Nov 16 2014

All Out Litigation Rarely Makes Good Sense

In Business Disputes, Don’t Let Emotions Blind You to the Real Costs of Litigation

In “The Godfather,” when hot-headed Sonny wanted to take an emotional and vindictive approach towards a conflict with the family’s rivals, consigliore Tom Hagen famously admonishes him to remember that: “It’s not personal. It’s business.”

While the Corleone family’s thoughts regarding effective conflict resolution strategies may be extreme, Hagen’s reminder that they were dealing with a “business” dispute and that Sonny should keep his emotions in check has striking parallels to actual business disputes in the real world.

When business conflicts arise, whether they be with customers, competitors, or partners, it can be easy to feel slighted and angry. A fervent belief in the correctness of one’s position, combined with a certain amount of righteous indignation, often leads to a desire to adopt a “take no prisoners” approach, eschewing efforts at negotiated resolution or reasoned discussion in favor of no holds barred litigation.

This can be a costly mistake, and is rarely in your best interests.

Pyrrhic Victories

When it comes to business litigation, the costs in time, frustration, uncertainty, lost productivity, ruined relationships, sometimes unknowable and substantial risks and, of course, often astronomical attorney’s fees, can make even victorious litigants regret such a “win at all costs” strategy. That approach can lead to the Pyrrhic victory of the costs far outweighing the “win,” making one regret the course chosen when emotions overcame good business judgment.

Litigation, like war, should be the option of last resort when attempting to resolve disputes. When a business or personal conflict reaches the point where one party deems it necessary to file a lawsuit, it is a sign that one or both of the parties could not or would not make the effort required to find a better way to bridge their differences. The reality is that, almost always, a solution other than litigation is the most mutually beneficial way to resolve a dispute or approach the problem.

Even “Simple” Cases Can Take on a Life Their Own, Becoming Far More Disruptive Than Originally Contemplated

Litigation is a costly and time-consuming process fraught with peril. Even cases which may seem simple and straightforward can become mired in a swamp of lengthy motion practice, endless discovery (and discovery disputes), and all manner of conflict about tangential issues that will ultimately have no role in the strength or weakness of either party’s position or on the ultimate outcome of the case. All of these activities will require hours upon hours of work by one or more attorneys for each side; hours and hours that cost thousands and thousands of dollars.

Retention of expert witnesses, their preparation of reports, and their testimony in defense of their positions are piled on top of the attorney’s fees, as are the costs of taking and attending depositions in far-flung locations. Those depositions can involve the parties themselves as well as employees, officers, family members, friends, customers, and others who are no doubt overjoyed at the prospect of spending hours of their time meeting with attorneys to prepare for and sit through depositions, or combing through their files, records, and computers in response to subpoenas or requests for documents.

Unpredictable Outcomes

All of this can take years. When a matter finally reaches trial, no matter the brilliance, diligence, and thoroughness of your attorney, your fate is now out of your hands and in those of a judge or 12 individuals who may or may not accept your version of events or interpretation of the law.

Despite your belief in the correctness of your position, you could be hit with a substantial judgment, which will be an unwelcome addition to the astronomical attorney’s fees you have paid your lawyer. Or all of the time, fees, and costs you’ve invested with your attorney in vindicating your position may be for naught if the judge or jury rules against you on your claim for the substantial damages you believe are owed. To add insult to injury, it is very possible that, along with losing, you could be forced to pay the other side’s attorneys’ fees.

A Judgment May Not Be Worth the Paper It’s Printed On

Of course, you may prevail at trial, and receive a judgment for a large sum of money. But, in reality, that sum is reduced, if not entirely wiped out, by the attorney’s fees and costs you paid to obtain that judgment. Even if you are successful in adding your costs and fees to the judgment (which are often drastically reduced by the judge from what you actually paid), you may then face the daunting prospect of having to spend even more money in efforts to collect that judgment. There are many things that can stand between the order that sets forth what your opponent must pay you and actually seeing that money in your bank account.

The losing party may be insolvent, declare bankruptcy, or force you down a rabbit hole of asset protection strategies designed specifically to stifle the efforts of those who would seek to recover those assets. You may also find that the other side won’t take its loss sitting down, filing motions for reconsideration or a new trial, or appealing the outcome of the trial to one, if not two, higher courts. The result of the appeals could be a reversal, or could even be an order for a new trial, in which case the entire process starts all over again. All of this means more bills from your lawyer, and more years spent engaged in litigation activities with no end in sight.

Certainly there are times when litigation is the only viable course of action. When it is, you need a skilled, tenacious, and experienced litigator at your side. But before you unleash litigious fury, you and your attorney should, as dispassionately as possible, evaluate the economic and emotional costs, with a full understanding of the time and expense that will be involved, as well as the risk of losing, or winning only a Pyrrhic victory. It is almost never a good idea to embark upon the process primarily to satisfy your urge for revenge, or as an outlet for anger. All parties should do their best to put emotions aside, and to invest the time and effort necessary to explore every other available option to resolve the dispute.

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