Litigation Primer: What To Expect When You Or Your Company Faces Litigation Part IV: Litigation Realities and Strategies for Litigation Avoidance

Having worked as a litigator for over twenty years, I have noticed that most clients are unprepared when they become involved in litigation.  This is true regardless of whether the client is the plaintiff (who can choose whether the dispute is one worth litigating over) or the defendant (who may have been pulled into litigation it never anticipated and certainly doesn’t want).  And it is true regardless of whether the client is an individual or a company, and regardless of whether the client has been involved in litigation previously or whether this is its first litigation experience.  Although every legal dispute is different, this multi-part article addresses some of the common elements of all civil litigation.  Parts I, II and III discussed some of the nuts and bolts of civil litigation.  This Part IV discusses some of the “realities” that should be considered by any party to existing or potential litigation, and then suggests some strategies that may enable a party to avoid litigation.

1.  Litigation Realities.

             Litigation Can be Lengthy

Parties that are evaluating whether to initiate litigation, or whether to settle a case in which liability and/or damages are disputed, should factor into their analysis the potential length of the litigation (and the impact of litigation delays on their business or personal lives). Although it can be difficult to predict how long a lawsuit will last, generally a lawsuit that proceeds through trial can be expected to last at least 12-18 months – IF every stage proceeds without undue delay – and potentially much longer.

Cases in which the defendant allows the case to go into default will end in a judgment a few months after suit is filed, but efforts to locate and seize assets to satisfy the judgment can take months or sometimes years.

Cases in which the parties fight tooth and nail over every discovery issue, and in which multiple motions are filed, can take several years to resolve.

Some courts have large backlogs of civil cases because in these days of tight budgets the bulk of the courts’ resources are needed to resolve criminal and domestic relations cases.  This can result in lengthy delays in resolution of civil litigation.

In addition, as is noted in Part III of this Primer, an appeal will add a year or more to the length of the case.

            Litigation Can be Disruptive

Once litigation commences, client and counsel will need to consult regularly regarding the litigation.  Parties can be required to produce records; answer questions; appear for depositions; and appear for trial.  In sum, although counsel can and should be expected to handle the day to day matters associated with pending litigation, a party must be available whenever needed to assist counsel in the handling of his/her/its case.  A failure to assist counsel fully and in a timely manner can result in harm to a party’s case.  This means that even the least complicated of litigation matters can be disruptive to a party’s business and personal life, often on very short notice.  This should be considered when a party evaluates potential litigation or considers possible methods for resolution of a dispute.

Litigation Can be Expensive for All Parties

Similarly, parties should factor the potential costs of the litigation into their analysis of a dispute.  While it is possible to provide a fairly accurate estimate of the initial attorney’s fees associated with evaluating a dispute and drafting a complaint or an answer, it is very difficult to estimate (at the beginning of the litigation) the total amount of attorney’s fees that will be expended through trial.

There are numerous variables over which a party lacks control which may impact the amount of a party’s attorney’s fees.  Chiefly, a party cannot control the other party’s discovery plan or the other party’s motions practice.  If one party decides to conduct multiple depositions, the other party usually cannot prevent the depositions from taking place; and if a party simply chooses not to attend the depositions in order to save on legal fees, no one will be present to protect that party’s interests during each of the depositions – at potentially great cost to the absent party.  Similarly, if one party decides to file several motions, the other party must respond to each of the motions or risk having the court grant the motions as unopposed.  All of this practice can be expensive, and it is often beyond the control of the party that most needs to control litigation costs.  Indeed, increasing litigation costs can be a way to force a party with limited financial means to settle quickly and on unfavorable terms.

Outcomes are Unpredictable

Finally, although judges and juries generally strive to handle the cases before them correctly, there are times when the judge’s or jury’s analysis of a case simply does not match the analysis accepted by a party or its counsel.  Parties assume this risk every time they become involved in litigation.  If the judge or the jury doesn’t evaluate the case the way the party or its counsel does, the party is left with unpleasant choices:  (a) accepting an unfavorable outcome; (b) appealing the outcome with the hope that the appellate court will evaluate the case more favorably; or (c) attempting to negotiate an acceptable resolution with the other party.  And, regardless of which option the party chooses, the party will continue to incur legal fees until the case is fully resolved.

