What Determines The Cost Of Litigation?
The American legal system is one of advocacy. That means that generally speaking, the court in a dispute does not do its own investigation to get to the truth of the matter; rather, it relies upon the parties and their counsel to plead their positions with evidence and legal arguments. The court then weighs the evidence and applies the law to reach a decision. Parties to lawsuits frequently underestimate the cost of litigation, and this often stems from a lack of understanding about how the litigation process works and what goes into presenting their case. This blog post offers some general information to help you appreciate and anticipate (with a non-exhaustive set of considerations) how the legal system may affect the cost of your litigation.
In most civil cases, lawsuits commence only after one or both parties fail in their attempt(s) to resolve the matter out of court. Such pre-litigation activities can range from non-existent to literally years-long protracted communications and negotiations to stave off a lawsuit. It can be difficult to assess the chances that the opposing party will compromise. Negotiations usually involve not only the sharing of information, but the formulation of demands, the research to find and apply supporting legal authority, and shifting perspectives and expectations on what a fair resolution should look like. Except in situations where there is time-sensitivity (such as a statute of limitations, ongoing irreparable harm, imminent insolvency, etc.), it is usually best to make reasonable efforts to exhaust the possibility of a settlement before going to court.
Once an aggrieved party decides to utilize the legal system to seek a remedy, the process usually begins with the drafting, filing, and service of a complaint and associated summons. Washington is known as a “notice pleading” state, meaning that generally, the complaint need not set forth in detail every possible supporting fact to support the claim. However, the pleading still needs to contain enough information to plead the essential elements of each cause of action and must fairly put the opposing party on notice of the nature of the claim and the relief sought. Deciding how to plead your case in a complaint, depending on the complexity of the dispute, can take a fair amount of time, research, and skill, and will often involve further consultations with the client. Sometimes the framework for a complaint has already been developed during the pre-litigation attempts at resolving the dispute. But it can also occur that theories of the case and the cause of action you ultimately allege evolve as the attorney and the client gather additional facts through investigation, and they develop new ideas about potential theories of recovery. Pleading in a complaint can be seen as somewhat of an art more than a science. The drafting process may involve more than just the bare legal requirements for stating causes of action; rather, it can involve selection and interpretation of the facts in such a way as to persuade the audience (i.e., the court, the opposing party, and their counsel) that you have a compelling narrative that is likely to prevail if the case were to be tried.
Once a complaint is filed and served, the opposing party usually has 20 days to respond. While the response is most commonly an answer, the defendant can also attack the sufficiency of the complaint by moving to dismiss it, or the defendant may assert counterclaims or bring in one or more third parties as new defendants in the case. The answer will usually admit or deny each of the factual allegations in the complaint, so that the plaintiff and the court know generally what the contested issues are. When the defendant answers the complaint, the defendant should also state any affirmative defenses to the complaint. Affirmative defenses are legal or equitable reasons why the plaintiff cannot or should not prevail on some or all the plaintiff’s claims. Alleging affirmative defenses can take significant attorney time because failing to raise an appropriate affirmative defense can mean that it gets waived.
Once the pleadings in the case (i.e., complaints, answers, counterclaims, third party complaints) are settled and all parties have appeared (or had their defaults entered because they failed to appear), we are usually in the next phase of litigation, which statistically tends to take the longest and be the most expensive: the discovery phase. Now that the parties have a general sense of what is contested, they can prepare for trial by gathering any relevant evidence. This process will often involve written requests for information (such as interrogatories, requests for production of documents, and subpoenas to third party witnesses), requests for admissions (which attempt to dispose of certain legal or factual issues by confirming the other side’s position or supporting evidence), and last but not least, depositions, which are the taking of oral testimony in the same way you would interrogate a witness or party on the stand at trial, but without being in the courtroom. Discovery tends to be expensive for many reasons, including, without limitation: (a) investigation often leads to further investigation, and only after gathering some information will it become apparent that additional information exists or is potentially relevant; (b) lawyers and parties often battle over what is relevant, what is privileged, what is admissible, and whether requests for information are vague, unduly invasive, or unduly burdensome; (c) sometimes broad requests are necessary to obtain or compile evidence, resulting in voluminous document productions which can be time consuming to sort through, digest, and organize; (d) sometimes witnesses are evasive or non-cooperative, forcing the party seeking the information to go to great lengths to obtain or compel the production of the information sought; (e) the procedures governing discovery can require that the lawyers hash through their disputes before being allowed to bring a discovery motion to the court. The sometimes tortured and protracted process of discovery can greatly increase the cost of litigation.
