What to Expect When the Clouds Clear
The common theme in our clients’ inquiries of late is what will happen to their ongoing or anticipated U.S. litigations once the crisis abates. This is of particular concern to foreign-based companies for whom venturing, willingly or not, into the American litigation arena is a fraught exercise to begin with. Now, as the landscape becomes ominous and uncertain, their concerns justifiably mount.
It is too early to say for certain what the legal scene will look like several months from now, but there is one thing we know with a reasonable certainty: In law, as in life, things rarely return fully to status quo ante. Every crisis leaves a permanent mark and no change is ever completely undone. This will be no different.
So what will things look like once the clouds clear?
Judicial Backlog. The court system in New York (and some other states) has effectively ground to a halt. New York has suspended all new filings and trials. Federal courts are operating but deadlines are being extended freely by the judges. There are now thousands of litigations that, for all intents and purposes, lie dormant. Once courts return to full operation we can expect a flood of motion practice, applications, requests for trial dates, etc. This will be coupled with a separate flood of newly-filed cases. These will be of two kinds: those that have been in queue waiting for the green light to file and those that arise directly out of the coronavirus crisis, such as insurance-related claims, employment claims, contractual disputes caused by the economic havoc, and many others. We can fully expect the judicial system, much of it already strained, to be overwhelmed. Right now, it takes approximately two years for a case to move through the New York state court system from complaint to trial. This has been the norm for many years, but is not likely to be going forward – not by a wide stretch.
Motion Practice. Generally, there is no time limit for judges to issue rulings on motions. In most cases, New York judges rule within one to three months of the motion’s submission. The time-frame will almost certainly expand, likely substantially. This will – should – affect lawyers’ strategic calculus. Sometimes even a winning motion is not worth a protracted delay in the case.
Also, the growing practice among judges in recent years to eschew oral arguments and decide motions “on papers” will likely grow even wider, primarily for reasons of expediency but also because court appearances will become less of a fixture of litigation generally.
Appellate Delays. Most appeals are filed after the trial phase is concluded. However, New York, among other states, permits what are called interlocutory appeals, where parties appeal the trial court’s various rulings as the case progresses. Appellate courts are likely to experience the same backlog and delays. In the case of interlocutory appeals, these delays have the potential of affecting the case in the trial court. A case cannot move on until the appeal is decided. As with motion practice, lawyers will need to make wise strategic decisions as to whether an interlocutory appeal is worthwhile.
Virtual Litigation. Technology has brought changes to litigation practice over the years. But even though, it has remained largely a face-to-face, “up close and personal” work. Lawyers still look witnesses in the eye and judges still berate lawyers from the altitude of their perch. The advent of social distancing with the attendant reliance on technology will likely accelerate our inexorable march to virtual litigation. (As I write this, I am told that the New York governor has just authorized a virtual, video or audio based, notarization of legal documents, which is nothing short of revolutionary!)
How far will technology take us is anyone’s guess. But a few near-future consequences, driven by the current crisis, are apparent.
Videoconferencing technology has been used for depositions since the 1990s. But it has remained the exception rather than the rule. Lawyers prefer to sit across the conference room table from their witnesses. Courts require a compelling reason to permit a video deposition over the objection of one of the parties. It is safe to predict that going forward video depositions will become much more prevalent, likely on the way to ultimately becoming the norm. Litigants who in the past had to travel from Europe or Latin America to be deposed in New York will be able to do it from their offices or homes.
Even more rare are witnesses who testify by videoconferencing at trial, particularly where the cross-examining lawyer objects. Here too change is inevitable. In a federal criminal trial only last week a sick juror was permitted to participate in deliberations by videoconference, something that only a short time ago would have been unthinkable.
Videoconferencing technology will also be used for oral arguments on motions and even for appeals. This is being done now in some courts. The experience of the next few months will demonstrate that this is feasible and does not detract from the quality of lawyering or the integrity of the outcome.
From a logistical and cost perspective, all of the above would ease the burden on litigants, particularly foreign-based ones.
Pressure to Settle. One thing that all judges have in common is a desire to get cases off their dockets, preferably without having to spend too much time on them. With the impending avalanche of litigation, the push to settle cases, already strong among the overworked judiciary, will only get stronger. We can expect judges to become more forceful in their “encouragements” to settle. We should also expect courts and legislatures to enact mediation programs or expand existing ones, possibly making mediation a mandatory part of the process. Litigants would still be entitled to their day in court, and to a trial if they want one, but not without a certain amount of arm-twisting from judges and mediators.
Arbitration as an Alternative. Given the inevitable backlog and delays in the court system, litigants may wish to consider opting for arbitration. Even where the underlying agreement calls for exclusive litigation, parties will usually be free to amend it by stipulating to arbitration instead. Arbitration carries its own drawbacks, such as a lack of well-defined evidentiary standards and rules, as well as the absence of any meaningful appeals, so it is important to weigh the pros and cons. Still, we would expect that for certain types of cases arbitration would be a reasonable alternative in the current climate.