Legal Actions - Judgments and Recovery
How to know if you should file a lawsuit
By Boris Parad
A lawsuit is generally the last option that should be chosen in trying to resolve a dispute. This question of whether to file the lawsuit enters the mind of many people who are upset with a bad product or service, or breach of an agreement. In order to answer this question and make a decision, one must consider the following factors:
1. POTENTIAL RECOVERY
Calculation of expected recovery, if the lawsuit is won, is based on the best case and worst case scenarios. Expectations may not be realized. Not all damages may be recoverable.
Illustrations of non-recoverable damages:
(a) In case of breach of contract, the aggrieved party's emotional distress is not compensated;
(b) Loss of income, plus time spent, while involved with a claim or suit is not compensated.
The amount of actual recovery in a lawsuit is unpredictable. In case of a claim for bodily injury, no one can exactly evaluate the amount of compensation which will be awarded by a judge or a jury for the injured party's pain and suffering, disability or disfigurement.
2. ATTORNEY FEES AND EXPENSES
Legal fees may be based on an hourly rate or contingency fee basis. An hourly rate depends on a lawyer's experience, relationship with a client, desire to have repeat business, or volume of client's business being given to that lawyer. Lawyers charge for each minute of their time spent on the case.
Illustrations of billable items:
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Every telephone call to and from a client or any other party related to the client's matter;
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Meetings, legal research, writing of letters and briefs, time in court (which may be charged at a higher rate than for the office work), preparing legal documents, travel time or depositions (interrogations of parties and witnesses) are recorded and then billed to clients.
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Expenses connected with the case may reach such level that further litigation may become counterproductive. Attorneys may advance such expenses but the burden is on the client to promptly reimburse the incurred expenses.
Illustration of typical file expenses or payments to:
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the court for filing a suit;
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the sheriff for serving a party with a complaint and summons;
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a private process server or private investigator for finding a defendant or ascertaining a party's criminal or financial background;
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interpreters for translation of documents or interpreting the testimony of a witness or a party speaking a foreign language;
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experts for giving professional opinions;
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copying of documents and photos, cameramen and photographers for video taping and picture taking;
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court reporters for their attendance time and preparation of transcripts of the proceedings; and
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attorneys for transportation and lodging (for out of town meetings).
A client must pay attorney fees and expenses each month pursuant to the respective invoices. On the other hand, a client does not incur such monthly charges if an attorney agrees to take the case on a contingency fee basis. Contingency fee means that an attorney is participating in the claim recovery, if any, on an agreed percentage.
As a rule, such percentage fluctuates between 20 percent and 50 percent of the amount of recovery. An attorney may advance costs and expenses of litigation to be repaid upon settlement or adjudication or a claim. However, a client remains ultimately responsible for expenses under any of the above-discussed methods of payment.
In Europe, attorneys are not allowed to take cases on a contingency fee basis but are allowed to request a bonus for good results or performance. For poor people or those who cannot afford payment on a systematic basis, a contingency fee method presents a viable alternative to an hourly fee method.
3. ALTERNATIVE DISPUTE RESOLUTION (ADR)
There are many organizations and individuals who are willing to serve as a mediator, counselor, ombudsman, or a judge in a private or out-of-court proceeding. It is much cheaper and faster to resolve any dispute through such intermediaries than to litigate in courts.
Illustrations of such alternative dispute resolution:
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mediation which is a reconciling and advising process;
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binding mediation which results in a decision the parties must comply with;
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arbitration which adjudicates the rights of and binds the parties.
Mediation involves a semi-formal or informal process of introducing evidence by parties. Parties may bring witnesses or documents to support their views and may hire attorneys to represent their interests at the hearings.
Arbitration may be accomplished through government or private organizations, such as American Arbitration Association (AAA), JAMS, Endispute, and many others. Former judges or experienced attorneys hear the evidence and make binding decisions. The rules of the AAA or other adjudicating bodies are different and less restrictive than the rules of evidence adhered to by the courts.
A friend, real estate agent or any expert in the area of the disputed subject matter may become a conflict broker or counselor. If the decision or advice of such a party is not acceptable, then any other ADR method may be used.
