The Costs of Litigation

I’ve been seeing too many cases lately where it’s clear that the opposing party did not understand the cost of litigation before it was too late. Before starting the legal process, talk to friends or other professionals or business owners you know to get a good referral. Even then, it’s not a bad idea to interview several attorneys before you make a final selection.

When you select your lawyer and before you start litigation, you should know the potential cost to go to trial and the potential chances you have when you get there. As with any advice, understand the financial incentives of who is giving that advice – lawyers make money by going to court. Are you being advised of other options? Are you getting a realistic assessment of your chances in court? Is it worth litigation even if you will “win” if it costs thousands to obtain a verdict?

Beyond the simple math that it’s not worth pursuing a claim if the legal expenses approach your demand, you need to understand what happens if you indeed get a judgment against the other party. In most cases, you don’t just get a check in the mail. Many people are judgment proof meaning that they have no assets that you can legally get to satisfy your judgment. Or, if they do have enough income or assets to collect, you often incur yet more fees to force garnishment or other legal remedies to force payment.

Litigation usually starts when the parties are at each other’s throat. Each party feels the other has wronged them in some way and they are out for justice. Our legal system exists for that very reason and it often is the best choice. However, litigation takes a lot of time and money. Slow down – don’t make a rash decision as it’s often hard to stop the process once you have started. Don’t make demands that you are not willing or able to enforce. Don’t start something you can’t afford to finish. Don’t forget it might be best to cut your losses rather than going full steam ahead only to make your problem worse.

People that have been through the process understand these issues all too well. Instead of learning through your own mistakes, select good advisors that don’t jump to litigate before their client is ready and fully informed.

Please send any request for topic suggestions to rene@breenandperson.com. Although we cannot give you legal advice through the column, we can provide some general information that may be helpful for you to know. Our purpose is to educate and we hope that you can take something new away from this column each time you read it.