Litigation caseload — and spending — is going up, with 2023 seeing a 10% increase over a record-breaking 2022, according to BTI Consulting's Litigation Outlook 2023, which found that 90% of clients were expecting to maintain or add to in-house legal budgets in 2023, driven primarily by an increase in litigation.

The end result of such an increase is that in-house counsel may find themselves called to opine on the risks and benefits of litigation more often.

In a more litigious environment, where legal spend is being monitored more closely, these decisions can be particularly challenging. Such an environment can also hold long-term opportunities if in-house counsel is well prepared.

In a recent conversation, a large holding company's general counsel said he viewed litigation, either as a plaintiff or a defendant, as an opportunity to play the long game.

When I noted that many general counsel view litigation as something to be avoided at almost all costs, he explained that when circumstances are favorable to the company, he would not hesitate to enter litigation if he thought the end result was achievable and beneficial in the long term — even if it carried risk and expense in the short term.

His comments reminded me of Sun Tzu's "The Art of War" — strategic insights borne of long experience.

That got me thinking: Given that litigation can sometimes feel like a battle, what would the ancient Chinese strategist think of modern litigation? What follows are strategic considerations for commercial litigation, liberally adapted from Sun Tzu's maxims.

Take Out Emotion

No ruler should put troops into the field merely to gratify his own spleen; no general should fight a battle simply out of pique. If it is to your advantage, make a forward move; if not, stay where you are.

Most corporate counsel are familiar with the moment when a business leader calls, furious over a letter received or action taken, and demands that counsel do something.

By instinct, many general counsel will do their best to dissuade their angry colleague because they know, probably much better than the business leader, what they are being asked for and what it entails.

Yet, in-house counsel are most valuable when they can dispassionately evaluate all circumstances and determine whether, despite the discomfort and difficulty, litigation may be the best option. If it is to your advantage, make a forward move.

In-house counsel are most valuable when they can dispassionately evaluate all circumstances and determine whether, despite the discomfort and difficulty, litigation may be the best option.

For instance, a multinational client of mine was once faced with a flurry of small lien suits that raised exactly the pique Sun Tzu warned about — where did all these suits come from, Jeff Golimowski and why are they draining my time and budget now?

Individually, none of them were cost-effective to fight — but together, the total exposure was significant.

Spread across a variety of jurisdictions with similar fact patterns, the client and I determined that settling all of them was inadvisable. Even though it would cost more than any individual case's demand to litigate, a favorable verdict in one could be used as precedent to attack the others.

The result was a careful analysis of the cases asserted and an informed decision to litigate a handful of cases. Following a few favorable decisions, settlement negotiations in the remaining cases were generally short and favorable to the client.

Preparing to Fight

The art of war teaches us to rely not on the likelihood of the enemy's not coming, but on our own readiness to receive that enemy; not on the chance of the enemy not attacking, but rather on the fact that we have made our position unassailable.

Like most litigators, I'm often asked for advice during a transaction as to the potential risk involved in specific circumstances: What happens if we take action X? Will we be sued? What's the likelihood the enemy is coming?

Unlike determining whether to initiate litigation, where control rests with the client, it's impossible to figure out if and when a potentially adverse party will bring suit. Just as a good prosecutor can convince a grand jury to indict the proverbial ham sandwich, a good litigator will find a way to sue that same ham sandwich for fraud.

Involving litigators prior to transactions or major actions that carry risk can dramatically improve your chance of winning if you do find yourself in a lawsuit.

Involving litigators prior to transactions or major actions that carry risk can dramatically improve your chance of winning if you do find yourself in a lawsuit.

Making one's own position unassailable means inserting language into deals providing for indemnity, control of the defense, and choice of law and venue that will be most favorable to your side, which litigators are often in the best position to identify.

While the sides in a deal are looking to best-case scenarios, litigators are used to dealing with the aftermath of a deal going sideways. Involving the people who will fight the battle in choosing the ground on which that battle will be fought will not stop the battle, but it will make the battle more easily won.

Follow the Goal, Not the Fight

In war, then, let your great object be victory, not lengthy campaigns.

In hard-fought, contentious litigation, every individual motion or deposition can take on outsized importance.

When you've been fighting an intransigent opponent for three years, a ruling on a motion to continue suddenly becomes the most important decision since Brown v. Board of Education. Your litigators are fighting the lengthy campaign, but your object, as a general counsel, is victory in your business objectives.

To achieve this balance, it's important to identify the goal of a litigation as early as possible and subject that goal to constant reevaluation.

Perhaps you are choosing to bring suit in order to obtain a favorable judicial ruling that can be used as precedent in other actions; that may mean you want your litigators to go to trial and win. This necessitates a dramatically different litigation strategy from trying to end a case — and consequent resource stress — as soon as possible.

Hence, communication with your outside counsel on the ultimate goal is critical.

While it is tempting to expect outside counsel to concentrate on "winning" and letting in-house counsel worry about the time to end the war, if your definition of victory is not communicated to, or aligned with, outside counsel, you may find yourself at odds with your litigators and fighting battles where tactical withdrawal may be a better move.

Reaching Victory

When you surround an army, leave an outlet free. Do not press a desperate foe too hard.

Human nature being what it is, it is tempting after a long litigation to demand nothing less than unconditional surrender.

The key here, however, is that even when victory appears secure, in-house counsel need to be prepared to be magnanimous and offer a settlement on reasonable terms.

Even when victory appears secure, in-house counsel need to be prepared to be magnanimous and offer a settlement on reasonable terms.

For instance, I had a case where it was obvious the other side would ultimately lose. Settlement offers were initially rebuffed, forcing us to proceed with briefing and discovery.

My client's general counsel was, understandably, frustrated at the expense involved and what we perceived to be the utterly irrational nature of the other side. Nevertheless, the in-house counsel made a point to step back prior to a major hearing and authorize one more attempt at settlement.

Even though we had the opposing party "surrounded" and were headed for near-certain victory, my client's general counsel recognized that even the most unassailable legal position could be overcome in strange circumstances.

Offering settlement terms that were on par with those put forward prior to briefing resulted in a settlement that eliminated all possible risk, and the nominal amount saved was still less than what my client would have spent to obtain total victory.

Leaving the avenue open for the opponent to retreat in this instance ensured a more satisfactory and cost-effective outcome than forcing the other party to fight to the end.

Recognition

What the ancients called a clever fighter is one who not only wins, but excels in winning with ease. Hence his victories bring him neither reputation for wisdom nor credit for courage.

Let's end with a counterintuitive truth: One of my favorite law school professors always reminded his students that if one is left with the feeling that a lawyer won the case despite the odds, the lawyer failed. It's up to the attorney to present their case in such a way as to make the outcome appear blindingly obvious, so much so that an observer is inclined to say, "Well, anyone could have won that case!"

In other words, "victories bring him neither reputation for wisdom nor credit for courage" when a general wins "with ease."

When justifying outside counsel's cost or even the necessity for litigation, nonlawyer business leaders may easily fall into this mindset: Of course we won, the case was simple. So why did it cost so much? Or, why did we settle?

The case looked easy because in-house and outside counsel worked together to identify the litigation's goals, develop the facts and legal arguments necessary to reach that goal, adjusted the strategy as the case evolved and ultimately executed the strategy to reach the goal.

What looks easy is actually the result of huge amounts of effort behind the scenes.

Ultimately, setting expectations can alleviate this concern. If counsel has been providing dispassionate and cleareyed evaluations of exposure and risk throughout, the value of the victory — and the victory's architect, the general counsel — will be apparent.