Re-Opening in the Face of COVID-19 Challenges: Guidance for In-House Litigation Counsel

Over the past year and a half, the United States judicial system has faced unprecedented challenges as a result of the COVID-19 pandemic, and in-house counsel and outside litigation teams have had to quickly adapt to the differing approaches of courts across the country. Courts have begun a return to normalcy;¹ however, particularly with the continuing threat of variants (most recently, the Delta variant), some courts are returning to social distancing and masking requirements and others are considering what COVID-19 precautions need to be taken yet again based on rapidly changing local conditions.²

One constant in the uncertainty is that the judicial system will feel the effects of the pandemic for years to come. In particular, many courts are facing a significant backlog of cases due to adjourned discovery deadlines, extended briefing schedules, or delayed proceedings.³ Courts are also facing an appreciable increase in civil cases related to COVID-19 issues.⁴ As the post-pandemic world will be a reality for some time, it will likely prove difficult to have civil cases tried on the timelines initially contemplated.

Pending Litigations

In an effort to address backlogs, courts have increasingly encouraged (and have even ordered) litigants to engage in settlement conferences or mediation through court-administered programs and private channels.⁵  Consider the following to maximize the value of these dispute resolution methods and effectively manage your cases.

Evaluate the status of your pending cases and how best to leverage Alternative Dispute Resolution (ADR) methods. Settlement conferences and mediation can be incredibly useful tools to litigants in efficiently resolving disputes; however, these processes can be a wasted effort if engaged in without adequate planning by the parties. This may especially be the case now that courts are encouraging or requiring ADR participation in an effort to manage their backlogs. Outside counsel can be useful in assessing the strengths and weaknesses of your litigation position, evaluating the stage of the proceedings, and developing a strategy for moving forward given the COVID-19 delays that have hampered the judicial system. Even where a complete resolution is not possible, or previous settlement or mediation discussions have failed, parties can use these discussions as an opportunity to narrow the issues and scope of discovery or negotiate a streamlined dispute resolution process moving forward. This can greatly benefit life sciences companies, in particular, which may be facing increased litigation risk as a result of the COVID-19 pandemic.

Consider potentially creative solutions to having your dispute heard. Settlement conferences and mediations are not the only means to facilitate resolution in the face of a backlogged court system. You should evaluate all available options, and outside counsel can be helpful in counseling you on what is likely to work for your pending litigations. For example, in federal court, litigants can consent to the jurisdiction of a magistrate judge, which can provide flexibility and potentially an earlier trial date.⁶ Certain states may also have special procedures in place (or may develop such procedures as a result of COVID-19) allowing litigants to use trials by a “special” judge or “non-judge,” who are often former judges or trial lawyers.⁷ Parties involved in complex litigation should also consider whether they would benefit from the close attention of a special master appointed by judges to handle discrete issues such as discovery, settlement, and damages. Lastly, consider whether a virtual jury or bench trial is feasible in full or in part. Many judges have commented that virtual courtrooms have increased efficiencies for trials, conferences, and other proceedings.⁸ Engaging with the court on creative technological solutions may help facilitate movement in your cases.

New Litigations

As for potential litigation, consider whether you have already agreed to a certain dispute resolution process, and if not, how you might want that process to look in the continuing and post-pandemic world.

Structure the terms of a dispute resolution process that takes into the account the realities of COVID-19 for your business. Parties, including in the life sciences space, have increasingly turned to arbitration during the pandemic due to a wide variety of benefits.⁹ In general, arbitration provides parties with flexibility to structure the process for having disputes heard in a manner that makes sense for the contract (and the parties’ relationship) at issue. For example, parties can choose which rules of evidence will apply, who will hear the dispute (e.g., how many arbitrators and with what qualifications), and whether there should be any limits on discovery or the presentation of evidence. In particular, there is the added benefit that arbitrations are private and strict confidentiality protections can be negotiated by the parties. In negotiating new agreements—or proposing amendments to existing ones—consider how COVID-19 has impacted your company and whether certain rules and carve-outs tied to your business needs are advisable. For example, the working world will remain partially virtual for some time and parties can anticipate that there will be a slowed ability to obtain documents and access to employees and third parties for case investigation, discovery, hearing, and trial purposes.

Keep in mind that arbitration is not a one-size-fits-all alternative to in-court litigation. While parties have increasingly turned to arbitration during the pandemic, companies should be mindful that traditional in-court litigation may be advantageous to your litigation position even in light of the potential for pandemic-related delays. In negotiating arbitration provisions, you should consider whether and how to incorporate carve-outs so that certain types of disputes can or are required to be heard in court. For example, M&A litigation can be heavily fact-dependent, and it may prove difficult to litigate a dispute without access to a full-borne litigation discovery process. Life sciences companies may also prefer in-court litigation, as opposed to arbitration, for intellectual property disputes to preserve appellate review by a court of those complex issues. Additionally, you should remember that, depending on the relief sought, there may be ways to seek expedited hearings in court for urgent disputes. Careful drafting of any carve-out in an arbitration clause is key, as a poorly worded provision can have the potential to create additional litigation over the meaning of that provision alone.¹⁰

Conclusion

We suggest you consider the above guidelines when assessing next steps in your current cases. If you would like to discuss these issues or any topic related to litigation in the current environment, please contact Kenneth Chernof (Co-Chair, Complex Litigation), James Herschlein (Co-Chair, Complex Litigation), or the author.

© Arnold & Porter Kaye Scholer LLP 2021 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.