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Comment by Tsiklon | Hacker News Reader

Yikes, 5 years between the ruling and the appeal being finalised. The earnings by the lawyers must be astronomical.

I have a question about that. Big companies like these have (I believe) pretty hefty legal departments, and would be constantly involved in legal negotiations and court proceedings (though not always at such a scale).

So why do court cases cost them so much in legal fees? Do they outsource representation for these big cases, or do they just extrapolate a lot of the costs from payroll, or what?

I doubt that legal departments are good at big court cases. They tend to be more concerned with mundane busywork like drafting contracts and reviewing public statements for potential issues. So it makes sense to outsource lawsuits, especially bigger ones, to experts with experience at court.

This is true in my experience at various large corps I've worked for. The legal department has a rather small headcount but a massive consulting budget. They hire other lawyers with local jurisdiction experience, subject matter expertise, courtroom experience, etc. Their day-to-day hands on work is 1) managing all of the outsourcing 2) mundane corporate contract stuff which is more frequent/consistent in volume.

To add to this like - having internal legal counsel take on a litigation cases would be like hiring SAP developers full time to do an SAP ERP implementation. Consultants/contractors are great for episodic projects (even if they span multiple years).

> So why do court cases cost them so much in legal fees?

im not involved in legal stuff, but i think part of the reason is the system of common law. this makes past related cases as important, if not more important, than the letter of the law. so in order to mount an effective legal case, you have to research your case and every other case like it in history (!)

more simply, its a high demand, low supply, high stakes job. drives up the price.

also, the job is just complex. you need to have good PR, a network of expert witnesses, an understanding of psychology to both select and then convince the jury, technical understanding of everything related to your case (computers, firearms, recording devices, medical devices, police procedures, jurisdictional boundaries, etc etc), on top of the normal business stuff like brand recognition to maintain business relationships, etc.

Dealing with Discovery in corporate lawsuits can be extremely labor intensive. Defendants especially like to dump huge amounts of evidence in discovery that the law firms have to sift through. A recent example was Remington submitting tens of thousands of pages of cartoons in discovery for the suit against them by Sandy Hook victims' parents [11]

[1] https://www.thewrap.com/gunmaker-includes-thousands-of-rando...

I’m not sure if a “normal” legal dept does cases like this but besides that, they have other things to do. That means that the day-to-day business would be postponed or the legal team expanded.

Litigation (court stuff) is almost always outsourced to law firms. The reason is that it's a different kind of practice than day-to-day corporate stuff (contracts, acquisitions, regulatory compliance) which is primarily done in house. Another major reason is the economics - generally, court cases are not always expected, and "lumpy" in timing (for example, you can have a few hearings back to back, and then spend months without court cases). So it's not usually efficient for companies to have in-house litigators. In addition, once litigation starts, you need a very big team to handle the work (pretty commonly, 10+ lawyers working full time on a tech case during pre-trial and trial). Companies don't like big payrolls.

Source: am litigator.

Makes sense, thank you.

It would be interesting to know how big and litigious a technology company would have to get before it made sense to develop their own litigation capability. Or would that run afoul of some legal profession expectation that "prestigious firms" are required, no matter the size of the tech company?

I struggle to think of a firm better matching that description than Oracle. But slightly more seriously, this kind of litigation work is both very specialised and high risk, so it makes sense to rely on the best advisors in the field, who will almost certainly be external counsel.

There isn't really a professional expectation about prestigious firms. However, there is some reputational effect of having external counsel represent you in court. Some courts (judges, juries) might view a lawyer who represents a variety of clients more credibly than a lawyer who is directly employed by one corporate party (admittedly I think this is a very small effect and can work both ways).

Most companies also want to maintain a healthy separation between internal and external counsel so that they can keep certain kinds of communications privileged and avoid awkward situations where an attorney who is both an employee and legal advisor to a company might be subpoenaed for a deposition (basically any time a lawsuit happens, any corporate employee with knowledge can potentially become subject to deposition as a fact witness). You basically never want your in-court lawyer to be deposed for any reason.

That said, there are some companies who look into this kind of stuff for smaller matters - small corporate disputes, collections of accounts receivables, and whatnot - oftentimes are now being done in-house even if they involve some in-court matters. It still doesn't seem to make sense for big files though.

But litigation is Oracle's core business!

This is not true and also not entirely wrong.

https://bonkersworld.net/organizational-charts

I like the MS business units pointing guns at one another. Gotta focus on the real enemy.

> The reason is that it's a different kind of practice than day-to-day corporate stuff

With some of these big companies, litigation almost seems like its part of their day-to-day though.

Don't forget that if any company were to do litigation completely in-house, the second they were involved in one major litigation would be the perfect time for anyone else to take the company to court -- their lawyers are already all busy!

Do you have any thoughts on litigation funding as an investment portfolio component -- e.g. via Lexshares, Burford, or Pravati?

Both.

Mind most of the lawyers in any corporation are responsible for "daily business" like contract negotiations with customers or routine operations in HR or deal with acquisitions or whatever the company does.

Only few deal with actual court cases. Now many of those court cases are very specialized and you don't keep all those experts on payroll, thus you go out contracting specialists. To some degree you also want to have a firewall by using external people who can dig up dirt without you doing it directly. However also the lawyers on your paywall don't work for free but produce cost ...

They outsource. And if you think Accenture is expensive, try an army of lawyers at double the rate billing 60-80 hours per week.

They have to do this to get specialists and many top experts work at firms. (Vs generalists who work in house)

That's why they love those kind of things. Layers and layers of laws and regulations.

And the employees, management, and shareholders at HP won’t even get compensated for the lost time, opportunity costs, stress, hassle, etc., incurred during those 5 years.

No wonder big companies settle out of court so often.

$10s of millions of dollars

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