4. COLLECTION ON JUDGMENT
After a long and victorious litigation, a winning party secures a judgment from an adjudicating tribunal. This piece of paper may or may not materialize into actual funds being transferred to the winner. Collection on a judgment is a separate legal process. Sometimes one may never recover the award.
Illustrations:
(a) A judgment-debtor declares bankruptcy which would isolate that party from claims of creditors, including the judgment-winner or judgment-creditor;
(b) An off-shore manufacturer of a counterfeit or defective product dissolves its corporation and, adding insult to injury, opens a new company under another name;
(c) All assets of a judgment-debtor are under other parties' names (relatives, friends, corporations, or business associates) and, therefore, that party becomes judgment-proof.
5. LENGTH OF LITIGATION
Litigation is a slow moving process which may take months and, in most cases, years before reaching the trial stage. After filing a complaint, the court issues a summons which must be served on each of the defendants by a sheriff deputy.
If a defendant has moved or otherwise cannot be found, then the legal juggernaut cannot proceed further. Courts inundated with lawsuits cannot quickly digest the suits. Delays caused by the judicial system frustrate the parties.
Illustrations of reasons for the proceedings' delay:
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An attorney asks for continuance of a deposition or trial because of the attorney's family emergencies or conflict of schedule
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A pool of potential jurors has been exhausted;
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The case has been transferred to another judge or court division;
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A party which has to be deposed or answer interrogatories is out of town;
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An expert witness is unavailable on the scheduled deposition or trial date;
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The file was recently transferred to another attorney who had no chance to prepare for trial;
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The suit was filed in a wrong venue (i.e. not where the defendant resides or cause of action arose) and, thus, must be transferred to another court;
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Service on the defendant was improper and, thus, must be properly repeated again;
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A judge assigned to handle the case has left for vacation, or is sick, or temporarily transferred to another court, or is still busy with the preceding trials;
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A new defendant has been added and, consequently, time is needed to conduct written and oral discovery associated with that defendant.
6. OPPOSITION
An opposing party's financial, intellectual and legal wherewithal may affect a decision to initiate litigation. The opposing parties ability to sustain a prolonged judicial process, the quality of their attorneys, and legal defenses may either encourage or stop the filing of suit.
7. PRINCIPLE
Often people desire to punish an opposing party or change the law and, therefore, want no recovery. There are political, moral or social causes which prompt such a decision. On a private party level, such a fight may even be detrimental to every party. During litigation, many unsavory deeds and past criminal or immoral activity of an accuser may come to light.
Illustration:
A spouse wants to leave no assets in order to financially hurt another spouse in a divorce matter. This causes both parties' to employ respective sets of attorneys, spend money and time in connection with the court proceedings, and to stretch the frustration and schism within the family. Also, spouses may be dissatisfied with the court's decision after spending years in court. An ADR method is an option if all parties agree to the ADR.
8. LOSS OF OWN TIME
Litigation is time consuming for the participants. A party must appear at depositions (own and, optionally, of another party) and at a trial. The trial may continue for at least a few days or even weeks. Preparation for a deposition and the deposition itself can take one or more business days.
Mandatory arbitration, which in some states is part of a court-based judicial system, also will take about a day. Consultations and meetings with attorneys, as well as answering interrogatories (opposing party's questions) and requests for production of documents, take many hours of business time.
Loss of business time is translated into a loss of income.
9. STRESS
Besides court appearances and testifying under oath at depositions, arbitration and trial, each participant is thinking and worrying about the case outcome at all times. Such incessant consumption of energy and emotional involvement may increase the daily stress of a person. Such psychological and mental drain takes a toll over the course of time.
10. LAWYERS
Even attorneys usually employ a legal counsel to represent their interest in court. There are lawyers who do not litigate, such as transaction-oriented attorneys who handle real estate closings, acquisitions and mergers, sale of business, etc.
Litigators are a separate breed because besides knowledge of the subject matter they have to know the court rules and rules of evidence.
