Why You Should Build a Litigation Risk Profile
And How You Can Build One
By Nick Brestoff
Founder and CEO, Intraspexion, Inc.
© 2016 All Rights Reserved
So why should you build a litigation risk profile? Let me answer the “Why” question first, before I show you how to build one, which I promise to do.
By analogy, here’s why: If you’ve stepped in a pothole once, you know where not to step next time. But if you don’t keep track of where you’ve been, well, history has a way of repeating itself, and you’ll step in that pothole again, no matter how many compliance seminars you attend.
So the answer to “Why?” is this: Forewarned is forearmed.
And now let’s get right to it. Let’s build a litigation risk profile. To do that, I’m going to use PACER. When I was a practicing attorney, I didn’t have to learn much about the federal litigation database, the one with long name of Public Access to Court Electronic Records, or the much shorter acronym, PACER. I wrote in Word, saved it as a PDF, and uploaded my work to PACER.
Inside a law firm today, I suppose that this process is still very much the same. I also suppose that attorneys who work for law firms are still handling specific cases, where the lawsuit begins with the complaint, a client gets served, and the silo for every document filed in a case-specific silo rises up in PACER until the case is over.
Of course, PACER builds that silo by tracking all of the contributions—by attorneys and courts—in numerical order: Document 1, Document 2, …, Document 356.
But if you want to track how your client is doing—whether that client is handled by you or by other attorneys in your firm, or by outside counsel at a competing firm, or whether you work for the client directly, as in-house counsel (my primary audience)—stay with me: There’s a lot more to PACER than a case-specific silo.
Now, as a caveat, I have to disclose that when it comes to PACER, I’m self-taught. But I’m sure of what I can show you, and I’ll present what I learned to you in step-by-step fashion. I’ll show you how get out of that case-specific silo, and instead how to build more perspective into your thinking.
To illustrate, we will build a litigation risk profile for a company with a unique party name, a party named Xerox. I have no particular reason for choosing Xerox. In a 38 year career, I did not sue or represent Xerox, and had a good experience with at least one of its copiers.
But because the name is unique, we don’t have to worry about one of PACER’s quirks, namely that it is literal. For example, the party name of J.P. Morgan with no space between the J. and the P. is not the same as the party name with a space between the J. and the P., i.e., J. P. Morgan. And if the party of interest uses an acronym, e.g., IBM, don’t use the acronym. PACER does not have an acronym library. Instead of IBM, use “International Business Machine,” without the “s.” Party names in PACER depend on how the plaintiff writes it.
I’m going to build a litigation risk profile for Xerox visually, and in baby steps, in part because I’m assuming that PACER’s workings may be unfamiliar to you, and because I think the way I use PACER is different from the way almost everyone else uses PACER.
I’m also assuming that you either have a PACER account or can easily sign up for one.
But beware. PACER charges for letting a user review the documents attorneys file in their cases. I’ll let you know at the end how much PACER charged me for stepping you through the process of building a litigation risk profile with you.
So let’s go to PACER. It’s not PACER.com or PACER.org. It’s PACER.gov, because the database is maintained by the judiciary. Here’s the top of the first page:
Now, here’s the bottom of that first screen:
Look for the middle column, the one called PACER CASE LOCATOR. At the bottom, find Search Now, and click on it. The next screen is this:
At this point, you’ll need your Username and Password. The Client Code is optional. Then click on Login. The next screen will show you what you’ll see immediately after you do that:
Now, note the Civil tab is shaded with blue hue. It’s one of the tabs just below PACER Case Locator. This is where to go to build a litigation risk profile. I go there so frequently that PACER takes my screen to Civil automatically. The other tabs are for All Courts, Appellate, Bankruptcy, Criminal, and Multi-District Litigation.
