Wisconsin Business and Commercial Litigation

In Ciccantelli v. Bishop’s Grove Condo Association, 2011 WI 36, the Supreme Court addressed a challenge by Bishop’s Grove to the attorney representing the Ciccantellis.  Opposing parties often make noise about conflicts of interest, but typically, unless there’s a current conflict or past representation on an issue directly related to the case, it goes nowhere.  Here, though, the Supreme Court broadened the standing requirements for parties to disqualify opposing counsel. 

The main issue was whether a nonclient party (one who is not a former or current client of opposing counsel) had standing to to move for disqulification of opposing counsel.  The court, in a bit of a fractured opinion, found that they do, but disagreed about how to make that decision.  Justices Abrahamson, Bradley, and Crooks, joined in part by Justice Prosser, effectively broadened the standing requirements to include nonclient parties.  Justices Roggensack, Gableman, and Ziegler agreed that the requirements should be broadened, but disagreed on the analysis required for the determination. 

In short, this case means that nonclient parties can move to disqualify opposing counsel when opposing counsel (or his or her firm) has has represented a nonparty on matters closely tied to the case.  For more analysis of the decision, have a look at Joe Forward’s article for the State Bar of Wisconsin.  This decision is sure to bring a rise in disqualification motions as parties and lawyers test the parameters of the new standards.

My favorite chamber of commerce, the Muskego Area Chamber of Commerce, located in my hometown of Muskego, has invited me to speak to the members about how to work with a lawyer.  There will be two sessions, the first on Monday, September 13, at 5:30 p.m., and the second on Tuesday, September 14, at 8 a.m.

I’m going to talk about three tips that will help a client (that is, you) work with a lawyer more efficiently and more effectively.  The discussion will last about an hour, but the three keys will help save money and contribute to a more successful relationship with your lawyer.

If you’re interested in attending, you can register here.  Hope to see you there.

In the Wisconsin Law Journal, Jack Zemlicka comments on a so-called “litigation prenup” that aims to make litigation more efficient.  These types of agreements may limit the amount or type of discovery, require pre-litigation dispute resolution techniques, both formal and informal, or identify particular issues or information that is off-limits in the event of a later dispute.  As always, Zemlicka makes good points, but in this case he doesn’t discuss the risks of agreeing now on how to disagree later. 

Negotiating the agreement early in the relationship, when each party is anxious to do business with the other, carries both risks and benefits.  One obvious benefit is that, during the honeymoon stage, neither party believes that the relationship will later sour, much less end in the courtroom — as a result, the negotiation of limits on future litigation is much easier than hammering the same agreements out between opposing counsel after the suit’s been filed.  On the other hand, that same honeymoon stage feeling can cause a party to give away more than is prudent to get the deal done, perhaps negotiating away the one unforeseen advantage it may have when the process server comes knocking.  As we trial lawyers are fond of saying (at least I am), you can plan for everything but what actually happens.

While the litigation prenup is based on a great theory — that everyone wants efficient litigation — it has its drawbacks, and should be entered into carefully, if at all.  Many of the same benefits can be later realized by hiring reasonable counsel (as I’ve previously written about) without the risk of dealing away advantage. 

Handshake courtesy AndyRob’s flickr gallery via this creative commons license.

I’m working with Chris Schilder, litigation counsel for Safway Services, on a presentation for the upcoming conference of the Wisconsin Chapter of the Association of Corporate Counsel.  Chris and I will talk about managing contract litigation, identifying for you three recurring traps and how to avoid them, or better yet, turn them to your advantage.  Chris works on contract litigation every day, all day.  He knows his stuff.

I know I wouldn’t miss this conference.  The event happens on May 20-21 at the Osthoff Resort in Elkhart Lake, Wisconsin.  Corporation counsel from around the state get together to discuss issues of common concern, share war stories, get some inexpensive CLE credits, and just hang out for a couple of days.

You can register here.  There’s less than a month to go, and Carrie Booher, director of WisACCA, tells me that registrations are coming in quickly.  It should be a great program — I encourage you to come out and take part.

WisACCA logo courtesy WisACCA.

As I’ve mentioned in previous posts, I’m going to be attending the spring conference of the Wisconsin Chapter of the Association of Corprorate Counsel, which happens on May 20-21 in Elkhart Lake (more information here).  Chris Schilder, litigation counsel for SafWay Services, and I will be talking with the members about managing contract disputes, and specifically about three areas that apply uniquely to in-house counsel.

Our discussion, one of many presentations as you can see from the materials, is going to touch mainly on three areas:  managing ongoing business relationships while in a dispute, what problems can arise from scope of work descriptions, and the impact of indemnification provisions and potential funding for litigation.  Chris and I have been working together on this for a while now and look forward to providing some insight and assistance to WisACCA members and anyone else who attends.

Although Wisconsin’s rules of civil procedure don’t currently deal specifically with e-discovery, the spectre of continuing increases in the number of cases that require it may force action sooner rather than later.  Jack Zemlicka of the Wisconsin Law Journal writes:

According to the Wisconsin Judicial Council, about 25 other states are considering or have already implemented rules incorporating elements of the 2006 amendments to the Federal Rules of Civil Procedure pertaining to e-discovery.

The Judicial Council recently presented a petition to the state Supreme Court seeking many of the same updates, including enabling parties to specify the form or forms in which electronically stored information is to be produced and a “safe harbor” provision that would prohibit court sanctions if a party fails to produce electronically stored information lost as a result of routine operation of a system

The Council is also recommending that business records be allowed to be produced in electronic form and that parties be permitted to request an opportunity to test or sample materials sought in addition to inspecting and copying them. However, the petition includes commentary from the Federal Rules of Civil Procedure Advisory Committee notes stating that “courts should guard against undue intrusiveness resulting from inspecting or testing such systems.”