2.  Litigation Avoidance.      

Perhaps the most important issue to address in any litigation primer is how to avoid litigation in the first place – so that the rest of the primer will be irrelevant.  This section discusses just a handful of strategies that may be used to limit the likelihood of litigation occurring.  Additional potential litigation avoidance strategies may depend on the specifics of a situation and should be discussed with counsel.

Ask Questions Early

First, it is important to ask questions and carefully evaluate the personality and track record of the other party, to determine whether the parties can work together, before proceeding with any business deal or other arrangement between the parties.  If a party appears to have unreasonable demands or expectations during the early negotiations, it is likely that party will continue to be unreasonable throughout the parties’ relationship.  Unreasonableness increases the odds that the parties will wind up in litigation.  Similarly, if a party has a history of litigation with other entities, that suggests that the party is either difficult to please or eager to litigate – and those factors also increase the odds that the parties will wind up in litigation.  Thus, while some prior litigation may be explained away, a pattern of litigation is a red flag.

Put it in Writing

Second, the terms of the parties’ relationship should be reduced to a clear, unambiguous writing.  The documentation should be carefully drafted, preferably by competent counsel who can advise as to potential pitfalls, and then signed by both parties.  Carefully drafting the terms of the relationship at the outset will allow the parties to identify each party’s rights and responsibilities and resolve any differences in expectations (or identify unresolveable differences in expectations) early on, so that there will be no surprises once the parties have fully committed to the relationship.

Do a Credit Check Where Appropriate, or Get Paid in Advance

Third, if the agreement calls for the extension of credit by one party to the other, the party extending the credit should perform a careful credit check prior to doing so.  Alternatively, or in addition, it may be wise to require payment in advance or at the time of delivery of the goods or services, in immediately available funds such as cash, money order or cashier’s check.  Adopting these measures at the outset will prevent the need for a collection action at a later date because of nonpayment.

These measures become even more important where the party extending the credit is selling goods that are unique or require customization.  It is better to lose a sale at the outset because a credit issue has arisen than to devote resources to performing services or customizing a product and then be unable to collect payment.

Consult Counsel Promptly if You Receive a Written Demand

Fourth, as is noted in Part I of this Primer, if a party receives a demand letter at any time during the parties’ relationship, the letter should be carefully and promptly evaluated by counsel.  This evaluation should take place within the time frame set forth in the demand letter.  Counsel can advise regarding whether and how to respond to the letter so as to limit the risk of litigation.  Depending on the nature of the grievance, sometimes litigation can be prevented simply with a couple of telephone calls or letters that clear the air before the problem has a chance to fester.

Similarly, if a party believes that it has been wronged, a careful review of the facts and the applicable law by counsel, and a discussion of the party’s options in the context of all of the material facts and the applicable law, may prepare a party to approach the opposing party with a reasonable proposal to resolve the dispute without litigation.  That, in turn, may allow both parties to move forward with their core business (or their personal lives, as applicable) without having to devote time and financial resources to unwanted litigation.

 

The analysis set forth in this article is provided for general understanding only and should not be considered legal advice.  Counsel should always be consulted for advice regarding a specific legal dispute.  Please contact The Myer Law Firm if you are in need of litigation counsel.

 

 

Comments

  1. Nicholas Snell says

    I was looking for specific strategies for persuading the adverse party to negotiate even when I believed I have the better trial position. What I got from this Web site was not much more than the typical law school platitudes.

    • Thank you for your comment. The article doesn’t offer specific strategies because the best strategy generally depends on the nature of the dispute, the parties’ goals, and many other variables that can’t really be addressed in an article. I suggest retaining counsel in your jurisdiction who can help you to sort all of this out and develop a meaningful strategy focused on the facts of your situation and your particular goals.

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