This Firm does both litigation and transactional work, and sometimes negotiation skills from deal-making can be used to settle litigation. Indeed, the Firm’s attorneys know that negotiation is an art, not a science.
Litigation is often like high-stakes poker; sometimes the client holds a full-house, which is pretty hard to beat, while other times, the client is mostly bluffing, holding little evidence of a claim. The client’s strengths and weaknesses need to be assessed not only at the pleading stage, but also as the case progresses – from initial motion practice (including a possible motion to dismiss) when affidavits and initial evidence may be presented, to discovery (when documents are exchanged and depositions are taken), to summary judgment (after all the discovery has been completed) and during trial preparation. Even during the trial or after a verdict is rendered may be a time to settle (including while a case is on appeal). At each and every stage of litigation (or alternative dispute resolution, if arbitration is chosen by the parties), there are opportunities for settlement.
A client should always be willing to discuss settlement and should often be the orchestrator of the settlement discussion with the attorney. Settling a case can save a client thousands, perhaps millions of dollars, depending upon the suit, in legal fees and does provide certainty, when it is impossible to predict what a jury, judge or arbitrator may decide.
Clients should work to manage costs and expectations of their litigation because sometimes a client or its counsel can lose sight of the forest for the trees, so to speak. For example, this Firm consulted with a corporate client that had litigation pending with representation by another firm, and when the client received its first bill for legal services from that other firm, it was unhappy and surprised that the bill reflected a sum greater than the amount demanded by a prior employee claiming a lost commission. The client had us speak with the other firm and the response we received was surprising, which was essentially: “The client has a great case and can win on the merits.” That may be fine, when the client is a large organization and where settlings disputes with employees is to be avoided for fear of setting bad precedent, but for most smaller organizations, it would a losing proposition for the client to spend more to litigate than to simply pay a settlement – potentially even the full amount demanded. By settling, the client will avoid not only the cost of attorneys’ fees, but also the time taken away from tasks that those managing the litigation within the client’s organization could be spending on more productive, income-generating tasks.
The enthusiasm the lawyer reflected of the client has a “good case” and “can win” is wonderful when the “zealous advocate” hat is being worn, but it is not necessarily what is best for the client. Litigators litigate, just like a surgeon operates; however, clients need to manage the work and consider whether the dermatologist, rather than the plastic-surgeon, approach might be better in any particular situation. The costs of legal services and time to deal internally with the matter are not the only costs. As stated before, setting bad precedent by settling can also be off-set by getting an adverse decision, which potentially could set even more problematic precedent for the organization, depending on the facts and circumstances of the matter.
Each case has to be evaluated on its own merit, but clients should avoid trying to use the legal process to “stick it to” business associates. Resolving disputes before cases are filed in the pre-litigation stage helps to avoid a public record of disputes. Indeed new potential business partners can get turned off if they see that a client is litigious, suing others for what they may see are small flaws, or failing to pay for what that they may see were services fully rendered and accepted. Just remember, very few court records are filed under seal, so in most instances all papers filed in federal or state court are fair game for public viewing.
For on-going matters, it is important to understand negotiation principles. Old adages like “he who puts the first number on the table loses” may be true, but if someone doesn’t make the first move, nothing can happen at all.
Moving toward a common ground, toward a mutually agreeable number, can be the best course of action for many clients. In order to even make an offer of settlement, the lawyer and the client need to evaluate the strengths and weaknesses of the client’s position at whatever stage the litigation is in. A trademark infringement claim where a plaintiff does not know how much merchandise has actually been sold bearing the infringing mark which would entitle the plaintiff to a monetary recovery may have to wait until some discovery regarding the number of sales and income from those sales is produced. A litigator may, depending on the situation, want to request that information early, so as to avoid wasting time. If the infringement is clear, it may be just a question of damages. By settling the case before a lot of money is spent on the mechanics of litigation, i.e., motion practice and discovery, the parties may be able to save time, effort and money and, as recited in so many settlement agreements, avoid the unnecessary delay and expense of litigation.
In contrast, there may be situations where the parties are very equally matched in terms of their strengths and weaknesses. In such cases settlement at the earliest possible moment may be warranted, as discovery may yield nothing new. What often gets in the way of settlement in such cases is pride – pride of the client and/or pride of the zealous advocate. Pride is something that a client must keep in check. Indeed, the worst outcomes are those where clients have more money than “cents” – when the client litigates for the sake of proving a point. Inevitably, those clients are dissatisfied with the process, even if they ultimately do settle because at some point the “sense” lightbulb goes off.
Knowing when to litigate and knowing when to pull the plug and settle is like the song: “To every season, turn, turn, turn…” There is a time for litigation and a time for settlement. As long as both parties view settlement as a possibility, then there is opportunity for settlement. When both parties try negotiating to a middle ground, a win-win can be possible – a win for the client and a win for the lawyer that assists the client in achieving that successful settlement to stop the litigation and move on to more productive business matters.