Just below the tab bar, you’ll see the words Case Search in black and Advanced Search in blue. What PACER means (without saying so here) is that this screen is the Basic Search screen and that, if you want more, you can click on Advanced Search to get more. So let’s do that. So we click on “Advanced Search,” and now the same screen has more functionality. You’ll see Case Title, Date Filed, and Date Closed:
With this additional functionality, you’ll find that Date Filed will be helpful. In the boxes to the right of Date Filed, you can put in “beginning date” and an “end date,” to get a range. PACER uses a particular format, which I’ll illustrate with the date range for last year, 2015. I’ll use 01/01/2015 for the beginning date of the range and 12/31/2015 for the ending date.
The result is this:
This format is helpful. When you want to look at more than one year, you just go back to this page and change the date range by changing 2015 to, say, 2014, just by changing the 5 to a 4 in both boxes.
The next step is to put in the name of the party. The party could be your client or it could be the name of your party opponent, or perhaps the name of a party who you’d like to know more about. Here, for illustration purposes, I said we’d use Xerox. So we’ll add Xerox in the Party Name box:
Now the next step will be to hit the Search rectangle below Party Name, but don’t do that yet. Let me pause to tell you about the box above Date Filed, which is called Nature of Suit.
In the federal system, everyone who files a complaint must complete and file a Civil Cover Sheet. The Civil Cover Sheet lists the Nature of Suit categories and codes for each category. Here’s the top of a Civil Cover Sheet:
Look at the bottom left hand corner, at section “IV. NATURE OF SUIT.” I’ll show you the categories and codes on the bottom half of this sheet next, but first note well the parenthetical in italics: (Place an “X” on One Box Only). That instruction is important. It means that even if there are more theories of recovery than just one, the party filing the complaint must choose the one and only category which best describes the case. Not two categories, just one.
Now let’s look at the bottom half of a Civil Cover Sheet:
Across the top, note the general categories like Contract, Torts, and so on. The Nature of Suit codes and their descriptions are listed below each category. For example, find Civil Rights. Now find the box to the left of “442 Employment.” It’s right after 440 for “Other Civil Rights,” and 441 for “Voting.” Remember that description “Employment,” because the same code (442) is sometimes referred to as Civil Rights-Jobs. That code is where you’ll find the employment discrimination torts, like age, race, sex, etc. Unfortunately, PACER does not provide codes for these sub-categories. They’re all in 442.
Now, with that context, so let’s go back to PACER. So I’ll repeat the last screen, the one where we put in the 2015 date range and Xerox:
Now I’ll put my cursor in the Nature of Suit field. Just by putting my cursor there, I will trigger a drop-down menu showing the codes in the CONTRACT category which appears in the Civil Cover Sheet. For example, under CONTRACT in the Civil Cover Sheet, the first entry is 110: Insurance. In the drop-down menu, you won’t find the Civil Cover Sheet categories, but you will see the codes. They appear in numerical order. So the first entry (highlighted in blue) is “110 Insurance.”
Now, if we wished, we could go code by code and find out how many of which type of case was filed by or against Xerox in 2015.
But that’s the long way around, and now I’m getting to a discovery: PACER has filters. So I’ll teach you the shortcut. Let’s not do our research using the specific Nature of Suit (NOS) codes one at a time (the screen above). Instead, let’s leave the NOS field blank; which means that we’re back to this:
And now we’re back to just Xerox in 2015, and those are the only parameters we need before we click Search. When we click Search, we get this:
Let’s examine this. First, note that “Xerox” brings up all of the records where Xerox, when followed by a space, brings up the next word, too. Usually, PACER puts these additional terms in alphabetical order, where Xerox Business would precede Xerox Corp. But PACER is not consistent with this expectation and capitalization seems to throw PACER off.
Regardless, we have found the Xerox records. Now, across from PACER Case Locator (upper left), you’ll see Civil Party Search, the date of the search (Fri Apr 1 ), and “83 records found.” A “record” does not mean the same thing as a “case.” A party can be listed on a case in more than one way, e.g., defendant, cross-complainant, and so on. Each way is a “record.”