Often before trial, one or more parties will ask the court to determine that a trial is unnecessary on one or more issues, because the party bringing the motion should automatically win under the law. Such a request is often something known as a “motion for summary judgment.” A case can be completely over without a trial if a court grants the motion for summary judgment on all issues. For more information on that, you can watch my webinar on the Beresford Booth YouTube channel here (https://www.youtube.com/watch?v=7XFJ9MYT7HU).
Throughout the process of civil litigation, it is likely that the parties or their counsel will continue discussing a potential settlement. These negotiations can range from nearly non-existent to almost constant. The devil can be in the details when it comes to settlement (see my prior post here on when settlement agreements become final: https://beresfordlaw.com/when-is-a-settlement-final/). It is not uncommon, in contentious disputes, for lawyers and parties to spend many hours fleshing out details of settlement agreements, often because mistrust between the parties has gotten so out of hand that only carefully drafted obligations or limitations will satisfy a party that their interests are adequately protected by the settlement agreement. The settlement negotiation process also often involves hashing and re-hashing out supporting evidence and theories of the case, and gathering additional pertinent legal authority which the parties have not previously discussed. Attorneys may disagree over the interpretation or applicability of legal authorities advanced by the other side, making the prospect of a resolution more drawn out and less certain. In Washington, it is common for trial courts to require parties to engage in a formal alternative resolution process. This is more than just trading settlement offers or discussing a possible out-of-court resolution; rather, it will involve the mandatory participation with a third-party neutral such as a mediator or a settlement judge. That process alone will tend to require significant attorney time, because the lawyers will normally have to brief the third-party neutral on the issues to prepare them for a mediation or settlement conference.
The good news is that the overwhelming majority of civil cases (i.e., well above 90%) end up resolving without a trial, and most settle voluntarily with an agreement struck out of court. But if settlement still is impossible, and neither parties gives up or prevails on a dispositive motion (like a motion to dismiss or a motion for summary judgment), then they will head to trial. They will participate in pre-trial conference, and the attorneys will have to prepare witness lists, exhibit lists, trial subpoenas, sometimes a joint statement of the case, an opening and closing statement, witness examination outlines, pre-trial motions, jury instructions, etc. This can be a highly time-consuming process, sometimes even more time-consuming than the trial itself. The trial itself will tend to be time-consuming, and will require a high degree of focus, composure, mental and emotional energy, strategizing about the case during breaks in the trial, witness coordination, client communication, etc. If it is a jury trial, the lawyers will have to vet the jury members before the testimony begins, to excuse or disqualify potential jurors for potential bias or other reasons. While the actual time in a courtroom on a trial day might be only 6-8 hours, the working days tend to be longer because the lawyers usually do not have the luxury of simply turning off the proverbial switch the moment the court is in recess. Sometimes a party will make a motion while the trial is in process (such as a motion for a directed verdict, asking the court to instruct the jury that one party must win as a matter of law). Once the attorneys give their closing statements, the judge or jury will typically deliberate before reaching a decision.
The decision will become final if it is not appealed by one of the parties or not reconsidered and promptly changed by the trial court. Appeals can cost tens of thousands of dollars and take many months or sometimes over a year.
Generally speaking, the closer a case gets to a trial, the more expensive it will have been to reach that point. Parties considering litigation should carefully consider the potential costs and understand which aspects of a dispute are within or not within their control. Consulting an experienced litigator can help clients make more calculated risks and weigh them against the prospect of a possible victory or defeat.
The lawyers at Beresford Booth have a wealth of experience in counseling and representing clients in civil disputes, both before and during litigation. We would be happy to assist you. Please contact Beresford Booth at info@beresfordlaw.com or by phone at (425) 776-4100.