It is wise to approach whether to pursue litigation from a business perspective. Between your time, the impact on operations, counterclaims, and the ability to collect judgment, there are a range of factors that constitute the cost to litigate a business. When faced with this decision, it is necessary to deconstruct the problem, weigh the significance of its parts, and assess the potential return on investment.
At Hone Law, we evaluate industry trends, analyze data, and take the time to understand even the most niche markets to better serve our clients. Using this data-driven approach, we help companies navigate the decision to sue or to settle and determine whether business litigation is worth the investment. To evaluate the costs and benefits of litigation versus other alternatives, reach out to our team at (702) 608-3720.
What Are Litigation Costs?
Litigation costs include all the fees spent on pursuing or defending against a legal claim. These fees may include court filing fees, expert witness fees, attorneys’ fees, and other expenses associated with case preparation and litigation. Projected litigation costs are an important consideration when determining whether a lawsuit should be pursued. If the estimated cost to litigate a case surpasses the amount of potential damages that may awarded in a case, the lawsuit may not be financially worthwhile.
Who Pays Litigation Costs in Civil Cases?
The “American Rule” governs the issue of who pays litigation costs in civil cases in the United States. According to this rule, each party must bear the cost of their own legal fees, no matter who wins the case. This rule violates the English common law standard, which states that the losing party pays the legal fees of the winning party, The American Rule was established to ensure that neither party hesitates to file a court case due to a fear of paying the other party’s legal fees.
Can My Company Recover Costs and Attorney Fees Spent on Litigating a Business or Commercial Lawsuit?
Yes, in some cases your company can recover costs and attorney fees spent on litigating a business or commercial lawsuit. This is important, as certain costs and attorney fees can easily exceed the amount disputed in the lawsuit. Some ways that your company can recover legal fees incurred during litigation include:
- Contract stipulations. It is common for contracts to include clauses allowing for the recovery of legal fees.
- State laws. Nevada law allows the winning party to collect attorneys’ fees if they recover less than $20,000 (NRS 18.010).
- Bad-faith litigation. Attorney’s fees may be awarded if one party acts in bad faith by bringing a frivolous claim to the court docket.
What Factors Influence Litigation Costs?
The cost of litigation can vary significantly depending on the unique circumstances of a case. Some of the most common factors that influence litigation costs include:
- The complexity of the issue
- Difficulty or novelty of the question asked in the case
- Experience and expertise of your attorney
- Number and importance of documents involved in the case
- Amount of damages or value of any property involved in the case
- The desired outcome that your company is seeking
While this list shows how important it is to consider all potential costs (and benefits) of pursuing litigation, many of these factors are subjective and intangible. Litigation can be highly unpredictable, and it is difficult to anticipate all costs and expenses that may arise. At Hone Law, we will work with you to determine the cost to litigate a business, and whether it makes economic sense to litigate your case rather than settling it.
How Should My Company Determine Whether It Makes Economic Sense to Litigate a Case Rather Than Settling It?
To settle or not to settle – that is the million-dollar question for many businesses in the midst of commercial litigation. Most cases settle before reaching a trial verdict, and there are several reasons for this. Litigation can be expensive, time-consuming, and stressful. The trial and appeals process can last for years, and the public nature of the trial can be unappealing to companies looking to remain private and safeguard their brand’s reputation.
That said, sometimes it makes economic sense to litigate a case rather than settle it. When making this decision, your Hone Law attorney will guide you through the following considerations:
- What is the bottom line? Conducting a comprehensive cost-benefit analysis is vital when determining whether it makes financial sense to pursue litigation. Litigating a small commercial dispute can cost thousands of dollars, and a major trial can surpass the million-dollar mark. It is also important to consider the lost time of key personnel and disruption of schedules, which are hidden costs often ignored when assessing economic feasibility.
- Can your company tolerate the unpredictability of a trial? As confident as you may be in your case, there is always a risk of an adverse verdict. When the decision-making power is in the hands of a judge or jury, there is no promise that they will see your case the way you do. Accounting for this unpredictability is necessary.
- What are the public relations consequences of trial? If there is an aspect of the lawsuit that you would prefer not to make public, settling out-of-court may be the right option. The publicity of a trial impacts your brand’s equity, emphasizing the importance of considering the public relations consequences of litigation.
Speak with an Experienced Attorney at Hone Law Today
Litigation can be an expensive proposition and, if not carefully considered, the costs to litigate a business can outweigh the benefits. At Hone Law, we carefully balance our role as your zealous advocate and sage legal advisor. In doing so, we can ensure that you receive the guidance you need to make an informed decision based on objective facts, potential risk, and our decades of experience. Our team of seasoned litigation attorneys will work with you to holistically assess the tangible and intangible costs of a lawsuit and determine the right path forward. To learn more about our strategic approach, contact us at (702) 608-3720.