Second, under Party Name, there’s a red arrow. The arrow means that the Party Name column is active and can be sorted in limited ways. Now look across from Party Name to see Court, Case, NOS, Date Filed, and Date Closed. All of these fields are active, and can be sorted; that is except for Case, which is in black type and is not underlined. Just by looking at the data, you can see that “Case” means the case number. The case number is active, however, and while clicking there will not lead to sorting, it will get you to the specific case. If you’re interested in a specific case, that’s one way to find it.
Last, we can also see (on this first of two pages) that many of the records that were filed beginning with 01/01/2015 have also been closed by 04/01/2016. On this first page, of the 17 records listed, 14 had closed by the date I prepared this tutorial (on April 1, 2016).
Now, since NOS refers to Nature of Suit, and is active, we can sort by NOS number. Here’s the result of moving our cursor to NOS and clicking on it. The arrow is down, which means we’re seeing the low-numbered NOS codes first:
So now we could scroll down and count the number of cases in Nature of Suit code 110 (there are 5), 160 (just 1), and so on.
Oh, let me say a word about cost. We’ll do this in two steps, to be complete. At the bottom of the screen above, you can see that we stopped at record number 17. Let’s scroll down further to a middle section. We see this:
Now, before I go on, note that we can count the number of NOS 442 cases, the cases for Civil Rights-Employment, beginning with record number 37 and ending with record number 45. There were nine NOS 442 record numbers. All of the Xerox records for NOS code 442 are followed by “(dft)” except for record number 38, which is followed by “(crc),” and that there two records even though the party name—Xerox Corporation—is the same for both, a case number duplication.
But notice that there are other case number duplications, too. Record numbers 40 and 41 share a case number ending in 04177, but the party names are different. Record number 40 pertains to Xerox Business Services, LLC, while number 41 pertains to Xerox State Healthcare, LLC. Similarly, record numbers 43, 44, and 45 share case number ending in 02704, and a quick scan now will tell you that three Xerox entities have been named in the same case. When that happens, there are three records, not one.
The lesson is to be aware that “records” in PACER are not the same as the number of “cases.”
Now let’s go back to the screen. We went from just before number 17 to just below 46. The next screen shows the rest of page 1 and the charge for looking at it.
So here we see a notice at the end of page 1—and a surprise. I was billed 10 cents for looking at this page previously, so when I revisited it, the cost was zero!
But what about my cost for reviewing all of the pages I used in connection with writing this article, which I started and completed on April 1, 2016: the grand total was $1.10. Seriously, that’s all it was, $1.10.
But now let’s take that shortcut I mentioned. I’ll go back to this screenshot (by the way, always use only the “back” arrow (white arrow in a blue circle, in the top left hand corner) when you are logged into PACER and shifting from page to page like I’ve been doing):
In the upper left hand corner, find User and then look to the right of that for “Filter Results,” which is in a blue-bordered rectangle with rounded corners. Click on Filter Results to see this:
As you can see, we’ve only activated the filter for “Year Filed.” Now click on “Party Role (5)”—the (5) means five party roles—to see this:
Note now that of the “records,” of which PACER reported 83 records in 2015 (for some reason, 59 of them were put into a sub-category abbreviated “dft,” which stands for “defendant,” 21 of them indicate that Xerox was a plaintiff, and there is one instance each for (cc), (crc) and (nmdft), for a total of 83.
(Note: Here’s another PACER quirk. If you were attempting to get statistical information, say for a year, but without specifying a party name, the Party Name filter would be unavailable. So if you’re searching for general information about any particular year, the PACER output is records, including the duplications due to either party capacities or party subsidiaries.)
