Breaking News Bar
posted: 7/6/2017 1:00 AM

Keeps stakes in mind when considering a lawsuit

hello
Success - Article sent! close
  • WILLIAM A. PRICE

    WILLIAM A. PRICE

 

American business people sue each other, and are sued by their employees, their families, their government, and the people their products or services injure, kill, or cost money. In securities law, for instance, there were 270 federal class actions in 2016, a 43 percent increase from the number filed in 2015. This reflected an improving economy, since many objected to mergers. Fraud, deceit, and other traditional litigation also helped fill up court calendars. Patent suits are also on the increase, with median awards up to $7.3 million between 2008 and 2015, and about 1/3 of all lawsuits successful. Federal courts saw 291,851 civil filings in 2016, up 5 percent over 2015.

Anger may be enough to motivate the filing of lawsuits, but money and the evidence usually determine the results. Some laws are designed to reward litigation, like the intellectual property system, which provides reasonable profits to companies like Getty Images for claims against Web page owners who use photographs in Getty's collections without permission or payment. Others discourage suits, like the "American Rule," which means most people that sue and are sued have to pay for their own lawyers.

Going to court is expensive, and results are uncertain. Employment lawsuits in one insurer study cost an average of $125,000 during 2015 if dealt with at or before summary judgment, and $200,000 if they went to trial. A quarter of the plaintiffs won, and the average judgment was over $500,000. Plaintiffs can often get lawyers to invest time and money in their cases, for a contingent share of any result. Business defendants do not have that luxury.

Litigation is a very slow way to get results. More than two years from filing to verdict is normal in most personal injury actions, since filings, motions, interviews and document exchanges, jury selection, and court hearings all have to happen before any judgment can be had. Appeals extend that time by a year or two, and increase the probability you could lose.

Business lawyers spend a lot of their time trying to keep their clients out of court. This usually involves a lot of paperwork like notices of risks to potential investors, limited warranties, arbitration clauses in business contracts, and HR policies to warn supervisors that they can be fired if they mess with the help. Very few people like to pay for legal documents until they are sued or need to sue somebody, which is frustrating for forms authors like yours truly, but not unusual.

If you are sued, or need to sue someone, remember the stakes at all times. Your reputation is worth a lot, but cash flow problems kill businesses, not bad feelings. Litigation lawyers can, to some extent, produce budgets by litigation stage and probable final results in the particular type of suit you face. Arbitration venues can reduce litigation time to results -- though often with "cut the baby in half" results, like a lot of securities panels, where neither the angry investor nor the broker-dealer is happy with the award. Civil courts, too, press all parties for settlement, and for results that clear their dockets. If you irritate the judge, he or she can significantly increase your costs.

So, in the end, suing the bastards can be fun, will take a lot of time, and may or may not be profitable. Use lawyers for what we are good at -- research, analysis, paperwork, and arguments. Don't let us make the final decisions on cost or settlement, but don't ignore our advice on those, either, if you want to keep affording that wonderful vacation cottage and (we hope) fancy U.S. made car.

• William A. Price is an attorney at law with Growthlaw.com Contact him at 1-800-630-4780 for email him at wprice@growthlaw.com, www.growthlaw.com

Article Comments ()
Guidelines: Keep it civil and on topic; no profanity, vulgarity, slurs or personal attacks. People who harass others or joke about tragedies will be blocked. If a comment violates these standards or our terms of service, click the X in the upper right corner of the comment box. To find our more, read our FAQ.