This article originally appeared in The Recorder on April 8, 2021.
If you’re in-house litigation counsel, you probably have so much on your plate these days that potential appeals may hardly register – at least, until you find yourself in the middle of one.
For the most part, that’s okay. Competent outside trial counsel who knows how to preserve the record and avoid waiving issues should be able to give later appellate lawyers the cloth they need to fashion your strongest possible arguments.
But in our decades of experience working with many in-house counsel on significant appeals for their companies, there are a few realities that they told us they wished they’d known earlier in the litigation process.
- They wished they had known to plan for appeals in their contractual arbitration clauses
Businesses that employ arbitration clauses should consider appellate issues in their contract drafting process. While arbitration was once thought as an all-around speedier and less risky approach to litigation than courts or juries, runaway arbitrators issuing unreviewable judgments are a separate risk.
One possible solution is to reconsider the value of arbitration itself in light of the downside realities. Another possible solution, at least for parties contracting under California law, is to specify that the California Arbitration Act rather than the Federal Arbitration Act governs the agreement, and that under the CAA, the parties reserve the right to appeal the arbitrator’s decisions in court on questions of law or legal reasoning. Courts have recognized that the CAA affords this level of flexibility, while the FAA does not. This kind of limited appellate review can strike a reasonable post-arbitration balance – it’s not so expansive as to include review of every evidentiary determination, which might defeat some of the advantages of arbitration in the first place, but it still is a powerful check against a completely out of control ruling because it requires the arbitrator to follow the law.
- They wished they had known to identify potential appellate issues at the outset of litigation
If you spend time at the beginning of a dispute identifying issues that might end up on appeal, you can save yourself and your client some headaches later on. Early identification lets your litigators strategize about how to create the best possible record for what may come down the road.
This is especially true where a decision in one appeal could impact other ongoing or future litigation against the company. Sometimes, the best thing for a company may be to pursue an appeal simply to get an answer to a legal question, so the company can make rational business decisions one way or another. Recognizing that in advance can make a huge difference.
- They wished they had known to involve an appellate lawyer before trial
There is little that will make a general counsel feel more frustrated than losing an argument on appeal that might have been won if trial counsel had not waived it below. Of course, in-house counsel aren’t looking to micromanage their outside litigators. And ideally, high-quality outside trial counsel should know enough about appellate procedures to protect their records.
But there are so many easy mistakes to make, and trial lawyers have a lot on their hands trying to win the trial. That’s why, more and more, in-house counsel we work with are integrating appellate lawyers into their trial teams early on. Appellate lawyers are strong thinkers and editors by nature, so that can never hurt on a trial team, but what appellate specialists uniquely bring to the table is experience with, and the ability to focus on, procedural issues important to a later appeal.
While trial counsel devotes his or her attention to the jury’s mood, witness testimony, and keeping the judge happy, an appellate lawyer can make sure objections are perfected, invited errors avoided, and transcripts preserved. Appellate counsel can make sure verdict forms are written in way that won’t fall apart when later challenged, that statements of decision leave no gaps requiring adverse inferences on appeal, and that post-trial motions are ready to go. When it comes time for an appeal, your team is already in place and up to speed, whichever side you end up on.
- They wished they had known how much their bond and interest costs would be
The biggest businesses don’t need to worry about appellate bonds – they either litigate frequently enough to have existing relationships with bonding agencies, or their assets are so substantial that collateral to obtain a bond isn’t much of an issue.
But in-house counsel for medium-sized businesses that don’t often have appeals may be surprised to learn that a money judgment in California requires a bond of 150% to avoid enforcement while an appeal is pending. That’s designed to capture 10% annual post-judgment interest. Other types of California judgments may be stayed without a bond, like mandatory injunctions, or with a bond amount set by the trial court.
That’s a big difference from federal bonds, which are set by the district court and can end up all over the map, but rarely much more than the amount of the judgment and likely costs. And in federal court, post-judgment interest is tied to recent Treasury yield rates – which have sat barely above zero since the beginning of the COVID pandemic.
Surety companies usually charge 1-2% of a bond as an annual premium, but it can be as high as 4% if risky collateral like real estate needs to be used.
- They wished they known the reality of appellate statistics and the importance of appellate specialists
Appeals are tough to win for the appellant. In any given year, state and federal appellate courts reverse between 15 and 20 percent of the time in civil matters, no more.
That’s a somewhat misleading statistic, though. It’s not that every appeal has a 15 to 20 percent chance of success – some appeals have a much higher chance of success, and some much lower. It is almost impossible for in-house counsel or even outside trial counsel that has been litigating the matter, potentially for years, to objectively evaluate how an appellate court may see the case. Having sober eyes from someone on the outside, and who knows how appellate judges and their clerks will approach the case and can approach it the same way, will give in-house counsel useful insight with which to rationally determine whether to pursue an appeal all speed ahead or stop and think about a settlement strategy.
Still, those sobering odds for appellants should serve as a warning that serious litigants need to maximize their appeal prospects in every possible way – which is just what an appellate specialist can help you do.
On Appeals is a monthly column on recent appellate decisions and appellate issues written by the attorneys of the California Appellate Law Group LLP*.
Rex Heinke is one of the most accomplished appellate practitioners in California, and among the best in the nation. Twice named “California Lawyer of the Year,” Rex has argued more than 150 appeals in federal and state courts across the country and is regularly called on to defend major corporations and high‐profile individuals in some of their most hotly contested appellate matters. Learn more about Rex at www.calg.com/rex or reach him at email@example.com.
Ben Feuer has been deemed one of the “top appellate litigators in California” by a national news network and an “Elite Boutique Trailblazer” by the National Law Journal. He regularly represents large and small businesses, individuals, and associations, as both plaintiffs and defendants, in the California appellate courts, the Ninth Circuit Court of Appeals, and the U.S. Supreme Court. Learn more about Ben at www.calg.com/ben or reach him at firstname.lastname@example.org.
*In July 2022, the California Appellate Law Group was renamed the Complex Appellate Litigation Group.
This article is copyright © in the year of publication above.