Now, since we’re building a risk profile for Xerox, let’s stick with “dft” only. So we click there, and get this:
So now below Civil Party Search, we see that there are only 59 records. We could sort by NOS code, but let’s let the computer do that for us. To do that, we need to go back to Filter Results, and so we click on Filter Results again. Now we find this:
And we see that, for the Nature of Suit column, there are 17 categories. We haven’t clicked on this filter yet, so let’s do that. We see:
I’ll scroll up so you can see the entire list. The next screenshot does that:
And now we see so much! Of the 59 records in which Xerox was a defendant in 2015 (59), we see how many of which type of case Xerox was named. For example, Xerox was a defendant in four cases best described (by the plaintiff) as 110 Insurance, and in eight cases described as 190 Breach of Contract.
We can readily put all of this data into a simple spreadsheet.
We can readily repeat this process for 2014, 2013, for the last 5 years, or for the last 10.
So we can see trends over time now, too.
Now I understand that it would help to know these NOS codes pretty well. One way to compile them is by looking at the Civil Cover Sheet, or the list of NOS in the drop-down menu, but that’s not necessary. In fact, PACER provides us with a list. So we’ll click off the Filter Results drop-down and use the back arrow to go back to the beginning, to this screen:
In the lower right hand corner, there is a local search box. It’s just below the rectangle asking HOW DO I GET MORE INFORMATION ABOUT PACER? I have already put my cursor there. Next I type in “NOS codes.”
Then I hit “return” and get this:
I now click on the Nature of Suit codes in PDF format and get the list:
The PDF is four pages long. Now you have a handy list of all the NOS codes. But don’t just print it. You won’t need them all. There are about 160 of NOS codes, and the list isn’t fixed. PACER sunsets some codes (and their descriptions) for non-use and adds others when a new case-type appears.
Instead, you’ll quickly find out that your company is only involved in a much smaller number of NOS code case-types. You will learn which codes are typical, and you won’t have to refer back to the Civil Cover Sheet or the PACER PDF after a while.
Here’s an example of a partial list, year by year, which you can build in only minutes using PACER and the “Filter Results” feature:
Using PACER and Filter Results, and a little proficiency with an Excel spreadsheet, I prepared this spreadsheet and put it into this article in about 15 minutes; a mere .3.
So now you can see how to build a litigation risk profile for your company. You can go back five years, or 10. It costs almost nothing but your time. Moreover, building one of these profiles will help you (I think) in some ways I can imagine and in other ways I can’t.
But now you know that you can build one, and you can be comforted by the fact that it will prove useful, especially if combined with still other data. For example, if you know the average cost of resolving each particular case-type from your own internal data, you can apply those cost figures to a spreadsheet like the one above, and obtain not just the trend, but the annual cost per year of dealing with each NOS code case-type and your entire litigation mix over the course of a year, and how those costs compare to prior years.
Metrics. We now have metrics. Now your own litigation history is speaking dollars and sense to you. If you construct a litigation profile for your company, then, from your own internal data, you can discern—in a quantitative, financial way—something which may pertain to your budgeting process and the experience of the litigation personnel you need to hire.
So there it is. That’s what we learn from this. It’s not just the numbers. The takeaway is that you can learn from your litigation mix in order to be motivated to prevent or avoid litigation.
But on the flip side, you now can form a data-informed expectation about what will happen if you don’t find a way to reduce the frequency of litigation for your company.
In fact, it was the Bard who told us what would happen. As Shakespeare put it in The Tempest (circa 1610, Art 2, Scene 1): “What’s past is prologue.”
Can you do something to prevent litigation? Yes, you can. Just contact us.
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Nick Brestoff was educated in engineering (UCLA, Caltech) before attending law school at USC, where he was a member of the Law Review. He retired after 38 years as a California litigator. His writing has appeared in the ABA E-Discovery and Digital Evidence Journal, the World Jurist Association, Law Technology News (2010-2012), and Corporate Counsel Magazine (2016).
In January of 2011, he correctly predicted in an article in Law Technology News that IBM Watson would prevail over the human champions in the game of Jeopardy!
He is the principal author of Preventing Litigation: An Early Warning System to Get Big Value Out of Big Data (Business Expert Press; August, 2015) (available from the publisher and via Amazon.com/books).
Nick is the founder and CEO of Intraspexion, Inc.