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By December 19, 2013No Comments

by C. Alden Pearson

“The pound of flesh, which I demand of him, Is dearly bought; ‘t is mine, and I will have it.” Shylock from William Shakespeare’s The Merchant of Venice, Act IV, Scene I.

Often like what happened to Shylock in The Merchant of Venice, obtaining a judgment against someone does not mean you get paid on that judgment or recover your costs incurred to obtain the judgment. For Shylock, he obtained a court order against Antonio, a merchant of Venice, which granted him a pound of Antonio’s flesh; that pound of flesh was the remedy for a breach stipulated in a loan contract between the two. Unfortunately for Shylock, the remedy was construed only to allow for the pound of flesh and not any drop of blood. Severing the flesh without any blood was impossible and Shylock was unable to recover on his judgment.

Litigation costs and risks must be considered throughout the process but are extremely important to consider at the outset of a lawsuit. Whether a party is suing or defending, there are immediate costs associated with hiring an attorney, preparing the lawsuit papers and filing the lawsuit in court. Even for a “run of the mill” lawsuit, these initial costs can be in the low several thousands of dollars.

Lawsuits take time. While a conciliation court trial may be in as few as a couple months from serving and filing the lawsuit; district courts often set out trial dates approximately one year or more from filing and trial dates often get pushed back.

Lawsuits cost money. In addition to the initial costs of starting a lawsuit or answering one, there are on-going maintenance costs of investigation of facts, identification and questioning of witnesses, and gathering evidence. These costs can be significant. If witnesses need to be formally questioned, a deposition of each witness can cost several thousands of dollars when you add up attorney fees for preparation and conducting or defending the deposition; the court reporter who creates the transcript; and the copy costs for the exhibits being used. If the deposition is video captured, additional costs will be incurred for the videographer.

Lawsuits often have motions made by the parties.  Motions must be researched, drafted and argued before the court. They also must be defended against. Most motions cost each side between a low few thousand to many thousands of dollars in attorneys’ fees to do these actions.

Courts also regularly require the parties to a lawsuit to engage in a form of alternative dispute resolution. Usually, that means a mediator must be hired whose cost is split between the parties. Most mediations last at least ½ day for simple cases to over several days for complex cases. Parties attend mediation with their attorneys so the lawyers and the mediator are all putting in billable time.

There are pre-trial dates set with additional paperwork to be filed and motions to be made. At pre-trial, courts often move trial dates back on their calendar.

Then there is trial. Trials can take as little as one day to up to many days depending on the complexity of the lawsuit and the evidence and witnesses to be presented. Unless it is a jury trial, it is a rare trial that run with consecutive trial dates. Often there is one day, then another in a few weeks or months, then more days later. For each day of trial, you can conservatively estimate a day of trial preparation by the attorneys and two days for each trial day if it is a jury trial.

After trial, for non-jury trials there are post-trial submissions the court requires. Basically, the attorneys each prepare a draft order for the court which is used by the court in creating its judgment. Sometimes there are post-trial motions made and defended.

If there is no appeal, or after all appeals have finished, then the judgment must be collected. The court provides some collection powers to hold and sell judgment debtor assets; however, if there are no assets; there is no value to the assets; or the values of the assets are already secured by another creditor, the judgment may be essentially worthless. Regardless, the out-of-pocket costs spent along the way are unrecovered.

Litigation is both costly and risky for all involved. This summary only addresses the monetary costs; however, litigation takes its toll on all involved emotionally as well. Because of these factors, settling where everyone is left a little unhappy often makes more sense than a slug fest where everyone is left bloody, staggering and penniless—except for the lawyers, of course, as long as they get paid.

© 2011 Alden Pearson, P.A. All rights reserved.

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