HOW TO MANAGE LITIGATION AND ITS EXPENSE
By: Daniel P. Simpson
Litigation is sometimes necessary, but never productive for business. How much will it cost? More than you want to spend. If you can afford to litigate a case, you can probably settle it for less. Litigation would generally be a viable strategy to resolve virtually any business difficulty if only the other side did not participate. Unfortunately, it’s a fact of life in today’s business climate that even the “winner” rarely comes out whole. That being said, consider the following cost-control measures:
(a) Designate one key employee as point person to interact with counsel. While a particular case might require the participation of several employees, efficiency is drastically improved through the use of a liaison who is knowledgeable about the facts of the case, can easily coordinate document productions, the scheduling of conferences and proceedings, and is readily available to assist counsel and provide continuity to the litigation effort.
(b) Don’t attempt to litigate at “low cost.” Keep in mind that your side has no control over the tactics of the opposing parties. Instructing counsel to keep the case going at a “minimum” level is a sure recipe for disaster. As a rule, the stronger you are at the start of the case, the more likely you are to gain real time and money advantages in the course of the litigation. Nothing sends a clearer message to the other side than an easily recognizable lack of litigation resolve. It is actually easier for us, as your counsel, to estimate the cost of a well thought out, properly coordinated initial litigation strategy than a tepid offense or reactive defense.
(c) Always make business decisions. Clients ask us “How much should I pay,” or “How much will they pay?” The answer to the first is a business decision you should make based on a legitimate risk-reward analysis predicated on the advice of counsel. The answer to the second question with you as plaintiff should be discussed and considered before you file a lawsuit. The real difficulty occurs when you base the required “result” on the money spent; that procedure a skews the legitimate business decision making process into an ever increasingly unobtainable or unrealistic objective.
(d) Pick your battles. There are certainly circumstances that justify litigation expense. Many clients use litigation as a tactical device to achieve specific business objectives beyond the result of a particular case. For instance, one large employer will not entertain a settlement demand from any employee threatening suit for a meritless employment claim, but will immediately take steps to resolve a claim with at least some reasonable basis in fact and law. This consistently maintained policy has served the company well—nuisance claims are virtually non-existent and most employees have a sense that legitimate grievances will be disposed of fairly and efficiently. At the same time, meritless claims have been aggressively defended, and, without exception, disposed of satisfactorily. Another client is highly adamant about strictly enforcing its valued contract assets; it is always willing and ready to start litigation at the drop of a hat. As a result, the reputation it has garnered within its business community is one of enviable respect; its rate of contract renewal is the highest in its industry.
While we have had some clients complain about spending a few thousand dollars to resolve a case from start to finish, others have been incredibly appreciative after spending hundreds of thousands on legal fees and paying a significant sum to settle the case. We have never hesitated to attempt to dissuade a client from litigating a dispute if alternative solutions made good business sense. On the other hand, we have tried hard to persuade clients to anticipate and plan for disputes well in advance of their onset. In our collective experience we have learned one truth about judges, juries and our court system: Predictability is not litigation’s strong suit. As with all business decisions, research, preparation and reasoned judgment usually yield the best results.
This publication is intended for general information purposes only and does not constitute legal advice. The reader should consult legal counsel to determine how the law may apply to specific situations.