The thought of being sued sends chills down the spines of most business owners. But a law suit doesn’t have to mean the financial death of a thriving business. Follow these five tips for keeping your legal costs down.
Your business has decided to invest in winning a lawsuit. How do you manage the litigation expenses? Consider these five tips.
1. Do Not Agree to Binding Arbitration. Before any lawsuit appears on the horizon, consider eliminating arbitration clauses from your contracts. Except for smaller disputes (like some employment cases), arbitration is not less expensive or faster than courtroom litigation. One reason for this is the fact that most courtroom cases settle before any trial occurs, thereby eliminating a lot of actual cost savings. Also, arbitrators – who charge fees by the hour or by the day – sometimes hesitate to decide a case summarily without a full hearing. The discovery process in arbitration can be less expensive than in other litigation, but that discovery can also be less effective, making your case tougher to prove. And parties often spend time and money suing over the validity of the arbitration clause itself.
2. Assess the Value of Your Case Carefully. As soon as possible, it is wise to make a conservative valuation of what you really stand to win or lose in the lawsuit or arbitration. Then use that estimate in deciding how much you should reasonably invest in legal expenses. Especially at the outset of a new case, it can be easy to rely on enthusiastic hopes for a massive judgment or wildly pessimistic fears of losing a huge punitive damages award. Instead, spend time with your lawyer and an accountant or other professional to put reasonable boundaries on the expected upside and downside. You will find the actual litigation expenses much easier to bear if your initial budget for the case matches an accurate valuation of what’s at stake.
3. Invest Early to Promote a Favorable Settlement. It’s a fact that most cases settle before any trial or arbitral hearing. And settling at the early stage of the case, rather than settling on the courthouse steps – months or years later – saves more legal expenses than anything else. You can create early momentum and negotiating leverage by taking the initiative to challenge the other side’s weakest claims and defenses. Likewise, you can deflect the other side’s energy and resources by taking care that your own contentions will stand up to their attacks. Nothing saps your credibility as a negotiator more dangerously than making overly-aggressive assertions that are vulnerable to such an attack. As a result, an up-front investment in careful lawyering and initiative is more efficient than any other strategy for controlling costs.
4. Help Your Expert Witnesses. In many cases – such as disputes involving new technologies or complicated financial arrangements, for example – proving your side of the story will require using (and paying) professional expert witnesses. Your lawyers will also depend on the experts in understanding the strengths and weaknesses of each side’s position for purposes of settlement, and in preparing the case for decision. Those pre-trial consultations often account for most of an expert’s billings in a case. You can keep those billings under control by making your own high-level employees available to educate both the attorneys and the experts. After all, your own people are the real experts on the topic of your technology and your business.
5. Stay on Top of the Calendar. As a client involved in a lawsuit, you can manage costs by understanding the timing of the work that your lawyers and your own employees will need to perform. Talk with your lead counsel regularly to understand the calendar of events – for the short term, and for the expected life of the case through trial. You cannot control the schedule, except in limited ways, and partly this is because you cannot control the actions of your opponent. But understanding the calendar allows you and your attorney to budget and plan for the necessary work. This should help you avoid some of the nastiest surprise billings.
© Kohn Law Group, Inc.
All rights reserved
Robert E. Kohn is a lawyer specializing in litigation of complex technical and business disputes. The information in this article has been prepared for informational purposes only and not as legal advice.
Kohn Law Group, Inc.
2120 Colorado Avenue, Suite 160
Santa Monica, California 90404
Tel: (310) 453-1388