
The Blue Jeans Cable approach recognizes one of the grim realities of U.S. litigation, which is the American legal system’s premise that “the law is entitled to every man’s evidence.”
Proceeding from that premise, the discovery rules allow adversaries’ lawyers to demand copies of each others’ relevant documents and to interview potential witnesses in depositions; one of the few limitations is that the requested information must be either relevant in itself or “reasonably calculated to lead to the discovery of admissible evidence.”
Disputes about discovery are one of the major reasons litigation is so expensive in this country:
- Party A’s lawyers demand that Party B produce copies of Documents X, Y, and Z;
- Party B’s lawyers object and refuse to comply;
- Party A’s lawyers file a motion to compel discovery; they spend lots of time writing a brief in support of the motion;
- Party B’s lawyers file an opposition to the motion, with its own brief;
- Party A’s lawyers file a reply brief;
- the judge orders an oral hearing — incidentally, there’s nothing judges hate worse than discovery disputes;
- the parties’ lawyers prepare for and attend the hearing;
- the lawyers’ meters are running the whole way.
Discovery disputes can also get in the way of coming to a sensible business resolution to the dispute: The parties and their lawyers get ticked off at each other, and over the money they’re spending on legal fees. As a result, they can sometimes have their judgment clouded about the true legal merits of their positions.
Cut the crap
In commercial litigation, it often makes sense for both sides to just cut the crap and exchange documents under a nondisclosure agreement, even before a lawsuit is filed. This lets the lawyers and management evaluate the case in a less stressful environment. It also improves the chances of coming to an agreeable settlement (not just a nuisance settlement) before the parties’ backs have stiffened.
When I was a software-company general counsel, I used this basic approach in quite a few disputes. It didn’t matter whether we were the potential defendant or the potential plaintiff: If preliminary due diligence suggested that the other side and its lawyers could be trusted to honor a nondisclosure agreement, I’d tell them something more or less like this:
- If our company is in the wrong, we want to know it early.
- We hope the same is true for you.
- If litigation were to come to pass, we’d each get the information we wanted during the discovery process anyway.
- So let’s put a nondisclosure agreement in place, and we’ll give your lawyer whatever s/he wants to look at that we can conveniently collect, as long as you agree to do the same for us.
- And then let’s talk, before we’ve both spent a ton of money on legal fees.
That approach generally worked out pretty well.
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