Pub. 4 2014 Issue 1

6 www.azbankers.org We’ve Been Sued! What to look for in retaining outside litigation counsel By Christian C.M. Beams , Ryley Carlock & Applewhite A s 2013 comes to a close, we see signs of market improve- ment, and with it, the transition of much of your routine outside counsel needs to “bor- rower pay” transactional matters. However, market improvement often brings an increase in lender liability claims. After all, in good times, stra- tegically wayward borrowers can no longer simply point to poor financials in trying to leverage a discount. As any of your banking colleagues will tell you, lender liability claims can potentially be a high dollar exposure, and given their intensely factual nature, often very expensive to defend. So how does one effectively manage what could become a large, unbudgeted line item? It starts with the basic premise that any professional you hire – lawyer included – needs to be more concerned about your organization’s bottom line than his or her own. A few subtleties can help you decide whether your hired pro- fessional’s focus is where it ought to be: First, upon the initiation of a lawsuit, your lawyer should discuss economics. While litigation can be unpredictable, every decision along the way should be met with whether the benefit in execut- ing a particular action is worth the cost that comes with it. Second, your lawyer should be calm, not allowing emotion to weigh into his or her recommendations. If he or she is expressing anger at the other side, such emotions will do little more than increase your litigation bill. Third, it is vital that your attorney be responsive. There is no justification for COUNSELOR’S CORNER not returning a telephone call or email promptly. If your attorney is routinely difficult to reach – regardless of the excuse – it may be time to consider someone else. Fourth, your lawyer should take an interest in your business objectives and processes. They should come to you when appropriate, and do what they can to make your life easier. This is not to say that your attorney should handle tasks more efficiently handled in house. In a collection matter, for example, an efficient attorney will ask a banker to perform such things as interest calcula- tions or ask whether your institution has a financial diligence method for investigating defaulting borrowers. Such requests show the desire to keep defense costs in check. Fifth, and perhaps most impor- tantly, your lawyer should be resolution focused at every step and always be looking to narrow the focus of a lawsuit by resolving ancillary issues. Litigation is the ultimate unknown – while you have control over how you develop your positions, a litigant ultimately has no control over what the Court decides. There is control in settlement negotia- tions, however, and you increase the likelihood of success in court when you can reduce the number of issues you are asking it to resolve. Lawsuits are, unfortunately, an inevitable part of the banking business. Your goal in retaining proper litigation counsel, when that need arises, should be to find the one who will provide your organization with the greatest likeli- hood of success in as efficient a manner as possible. Keeping the above in mind will help you determine if the right per- son is representing your institution. w For more information contact Christian C. M. Beams at (602) 440- 4818; cbeams@rcalaw.com . Chris is a shareholder in the bankruptcy, lending and commercial litigation practice groups at Ryley Carlock & Applewhite.