Parties to litigation are often dismayed by its costs. Attorney fees alone can motivate the payment of handsome settlements even in meritless cases, and litigation costs tend to make traditional litigation unavailable, impracticable or uneconomical as a tool for individuals and organizations if substantial funds are not available or if the dispute is not worth many hundreds of thousands of dollars.
Jerome K. Jerome’s comedic travelogue, Three Men on the Bummel, published in the year 1900, places in the mouth of one of the characters the following statement: “If a man stopped me in the street and demanded of me my watch, I should refuse to give it to him. If he threatened to take it by force, I feel I should, though not a fighting man, do my best to protect it. If, on the other hand, he should assert his intention of trying to obtain it by means of an action in any court of law, I should take it out of my pocket and hand it to him, and think I had got off cheaply.”
Litigation is—and perhaps has always been—a troublesome, unpredictable drain on time, energy and money. Yet it is sometimes also unavoidable. A terminated employee is free to sue, and it may be difficult for a court to discern, prior to prolonged discovery (if ever), a meritorious case from a meritless one.
In the context of employment disputes, careful attention should be devoted to avoiding litigation in the first place while at the same time preparing for that contingency. De-escalation and relationship management can sometimes deter lawsuits. Some studies have found that a physician’s apology for a medical error tends to reduce the risk of litigation. Similar emotional dynamics may be at play in the employment context. This is not to suggest that an apology for termination is a good idea—in most cases, it is not—but only that the state of the departing employee’s emotions may impact whether a lawsuit is brought, and the employee’s emotions might be quite different depending on how a termination is handled. Terminations for cause are more likely to be sustained by courts and arbitrators when they are supported by abundantly clear documentation. It is often cost-effective, in contentious terminations at least, to involve legal counsel before a lawsuit has been filed to minimize the risk of litigation, to obtain a release of claims in exchange for severance or other benefits and/or to pursue pre-litigation mediation.
But if litigation does come, here are some important pointers for how to minimize and mitigate the misery:
- Encourage your counsel to discuss with you creative solutions. Hopefully, attorneys are always seeking creative solutions, but it can’t hurt to encourage creativity through an actual discussion. There will rarely be any “silver bullet” to solve litigation woes, but there are numerous ways, besides those mentioned below, that certain aspects of litigation can be rendered less unpleasant or less costly.
- Consider the value of cordial relations—between counsel at least, if not between the parties. A basic level of trust and collegiality between counsel can make it easier to resolve discovery disputes, pursue settlement discussions and conduct trials without having to go to the judge at every third step. Collegiality can be oil in the joints of litigation machinery. Therefore, employers should consider whether taking a hardnosed approach in a given case will really save money in the long run.
- Be open to settlement. Litigation involves a cost. According to economic theory, a rational party should be willing to pay nearly the amount of that cost, if necessary, to avoid that cost, as long as doing so does not create additional risk/loss/expense or eliminate potential benefits, and sunk costs are irrelevant. Of course, settling can create additional risk and may eliminate the potential for certain benefits (such as producing favorable precedent, clarifying the law or recouping costs after a victory). The suggestion here is not that a party should ignore valid considerations, but only that a party should not foreclose settlement by an emotionally-driven insistence that they are in the right.
- Consider alternate dispute resolution strategies for particular cases, and think about contractually mandating such procedures. Mediation, arbitration and interesting combinations of these (sometimes called “med-arb”) may in particular instances provide a more efficient means of resolving disputes than traditional litigation. “Med-arb” is a strategy where the mediator attempts to negotiate a settlement and then becomes the arbitrator who decides the case if mediation fails. To a certain extent, employers can contractually require employees to utilize these alternate strategies rather than litigation when a dispute arises. Employers may also be able to contractually define the dispute resolution process.
- Be deliberate about whether to demand a jury trial. Plaintiffs often leave defendants no option; but, if a jury is not demanded by the other side, do not automatically elect a jury trial. Jury trials are somewhat more complex and therefore more time-consuming and expensive than bench trials (trials to a judge). The prospect of a bench trial may even favorably alter the way a court views summary judgment motions.
While litigation is sometimes unavoidable and usually painful, there are often ways to avoid or reduce the expense and unpleasantness entailed by the process.
If you have any questions, please reach out to:
- Brian Sabey at 720-282-2025 or briansabey@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer an individual’s questions that may constitute legal advice.
