There’s No Litigation Line Item on Your P & L
Before joining FPL/Next Era, I never had a complete appreciation for how legal bills impacted our clients. I recall in the heyday of the white-collar litigation involving the likes of Tyco, Qwest, Adelphia, and Enron, that monthly bills just for document review tended to exceed $1 million, for cases of that type.
Once I got to FPL/Next Era, I realized the severe impact that legal bills had upon profitability and operations. It even affected the personal compensation and bonuses for those responsible for controlling profit and loss, even if they had nothing to do with the cause of the litigation. I soon realized that litigation expense was highly impactful to the bottom line. I noted that there was no line item for potential litigation in any corporate P & L, because that type of unplanned, unbudgeted for expense was fatal to the success of any business unit.
Even for a gigantic company with deep pockets, litigation expense that was unplanned for was unbudgeted, and was sure to have great impact upon the fate of those working within an area or department of the company that was subject to litigation.
I learned at that time that, well before the American Bar Association’s Standing Committee on Professionalism published The Relevant Lawyer – Reimaging the Future of the Legal Profession, that even big companies suffered mightily under the weight of litigation expense.
I learned then and there that the best approach to minimize legal expense was proper planning, assessment of risk, negotiation of agreements to avoid risk or to have risk borne by the party most appropriate to do so.
Since that time, we have made it our mission to guide companies through disputes in the most cost of cost-effective way possible, and also to shore up and tidy up corporate operations, agreements and other risks, to minimize or avoid legal expense, and avoid litigation expense.
By David Markarian