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BUSINESS LITIGATION: Managing Your Attorney in a Business Dispute

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Most people justifiably assume that when they hire an attorney to represent their interests in a lawsuit over a business dispute, that the attorney is on “their side.” In most cases, that is a safe assumption . . . at least when it comes to the arena in which the client is lined up against the opposition in the dispute. However, there is another relationship in the litigation arena in which the wise client will understand that his interests and his attorney’s interests are not necessarily always aligned.

This can be well illustrated with two very different outcomes from two similar efforts I made recently to settle two different business disputes. In both cases, I met with the client just after they had been named as a defendant in a lawsuit. In both instances, I advised the clients that the economic burden of litigating the lawsuits was going to be substantial and that a resolution of the dispute at the outset, if possible, was likely going to be in their best interests. There were significant reasons for this. In both cases, the parties had years of a prior positive business relationship that had been mutually profitable. If the rift could be healed, there was the opportunity for restoring the business relationship. In both cases, the amounts of money in dispute were relatively small. This was a critical fact because the costs of litigation may often be many times more than the total dollars recoverable. While litigation is often a no-win situation for even a victorious defendant, victory for a plaintiff can likewise be a “practical defeat” when the actual recovery is less than the amount of attorneys’ fees. In both cases, I convinced the client that the wise path would be to attempt to open a dialogue with the other side to explore early resolution. Here is where the roads diverge.

In the first matter, I encouraged my client to directly contact the party on the other side, who he knew well, to explore their willingness to engage in settlement discussions. He was cautioned not to talk about the substance of the dispute but only the willingness of that party to try and resolve it. We worked out ahead of time a number of options that my client was willing to offer to resolve the dispute. Among those ideas were several business concessions that cost the client little but had real value to the other side. Within a day, the outline of a deal was worked out between the two clients and within a week the settlement agreement was drafted with the joint effort of both party’s attorneys. The lawsuit was dismissed before my client even had to file an answer. Needless to say, the attorneys’ fees were minimal and my client was happy. My experience has been that happy clients are far more likely to come back again and refer others to our firm. Unfortunately, not all attorneys have a long term view of business development in these economically challenging times. Such was the case in my second example.

As with the first matter, I encouraged my client to explore a willingness to talk about settlement. As I always do in these situations, I advised my client to respect any expressed desire of the other side to involve their attorneys in the settlement dialogue. After my client’s repeated calls to the other party were ignored, I called the other side’s attorney directly to discuss having a dialogue about possible resolution. It became clear immediately in my phone call that having this case go away quickly was not something the other attorney had any interest in. He hemmed and hawed and the tone of his voice made it clear to me that a quick resolution was not good news for him. I pressed him as to why he would pass on the opportunity to at least sit in a room and explore options for resolution. I offered that we would agree to invoke the “mediation privilege” so that our discussions could be open and frank and we could speak without concern that what was said could be used in the litigation. I assured him that I would be open to hearing his client's perspective as it would help me to better advise my client on his risk of going forward in the litigation. He finally said he would consider it and get back to me. I heard nothing for two weeks and then I received the answer - a large package in the mail which contained a big set of interrogatories, document requests, and other discovery. His answer was “no.” No, he would not meet to discuss resolution. No, he would not discuss what he and I thought were the relative merits of the case. No, he would not give us an early settlement demand.

The unfortunate reality is that we are seeing an increasing number of situations where the attorney on the other side appear to be hanging on as long as possible to cases to at least enjoy several “good billing months” before the case goes away. Some of these attorneys will work a case hard for months, even years, only to then strongly recommend settlement as the case gets close to trial. Often the terms of that eve-of-trial settlement could have been achieved much earlier in the case and before the incurring significant portions of the obligation for attorneys’ fees.

So how did this second attorney justify an unwillingness to sit down and talk? I'm certain, that he went to his client (assuming he even told them about the overture) and convinced them that this was some sort of nefarious strategy on my or my client’s part and that their interests would be better served by letting him do a little initial work - several thousand dollars or so – before they talk settlement. Most clients trust their attorneys and view the litigation process as a great mystery - a black box from which justice somehow magically appears. They often don't really understand what's going on and the unscrupulous attorney may use legal jargon to present to their clients some plausible sounding strategic benefit justifying the need to do more work and keep the case going.

So what steps can you take to insure that your attorney is really on your side? First of all, you, as the client, need to understand the “big picture.” You need to know at the outset of any case what the most realistic end result is and what the game plan will be to achieve that result. Does that include early settlement discussions, taking a key deposition or some other action that will result in a quick resolution of the case? Second, keep informed. Pay attention to the monthly invoices which should document what your attorney is doing. Finally, ask questions. Why are we doing what we are doing? How is that work consistent with the game plan? Why aren’t we talking settlement? When your attorney is on your side, he or she should always be willing to explain the reason for what is being done or not being done. If answers are not forthcoming, or they don’t seem to make sense, don’t let it go. Press for answers. Get another opinion.

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