Top Ten Questions to Ask your Lawyer before you Litigate
You’ve opened the morning mail. It includes a certified letter. Inside you find a summons and complaint and, after reading it, you learn your company is being sued by a customer/former employee/competitor. You forward the documents to your old college roommate, who is now your lawyer and was the one who helped you file the documents to set up your company years ago. Your friend says he will take care of the suit, but $100,000 in legal fees later he is recommending six figures to settle a case you thought had no merit. What went wrong?
For starters, turning over a lawsuit to a lawyer without litigation experience is not the best approach. Before retaining counsel for a litigation matter, ask these questions:
1. Does your lawyer have trial experience?
Does your lawyer have trial experience? If so, how many trials, bench trials, jury trials, administrative hearings and contested matters of any type has the lawyer handled and what is his or her winning percentage? If the lawyer has little experience or can’t seem to win, do you really want your business in that person’s hands?
2. Ask for a litigation budget
How much will this cost if you settle the case now and how much will it cost during the life of the lawsuit?
3. Ask for a cost-benefit analysis
What is the range of outcomes or exposure and what are the chances that they will happen? What is a likely success and what is the chance you’ll achieve that success? With this information, a budget, and monthly invoicing, you can reduce the financial surprise of litigation. Any experienced trial lawyer should be able to give you this information at the outset.
4. What are the alternatives to a trial?
Discuss the benefits of early mediation, which is a formal settlement process. Discuss the various types of arbitration, which is usually cheaper than a trial and is often quite effective, especially in business-related disputes.
5. Preserve your defenses
Discuss at the outset the defenses of personal jurisdiction and venue. Personal jurisdiction relates to limitations placed on the courts to protect you from being sued in a state where you have not done business. The venue question is similar and requires the court that has the most connection to the case or the parties to preside over the case. The venue and personal jurisdictional defenses, if not raised immediately, will be waived and you won’t be allowed to raise them at a later date.
Most businesses are better off litigating on their home court. In one case, we were able to move the case from a federal court in Michigan to the federal court in Fort Wayne. We won the case on summary judgment by asserting and proving an arcane statutory defense, unique to Indiana and non-existent in Michigan. If we had been forced to litigate in Michigan with a judge who most likely was not familiar with the defense, summary judgment could have been next to impossible. Where the case is heard can be very important.
6. Put your insurance carrier on notice
Even if your general liability policy does not cover contract disputes, some provide coverage for claims based on trade secrets, defamation, environmental damage, software, and malware related claims, and other non-negligence type claims. Let the insurance company evaluate whether there is coverage, even if you believe there is none. While coverage may not be guaranteed, what is certain is that the failure to notify the insurance company of the suit in a timely fashion will jeopardize any coverage you may have had.
7. Put it in writing
Insist on an engagement letter with your litigation counsel, identifying the terms and conditions of the representation, the cost of and the scope of the work to be performed, and how billing will be handled.
8. Broadly check for conflicts
Make sure your counsel performs a conflict search not only to see if the firm represents the party who is suing you, but also to search for names of your competitors, suppliers, customers, or anyone else you might be uncomfortable having represented by the same firm representing you. While you still may want to use that firm, you can request that your attorney take precautions to segregate your information from other attorneys in the firm who represent those other clients with whom you may have a concern
9. Preserve your evidence and ensure preservation by the other side
Any business-related lawsuit will require you to preserve documents potentially relevant to the dispute. Make sure you discuss this with your counsel at the first meeting and make sure your counsel understands how to preserve your electronic documents and what the extent of the preservation will be. Your attorney should understand how your IT system works and any routine document destruction policies. You should also discuss sending preservation notices to the other side if you believe the other side may not be preserving documents needed for the litigation.
It is also advisable to spend some time with the attorney who will be handling the case. Have lunch. If it’s a lengthy proceeding, you want to know in advance if you’re going to be simpatico.
Good luck. It’s crazy out there.