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S P R I N G 2 0 1 5
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should be able to give you an assessment
of the strengths and weaknesses of your
case, the necessary steps to work toward
a successful resolution, and outcomes of
past similar cases.
3. Likelihood of Recovery
This is entirely separate ­ but just as
important ­ as likelihood of success.
Many clients are surprised to learn
that collecting on a judgment is not an
automatic given following a victory.
Be sure you are not left in a situation
where you have expended tens or even
hundreds of thousands of dollars, only to
be left with a judgment "that isn't worth
the paper it's printed on." The defendant
may be a fly-by-night company or have
little to no assets. You may obtain a
judgment against a company, but later
discover that the CEO has transferred
all the company's assets to his wife or
another entity he controls. Unless a
defendant is an established, reputable
company or some equivalent, collection
may be as big or even a bigger battle
than the underlying lawsuit itself.
4. Time
Most cases last months, if not years,
when measured from the filing of the
complaint through a trial. That is not
even counting an appeal or even multiple
appeals. During all this time, you are
meeting with and paying for attorneys,
gathering and reviewing documents,
responding to inquiries, and attending
depositions and hearings. All that is
valuable time away from growing and
working on your business, not to mention
added personal and professional stress.
5. Opportunity Costs
What opportunities are you and your
business missing out on because your
time, money and efforts are tied up
bringing a lawsuit? If you are a small
or medium-sized business, the money
and time you spend bringing a lawsuit
is money you can't spend to hire a new
sales manager, invest in a new project or
product, or pay out as profit at the end of
the year.
6. Publicity
"There's no such thing as bad publicity"
may be true for celebrities, but it
definitely is not true for businesses.
When you file a lawsuit, understand
that the defendant can then assert
counterclaims against you or attempt
to bad-mouth you in the media or your
industry. This is actually what happened
in the case of Donald Sterling, former
owner of the Los Angeles Clippers
professional basketball franchise. His
wife sued V. Stiviano, a female friend
of Sterling's, for the return of expensive
gifts Sterling gave to Stiviano. A tape
recording of Sterling making racist
comments came out soon after that,
resulting in Sterling being banned from
the National Basketball Association for
life and being fined $2.5 million by the
league. If your company is the subject
of negative comments or headlines, or
develops a reputation in your industry for
being litigious, this could significantly
jeopardize your business and your
relationships with your business partners
and employees.
7. Risk vs. Reward
Ultimately, litigation is a cost-benefit
scenario where you must evaluate risk
vs. reward, i.e., the risk of filing and
spending money on a lawsuit with an
uncertain outcome vs. the reward of
winning damages and possibly stopping
the wrongdoer from continuing to
harm you. Make sure litigation does
not become a Pyrrhic victory, i.e., that
the cost of winning exceeds or negates
any benefit gained. In most cases,
each side is responsible for paying
its own attorneys' fees. Thus, even
a "successful" verdict or judgment
must be viewed with an eye toward the
cost of getting there. Moreover, most
lawsuits settle, frequently after months of
litigation and tens of thousands of dollars
expended, if not more. While not always
the case, the results achieved by settling
after months or years of litigating can
frequently be reached early in litigation
or even before a lawsuit is filed, which
can mean a savings of tremendous time
and money.
So where does all of this leave you?
Talk to several lawyers before making a
final decision on whether to file suit or
not. Many, if not most, business litigation
attorneys do not charge for the initial
consultation. During your initial meeting,
you should look for the attorney to be
honest and candid with you regarding
cost, the merits of your case, and the
likelihood of success and recovery.
Sometimes litigation is a painful but
necessary process, and sometimes it can
and should be avoided. Once you have
evaluated these seven factors, you can
make an informed, educated decision
about whether filing a lawsuit is the right
decision for your company.