One of the major problems with the current proposal, points out Zemlicka, is that there is no claw-back provision.  Given the volume of production and the time required to review the information, claw-back has become a mainstay of the federal system.  Of course, nothing official has happened yet, but stay on your toes — it’s sure to impact you one way or another.

Photo courtesy Robert S. Donovan’s Flickr gallery under this creative commons licence.

Last week, I wrote about the Shadley case, and encouraged that care be taken in selecting causes of action and damages when there’s an attorney fee clause in the underlying contract.  There are other lessons to be taken from that case, though, that apply to lawyers and clients alike.

It’s not unusual for clients to have unreasonable expectations, and for lawyers to do too little to correct the belief.  In Shadley, we can’t tell whether it was the client that wanted the damaged piano and her daughter’s education paid for, along with repainting a variety of rooms in the broken home, or whether it was the lawyer who encouraged the claims.  In the end, I guess it doesn’t really matter.  We just know that it didn’t turn out well because expectations weren’t adjusted.

It’s the responsibility of both lawyers and clients to work together to set reasonable expectations about the outcome of a dispute.  Clients come to lawyers to benefit from our experience and training — let’s face it, pretty much anyone can describe a dispute in writing and file it with the court.  That’s hows small claims court functions. 

Clients need to remember that part of what they pay for is our role as counsel:  our detachment from the emotion of the dispute and our ability to dispassionately weigh the evidence and arguments on both sides.  Sure, the advocacy part of the relationship is a big one, but that’s based upon a rational judgment as to what arguments and evidence are most convincing to someone who doesn’t care who wins or loses. 

Lawyers, for their part, should immediately share their opinions about expectations, and begin to educate clients on the possible outcomes of the dispute.  The Shadley case demonstrates that when the lawyer/client relationship doesn’t function completely properly, it can be costly.

Read what Hinshaw & Culbertson LLP’s Steve Puiszis writes about the Seventh Circuit’s new electronic discovery pilot program.  As everyone’s aware, electronic discovery necessitated changes to procedural rules in courts across the country.  The Seventh Circuit’s program is road-testing approaches to the issue.  If you or someone you know is involved in a case that’s been selected to take part, have a look at Puiszis’s post.  It’ll be worth your time.

There are all sorts of reasons to enter into, and continue with, litigation.  Not that anyone enjoys the process.  Much of the time, even plaintiffs feel as if they have been forced into it by the actions of others.  For many, however, business strategy demands certain litigation decisions and strategies.  This approach derives from a more complete view of the client and its goals.

For instance, certain insurance companies will take any case to trial that has a legitimate defense.  Likewise, many professionals choose to litigate rather than pay an early settlement demand.  The result for the plaintiff (and often, the defendant, as well) is the same, but the motivation, and business reasons for the decisions, are different. 

The insurance company develops a reputation as a tough defendant, and in the process hopes to obtain more favorable offers of settlement from future plaintiffs.  The professional protects his or her reputation (and perhaps a license). 

Civil litigants, when considering entering into, defending, or negotiating to conclude litigation, should be motivated first by their business goals.  Litigation should be used as a tool to protect hard-won marketplace positions, or to obtain a competitive advantage.  It is not an end in itself, but rather part of a complete strategy for business success.

In Donaldson v. West Bend Mut. Ins. Co. (August 4, 2009), the court of appeals addressed the statute of limitations relating to personal injury counterclaims.  After Berg hit her with his bicycle on October 3, 2004, Donaldson filed a September 27, 2007 lawsuit against Berg and his insurance company.  Insurance defense counsel filed an answer and affirmative defenses, but Berg hired separate counsel to pursue a counterclaim against Donaldson for causing injury to Berg.  Berg’s counsel filed a counteclaim on December 14, 2007, outside Wis. Stat. s. 893.54’s three year statute of limitations for personal injury claims.

The court concluded that the statute of limitations applied to personal injury actions, whether or not brought as counterclaims.  However,

While it is true that Wis. Stat. § 893.54 references only “actions” and not counterclaims, Wis. Stat. § 893.14 provides the link between §§ 893.14 and 893.54.  Section 893.14 provides:

Limitation on use of a right of action as a defense or counterclaim.  Unless otherwise specifically prescribed by law, the period within which a cause of action may be used as a defense or counterclaim is computed from the time of the accrual of the cause of action until the time that the plaintiff commences the action in which the defense or counterclaim is made.  A law limiting the time for commencement of an action is tolled by the assertion of the defense or the commencement of the counterclaim until final disposition of the defense or counterclaim.  If a period of limitation is tolled under this section and the time remaining after final disposition in which an action may be commenced is less than 30 days, the period within which the action may be commenced is extended to 30 days from the date of final disposition.

Because the statute of limitations was tolled from the date of the plaintiff’s filing, the counterclaim was timely.

The reason this became an issue at all is because most insurance companies refuse to pay for anything more than pure defense, even if a colorable counterclaim will provide great leverage.  The position can be shortsighted, often leading to later problems when settlement is being seriously discussed, and the plaintiff wants a package deal including the counterclaim that now belongs to the insured defendant. 

Ideally, talk with your insurer early and in detail about the usefulness of potential counterclaims and the role they’ll play (if any) in defense.  It may prevent your case from being the next reported statute of limitations case out there.