Q: Normally, I enjoy my business a lot, but right now I don’t. Why? Because I am involved in a nasty lawsuit that is dragging into its second year. The judge’s first ruling ‘split the baby’ but I cannot live with that. So what do I do – keep paying lawyers and maybe get some justice, or walk away and be in the hole? It is a lose-lose in my book.
A: Your question reminds me of the old song by The Clash (with apologies!):
Should I sue or should I go?
If I sue there will be trouble
If I go there will be double!
The fact is, lawsuits are often a pretty poor way of resolving business disputes. The problem however is that we have yet to come up with something better, and so litigants are usually forced to make some very tough choices. As a lawyer who left the daily practice of law because of, among other reasons, how frustrating and cumbersome litigation can be, I really appreciate that lawsuits are fraught with problems:
Cost: Unless you go to small claims court (see below) you will need to hire a lawyer. Easily upwards of $200 an hour for business litigation, the fees add up quickly and can begin to outweigh any benefits before you know it.
Time: Even though lawsuits are more expedited these days, they still take a long time. A year or more in protracted litigation is not uncommon.
Emotions: When you sue, you are forced to re-live and analyze the offending event time and again. That wears on people.
Resources: Responding to the discovery requests, prepping and participating in depositions, attending hearings, preparing for trial and the like all eat up precious company resources.
Retaliation: They can always sue you back.
So yes, the downsides are plentiful. That said, and I apologize for sounding like the lawyer I am, the other side of the argument is that there are also times when you have no recourse but to sue the bum. When you have been aggrieved, when you are owed money, you deserve recompense, and the way to get that is to get a judgment. Just be prepared for what that likely entails.
Are there ways to avoid the dreaded lawsuit? Yes, I think so.
1. Bluff big: People in business generally dislike litigation and work to avoid it. Use that. If you have a grievance, consider hiring the big guns, have them threaten to sue, but offer to settle for less. Your defendant just may come to the same conclusion that you did – that a lawsuit is just not worth it – and therefore may look to settle.
But that outcome requires . . .
2. Being willing to settle for less than you are owed: If you want to avoid the expense and time of a lawsuit it is almost a guarantee that you will have to settle for less than you want. Be happy if that is the case. Plenty of defendants will not settle. But if your hired gun offers a reasonable settlement, and the other side agrees, you just avoided paying him 10, nay, 100 times that in hourly fees.
3. Go to small claims court: Of course, this is for smaller disputes. The limits of recovery vary by state, but usually it is something like $5,000. In that case, even if you are owed, say $7,500, I suggest you sue for the max in small claims, write off the rest as a loss, and be happy for what you do get.
4. Walk: Not every dispute is a litigation-worthy dispute. Even in the best of cases, you should think that your odds of winning are 50-50. The judge may say yes, or she may say no. The jury may find in your favor, or not. It’s 50-50. Of course some suits are better than others, but you just never know what a judge or jury will do.
When you sue, you are playing with fire and if you are not careful, you will get burned.