When Not to Litigate
One of the most frustrating parts of my job is telling people that it is not worth litigating their claim. People often approach me in anger, upset that someone has done something terrible and eager to seek their day in court. But not every case is worth the time and money for a lawsuit. Some are likely to fail on the merits, and even meritorious ones may not present enough benefit to offset the real costs of litigation.
Why should you read this post about deciding not to litigate?
You’ve read how tedious litigation can be, so not litigating should be super interesting.
You’re afraid of getting sued so you want to send a webpage to someone to convince them not to sue you.
You want a reason not to hire me besides personal distaste.
Image credit: https://en.wikipedia.org/wiki/White_flag#/media/File:Surrender_of_Lord_Cornwallis.jpg
Less Than $300,000
As I have written before, lawsuits are expensive. As a result, any dispute over less than $300,000 may not be worth litigating. This is because the legal fees could exceed the amount in dispute. Why pay a lawyer $100,000 to maybe win a case when for that much money you could definitely make the case go away?
Even in cases where a plaintiff could recover their attorney’s fees from a defendant, it still may not make sense to sue for less than $300,00 and risk losing or risk being unable to collect. It could be a case of throwing good money after bad.
It’s true, $300,000 is a lot of money. And it’s hard to tell someone to just walk away from that kind of loss. But the alternative often is worse: spending even more money and then ending up with an expensive result.
For this reason, many people pursue mediation to press for a quicker settlement rather than spend legal fees litigating. But if there is no credible threat of litigation, it is hard to pressure an adversary to participate, let alone settle.
Serious Reputation Damage
Some people litigate a case to clear their good name. If someone sues, even for a small amount, it may be worth spending more money than the case is worth to prove that allegations are false. Still, litigation is unpredictable and so going to court may not result in the big win that a defendant wants. This is especially true if the defendant wins for some reason besides disproving the major factual allegations, such as on the grounds that the claim is too old or brought in the wrong court.
But some people want to go to court to bring shame to another person. These cases rarely work out well, especially because they expose the plaintiff to publicity and scrutiny. So if the purpose of a lawsuit is to attract attention, the risk that it may attract bad attention is a good reason not to go to court.
Setting a Precedent
A lawsuit may be worth it, even if the money at stake is low, if it will set an important precedent. This is why legal advocacy groups may represent clients for free in some commercial disputes: the court decision may result in a precedent that may have a positive impact on society. So, for example, a lawsuit against a company that discriminated against someone because of their religion may not be worth a lot of money. But the precedent it sets, establishing that certain conduct is discriminatory and having the effect of ending the practice, may be valuable enough to be worth litigation.
Some defendants may also litigate cases that cost more money to defend than to settle because they want to set their own internal precedent. They want potential plaintiff to know that they will not hand out easy settlements to anyone who sues them, but instead will fight. This may cost short term losses, but may save money in the long run by discouraging additional weak lawsuits.