Patent lawyers have an additional license allowing them to practice in the United States Patent and Trademark Office.
Trust in the attorney's abilities and rapport with that attorney are essential for cooperation, decision making and communication efforts. Experience in litigation of the matters at issue is important.
One may present his own case in any court but the judges usually resent this "pro se" representation because "pro se" litigants are not familiar with the court and evidence admission rules.
In small claims courts where the amount of recovery does not exceed a statutory limit set up by the legislature, for example $2,500 or $5,000, a plaintiff may not need an attorney. Attorneys help to negotiate a settlement or work out a deal.
11. COUNTERCLAIMS
A complaint filed in court may trigger a counterclaim by a defendant against the plaintiff for another act related to the complaint.
Illustration:
A complaint by a professional against a client demanding payment for services rendered may trigger a client's counterclaim or defense of malpractice. That is why a review of one's own vulnerable points and background is needed in order to ascertain the level of risk in that regard. Any past wrongdoing may come to light in the court proceedings.
12. LOSS OF SUIT
In case a lawsuit is lost, the losing party will pay legal fees to his own legal counsel, unless there was a contingency fee agreement, plus file expenses, and the court costs of the opposing party.
If a contract provides for payment of attorney's fees of the prevailing party, then these fees also must be paid by the losing party. Name, reputation and prestige may also be affected by that legal loss. Disclosure of trade secrets may be forced upon a party by the court.
13. ADMINISTRATIVE REMEDIES
Besides the court system, there are many other tribunals which may help an aggrieved party. In general, any problem may be addressed to the governmental agency responsible for or regulating that area of conflict.
Illustrations:
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The Office of Attorney General may help victims of violent crimes, antitrust violations, consumer fraud by businesses and individuals, etc.;
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The Department of Insurance may be asked to secure payment from insurance companies vexatiously and frivolously delaying car repair payment;
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The Department of Labor may impose sanctions on employers in their disputes with employees.
14. APPEALS
A party may appeal the trial court's judgment to the Court of Appeals which may affirm, remand (meaning to return the case to the trial court for further proceedings)) or reverse that judgment. An appeal process may take a few years. In case of reversal with remand, the trial is repeated. Costs will be increased proportionally.
In case the trial court decision or judgment is affirmed, a losing party may try to appeal to the State or the U.S. Supreme Court but the chances of being heard by the Supreme Court are very low. A prevailing party is accumulating interest on the trial court award.
That interest is set by a state statute. In Illinois, for example, a post-judgment annual interest is nine percent. The losing party must post a bond to secure payment of the judgment while the appeal is pending.
CONCLUSION
Knowing all the deficiencies and advantages of the judicial system and practical aspects of the litigation process should help any person or legal entity to make a decision to settle, arbitrate, or adjudicate any claim. Sometimes a letter from an attorney or third party mediator may bring the parties to an amicable resolution of a dispute. It is not justice, but the fair compromise of the parties' positions, that is the goal of such resolution.
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Boris Parad, the firm's founder, has more than 25 years of legal experience in corporate and private practice. As a patent counsel, he represented major corporations in technology transfer, corporate law and intellectual property protection matters.
Mr. Parad is a member of the Association Internationale pour la Protection de le Propriete Industrielle, U.S. Federal Trial Attorneys Bar and International Association for Protection of Industrial Property. His business protection guides have been published in Europe and the United States. He has been listed in Who's Who in American Law.
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Mr. Parad's engineering experience in Europe and the Unites States, combined with his corporate and patent law practice at the foremost U.S. companies, provides Parad Firm with unique tools to lead complex trials of corporate fraud, breach of contract and RICO cases.
Boris Parad's engineering experience is beneficial to our clients in machinery and automotive accident injury litigation.
His technical background helped the firm to win product liability, pedestrian knockdown, child dart-out, bicyclist, and vehicle collision lawsuits. Boris Parad is the lead trial attorney in all of the firm’s federal court cases.
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Kim T. Sanders
Managing Partner
PHAEDEAUX, LLC
Phone: 262-965-4832
Email: sanders@phaedeaux.com
