While Americans and their businesses are the most litigious in the world, lawsuits are often filed and defended without consideration of the costs for the litigants. Plaintiffs should consider before suing and defendants before responding.
Even if attorney’s fees are on a contingent or some modified cost basis, as opposed to hourly, the cost of litigation for plaintiffs can also be substantial. Owners and employees are required to assist with the litigation, taking time away from the business. Parties must open their books and activities to scrutiny by defendants, proprietary and confidential information is exposed, and embarrassing information can become public. Counterclaims are also often brought, resulting in additional attorney’s fees and risks. Pending litigation also effects credit decisions and employee and third party relationships.
Even with insurance coverage, the cost of litigation can be substantial to a defendant. Litigation not only causes uninsured or deductible expenses, but requires substantial involvement of employees at the expense of the operation of the business. Pending litigation can effect financing, employment, customer and vendor relations, business value and other critical business functions and decisions. Buyers and bankers often do not care about why a lawsuit is pending or your promises that it will not damage the business.
Before initiating or responding to litigation, the parties and their counsel should consider alternative methods to resolve the situation, including mediation, arbitration or negotiating a settlement, reducing costs and avoiding the publicity, risk and delay of litigation. Involve appropriate third parties, insurance carriers and others to help reach a settlement and think outside the box. Including a dispute resolution mechanism in contracts can also minimize the risks and costs of a lawsuit.
If your business is confronted with the decision to sue or defend a suit, the attorneys at Brooks, Tarulis & Tibble can advise on what to expect and counsel you on options to minimize the risks, costs, uncertainty, publicity and delay of litigation. If you have any questions or we can assist you in this regard, please contact us.