Attorneys’ fees and litigation-related costs (i.e., deposition costs, expert witness fees, filing fees, travel, etc.) can be significant and, indeed, sometimes overwhelming to a client in a hotly-contested lawsuit. The prospect of incurring such fees and costs frequently discourages companies and individuals from vigorously pursuing or vigorously defending litigation even when doing so in either instance is completely justified. Here are some suggestions for companies and individuals that should minimize those fees and costs.
First, companies should procure insurance with a reasonable deductible that will minimize the company’s exposure to have to pay for attorneys’ fees and costs when that company is sued. Of course, not all potential litigation claims are insurable, but, for those that are, procuring insurance makes sense. For instance, given the proliferation of employment litigation commenced by employees, EPL insurance for a company is a must. Similarly, directors and officers liability insurance for the company’s board members is advisable. Without procuring insurance policies such as these, the company, rather than the insurance carrier, will be paying for the attorneys’ fees and costs in defending a claim.
Second, clients should not be “penny-wise, dollar-foolish” when assessing whether or not to contact counsel about a legal issue. When in doubt about how to address a legal issue that could develop into a lawsuit, call your counsel and incur the fees in seeking legal advice. Incurring those fees will save you or your company significant monies in the long run. Frequently, one of my clients will be sued on an issue that could have been avoided had the client sought my advice prior to engaging in some conduct that spurred the litigation. In other words, a 15-minute call to your attorney about how to address an issue that could develop into expensive litigation could avoid a litigation where a six- or seven-figure legal fee could be incurred.
Third, when selecting an attorney to represent you in a litigation, evaluate that potential attorney’s priorities. Although the vast majority of attorneys always meet their ethical obligation by placing their clients’ financial interests ahead of their own, as in any profession, there are unethical individuals. There are, unfortunately, attorneys who will churn a litigation file to generate fees. In selecting litigation counsel, get a sense of whether or not your attorney will be attempting to litigate your case in the most cost-effective way for you or whether or not your attorney sees the litigation as an opportunity to bill more and more attorneys’ fees and costs. If your potential counsel raises issues — the likely cost of litigating the case, your interest in settling the dispute prior to running up a large legal bill and possible pathways to settling the case in a cost-effective manner — that would suggest that the attorney is putting your best interest over her or her own financial interests.
Fourth, set aside your emotions in litigating a dispute and be guided by business and economic principles. Evaluate whether it will be cost-effective to settle the matter rather than litigate it. Unless you are willing to “pay for principle” to prove a point, if your anticipated attorneys’ fees and costs in the litigation will approach, or indeed, eclipse your potential recovery or what you as a defendant would have to pay to settle the litigation will approach or eclipse what you will pay in settlement, attempt to settle that case.
Although incurring attorneys’ fees and costs in litigation is sometimes unavoidable, if you follow these suggestions, you may well minimize your attorneys’ fees and costs in litigation.
Michael Saffer is the co-chair of Mandelbaum Salsburg’s Commercial and Corporate Litigation Group and focuses his practice on the areas of complex commercial litigation, shareholder disputes, restrictive covenant contracts and corporate counseling. He represents banks, national corporations, closely held companies and entrepreneurs, and has considerable experience in both seeking and opposing injunctive relief actions.