The primary time I ever heard the time period CYA was after I was finishing an Military ROTC program In Fort Knox, Kentucky. One of many drill sergeants advised me that this stood for “cowl your ass,” and generally you wanted to carry out sure duties so that you aren’t chewed out by a superior if issues go south. Though this expression undoubtedly applies to army life, it’s also relevant to many industries, together with the legislation. Generally, purchasers and attorneys alike have to take steps purely so they won’t get into an excessive amount of bother if one thing goes fallacious down the road. Nevertheless, taking a CYA perspective too far can value purchasers cash in sure circumstances, and purchasers ought to rethink some methods they might take to be able to defend themselves.
After I was an affiliate in Biglaw, I largely labored on a number of multibillion-dollar lawsuits that had been extraordinarily essential to the businesses concerned. After all, if a enterprise is engaged in a bet-the-company lawsuit, they’ll rent the most effective attorneys that they’ll, and they won’t care an excessive amount of about the associated fee. Nevertheless, as an affiliate in Biglaw, I as soon as needed to deal with a business lawsuit that was price possibly a mid-five-figure sum. It appeared odd to me {that a} shopper would rent our legislation agency, which prices a number of occasions greater than different retailers, to deal with this comparatively small matter.
I requested the companion why he thought we had been employed for this matter, and he gave me two attainable causes. First, we had a superb relationship with the shopper, so the shopper maybe didn’t wish to go looking for completely different counsel for this matter with whom it didn’t have a robust connection. Second, the companion mentioned that we’d have been employed for CYA functions. If the lawsuit went poorly, a higher-up would possibly ask the in-house counsel concerning the matter. The in-house counsel might reply by saying that they employed an enormous agency with a confirmed observe file so it was not the in-house counsel’s fault that the lawsuit went poorly for the corporate. Nevertheless, if the in-house counsel employed a smaller agency that didn’t acquire a positive consequence, it is likely to be tougher for the in-house lawyer to keep away from scrutiny. Since large firms have deep pockets and layers of forms, the enterprise and individuals who work for it may not be incentivized to save cash and is likely to be extra incentivized to insulate themselves from legal responsibility.
Generally when purchasers take CYA attitudes with the choice of counsel, not solely would possibly it value them further cash in attorneys’ charges, however it might probably additionally make it tougher for them to win a case. Since higher-paid attorneys would possibly simply eat litigation budgets, there may not be sufficient cash remaining for professional studies, personal investigators, and the entire different companies that is likely to be wanted to win a case. Nevertheless, purchasers who spend much less cash on counsel may need further choices that may give them a stable footing in litigation, and this could even give them the higher hand when matched in opposition to a bigger legislation agency.
One time, I used to be at a agency that represented a plaintiff in a run-of-the-mill breach of contract matter. The case was undoubtedly a five-figure matter, and the problems weren’t too sophisticated. This undoubtedly was not a bet-the-company lawsuit for both of the events concerned within the dispute. To our shock, the defendant employed a large legislation agency that possible charged a number of occasions greater than us to deal with the protection. Some on the agency had been nervous concerning the implications of this bigger agency being employed to defend the case, however I figured that this is likely to be to our benefit.
Because the bigger legislation agency was charging an arm and a authorized for authorized companies, it quickly grew to become obvious that, earlier than lengthy, the defendant would most likely spend more cash on authorized charges defending the case than settling the matter. Regardless that the defendant had stable defenses, and the prevailing celebration was entitled to attorneys’ charges, this celebration quickly realized {that a} settlement was its finest choices given the bills that the celebration would face. After all, I don’t know why the defendant selected a large legislation agency to defend it in that matter. Maybe it was as a result of they’d relationships with this legislation agency and didn’t wish to forge connections with new counsel. But when the choice to make use of this legislation agency was primarily based on a CYA perspective, that technique may need value the celebration cash in the long term.
All advised, generally it’s good for purchasers to make CYA an enormous a part of their methods since bigger lawsuits and different forms of issues require seasoned counsel which may cost more cash. Nevertheless, in some cases, CYA attitudes can value purchasers cash in the long term.
Jordan Rothman is a companion of The Rothman Regulation Agency, a full-service New York and New Jersey legislation agency. He’s additionally the founding father of Scholar Debt Diaries, a web site discussing how he paid off his pupil loans. You may attain Jordan by e mail at jordan@rothman.legislation.
