Controlling litigation costs


When does it pay to go through the
cost and stress of filing a lawsuit?
John J. Butrus Jr., the chairman of Munck Butrus PC’s Litigation Section, is
fond of saying, “winning resets your costs
to zero. The case you win costs you the
least. If you get into a fight, fight to win.”

That is prime advice.

“In many instances, however, litigation
costs prevent you from implementing a litigation strategy that gives you the best
chance to win.” Although litigation expenses can be significant, more than 90
percent of all civil cases settle prior to trial.

Smart Business talked to Butrus about
controlling business litigation costs.

Are litigation costs really out of hand?

Yes and no. Litigation costs deprive many
individuals and small entities access to our
legal system. These persons and entities
often lack the necessary resources to engage in litigation against large opponents.

Our judicial system is designed to accomplish a fair and impartial resolution of litigants’ claims. In theory, every litigant has
the right to expect our judicial system to
provide a forum conducive to this purpose.
Judges, legislators and attorneys must periodically assess whether rising litigation
costs are creating a barrier to a fair resolution of civil cases.

How tough is going through litigation?

While most litigants understand litigation
costs, most do not consider the intangible
costs. Litigation often requires employees
to dedicate significant time and energy to
gather documents, provide information
and otherwise work with counsel on the
case.

Never presume a lawsuit will end quickly.
Most lawsuits have the potential to become a multi-year proposition, and if your
business cannot afford a lengthy battle you
should avoid litigation.

In many instances, there are good reasons to file a lawsuit even though the company may never recover its costs. For
example, litigation often occurs when a
large company wants to protect its intellectual property against infringers. Some
manufacturers, as a matter of policy, want
to litigate all claims to discourage parties
with weak cases from filing suit.

Is there a rule-of-thumb on when to pursue
legal action?

While there is no rule of thumb per se, a
company should consider certain critical
issues before engaging in litigation. Theoretically, a business’s goal is to maximize
long-term value of shareholder equity. Of
course, litigation expenses affect bottom-line profits. In the end, however, a successful lawsuit may lead to higher profits and
increased shareholder wealth.

What do you tell clients who want to fight
about ‘the principle of the thing?’

In most instances, it makes no sense to
incur litigation costs simply to prove a
point. Ultimately, however, the client
decides whether to pursue a claim.

The attorney should explain to the client
that our civil litigation system achieves justice primarily through awarding or denying
monetary damages. In simple terms, our
judicial system is not right venue to prove
a point.

Can mediation help?

In some instances, mediation can help.
During the course of a dispute, the opportunity for a successful mediation comes
and goes.

When the parties have sufficient information to evaluate a case’s value, a case may
be ripe for settlement at a pre-suit mediation. In addition, when both sides want to
resolve the dispute a pre-suit mediation is a
good idea.

A good time to seek post-suit mediation
is just before the parties invest in large
amounts of litigation costs. A critical development that changes the landscape of the
case or resolves a critical disputed fact also
presents an excellent opportunity to
resolve a case through mediation. An imminent trial date is perhaps the best motivation for the parties to agree to mediation.

How do you choose a litigator?

Past success is an excellent predictor of
future success.

In addition, ask questions to determine
whether the firm has the in-house expertise needed for your case. In many cases, it
is less expensive and more convenient to
consult in-house experts than to hire outside consultants. Your case may involve
intellectual property, tax, employment and
other practice areas in addition to litigation. When the firm you hire has attorneys
who practice in these areas, your costs typically go down.

Finally, be sure you have good rapport
with the attorney you hire. Highly educated
people such as engineers, scientists, accountants and attorneys tend to rely on
technical skills and logic rather than intuition. However, litigation success goes
beyond technical proficiency. It is critical
that you trust your attorney and feel he or
she is looking out for your best interest.

JOHN J. BUTRUS JR. is chairman of the Munck Butrus
Litigation Section. He has more than 20 years of trial and litigation experience and currently handles intellectual property and
complex commercial litigation matters for corporate clients and
investors. Reach him at [email protected] or (972) 628-3600.