Why You Should Never Want To See Anyone In Court
By Charles P. Castellon, Esq.
All rights reserved, 2017 ©
It’s beyond debate that we’re a litigious society. Ingrained in American culture is the declaration “I’ll see you in court.” This article will provide an overview of what litigation is about, its costs and ways to avoid it. There are also many reasons why you do NOT want to see anyone in court.
Most legal actions start with a warning shot and attempt to resolve before going to court, usually in the form of an attorney’s demand letter. Sometimes, the law requires a pre-suit notice with an opportunity to cure before filing. In most cases, a potential plaintiff will make a pre-suit demand with a chance to settle.
If a pre-suit resolution doesn’t happen, a complaint is filed. The complaint is personally served on the defendant. In most cases, the defendant will have 20 calendar days to file to respond or risk losing by default.
After services of process, the real fun begins. The defendant files an answer and claims available legal defenses (known as “affirmative defenses”). Usually, the next stage will involve discovery. This is where gamesmanship happens and expenses can pile up, along with much frustration.Discovery is the process through which the parties collect evidence from each other. This may include documents, business records, emails and virtually anything else a party may possess that’s relevant to the case. Written questions called “interrogatories,” are asked and answered under oath.
Depositions are taken. This is a trial preview where attorneys take the testimony of witnesses (including non-parties to the case) with a court reporter making a record. Depositions are crucial to a case because they force witnesses to “show their hands” before going to court. The quality of a witness’ performance at a deposition affects settlement negotiations.
Costs skyrocket because discovery is labor-intensive. Court reporters are paid and expensive transcripts are ordered. Attorneys often use evasive tactics and create discovery battles within the larger war of the case, all costing time and money.
This discovery discussion highlights a common source of tension between attorneys and clients. To effectively fight cases, highly-skilled professionals must spend lots of time, which costs money. When attorneys choose their battles and hold back in selective ways to keep costs down, it can weaken their case and clients get upset. This dynamic shows how litigation can be a no-win situation.
The conclusion of a lawsuit may be a trial where a jury or judge decides the case. Relatively speaking, trials are rare. More often, cases are decided by settlement or a judge’s ruling on a motion without a trial.
Motion For Summary Judgement
Typical motions include a motion for summary judgment. This is a filing, supported by sworn testimony including affidavits and deposition testimony, where one party argues that according to the undisputed facts, the law says they should win. A defendant can win a case through a motion to dismiss on various legal grounds.
Unless the matter is one an attorney will take on contingency, such as a personal injury case against a defendant covered by insurance, most lawyers will require an hourly retainer arrangement. This involves putting a deposit into the client trust (escrow) account and billing time against that deposit. If the case is resolved within the deposit, the attorney will return change to the client. If it’s not and more work is needed after depleting the retainer, the attorney will ask the client to “feed the meter.”
Lawyers want this hourly arrangement because of the unpredictability of lawsuits. No one can know the amount of work the other side will create and other uncontrollable factors. Flat fee arrangements are dangerous because a miscalculation of the time devoted to a case can be disastrous for the attorney who has a business to run.
Worst Case Scenario
To accommodate a client who wants to know what they’re in for with a flat fee, the lawyer is inclined to request a fee reflecting a worst-case scenario. This is likely to hurt the client who pays for the worst-case scenario that doesn’t play out.
The bigger guns have a great advantage. The side with the most money will often prevail through a war of attrition. A weaker party can be spent out of the case or pushed to settle for less than desired. Some cases, however, are based on laws or contracts awarding fees to the winner. Though it’s risky to take a case for an uncertain back-end payday, an attorneys’ fees law or contract clause can level the playing field.
Lawsuits are discouraged by being an unattractive target. This involves becoming judgment-proof by living an asset-protected lifestyle. Many assets are exempt from creditor claims in whole or in part. Examples include Florida homestead property, annuities, retirement accounts and marital property when only one spouse is liable for the matter upon which a lawsuit is based.
For real estate investors, holding title through land trusts is an effective litigation deterrent. A land trust also keeps the investor’s name out of the public record because the investor has legal control over the property as beneficiary while legal title is in the name of the trustee. The land trust statutes cloak the beneficiary and a potential plaintiff can’t find their target’s real estate holdings through a quick public records search.
Once sued, mediation is usually the best path to settlement. The court won’t let a case to go to trial until mediation is attempted. Mediation is a conference where the parties try to reach a settlement guided by a neutral mediator they hire. It’s often best to pursue mediation as early in the litigation process as possible, before too much money is spent. Additionally, a skillful mediator can work miracles in bringing the parties together to settle, despite how far apart they may be at first. However, to end the case, some compromise will be required by both sides.
In summary, litigation is an experience everyone should try to avoid or resolve as quickly as possible. However, even when you win, there is usually a heavy price to pay along the way, both monetary and emotional.