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Knowing the Risks of Litigation

by | Feb 19, 2016 | Firm News |

Not every case is a winner. The nature of litigation implies that there is a irreconcilable issue of dispute that exists between two rational persons. Only when a neutral, or judicial officer, weighs in does it become clear that the law favors one of the two. That being said, it is important for plaintiffs to know the risks of going forward with a lawsuit.

There are plenty of risks. Before I get into the procedural and legal risks, let’s discuss the financial risks. Clients, typically, are responsible for the costs of litigation. Costs are not fees (fees are contingent in almost all personal injury cases). Costs include: postage, medical record copy charges, investigation, experts, filing fees, and other court costs. Attorneys will routinely front the costs, and reimburse themselves from the settlement, but if a case is lost, clients could be liable.

Besides the out of pocket costs that could accrue during litigation, there is also the opportunity costs. Litigation can be time-consuming. A plaintiff may have to miss work. She or he may have to prioritize a deposition ahead of a family obligation. Such realities need to be considered by a plaintiff before they are prepared to move forward.

Now to some of the legal risks. A case may not have the best facts, meaning that the evidence may be weak for the plaintiff. For example, although the plaintiff asserts that the defendant ran the red light, there may be five independent witnesses who claim that the plaintiff was the one who ran the red light! In a situation like above, a defendant may utilize the law to his favor. Let me explain.

In California, a defendant may utilize a statutory scheme intended to encourage settlement discussions. California Code of Civil Procedure (“CCP”) section 998  allows defendants to make an offer of settlement with conditions. Pursuant to CCP 998, a defendant can incentivize the plaintiff to accept an offer, or face the potential risk of having to pay the defendant’s costs and expert fees. An example is illustrative:

Defendant does not believe that he ran the red light. He thinks it was the plaintiff. Plaintiff is certain that it was the defendant, and is demanding a payment of $50,000 for damages incurred. Prior to trial, Defendant makes a CCP 998 offer to settle for $5,000. Plaintiff rejects it. Trial occurs, and the jury awards plaintiff $4,000 in damages. Because the award from the jury is less than the CCP 998 offer, defendant may recover his costs, and expert fees. Defendant’s costs and expert fees are $23,000. Now, the plaintiff owes the defendant $9,000 (difference between the jury award, and the CCP 998 award).

In some cases, the plaintiff has no chance of winning! In those rare cases, when an attorney is usually not retained, and the plaintiff is pro per, there is the added risk of malicious prosecution. Malicious prosecution is a tort that the defendant can assert after the initial case is decided in the defendant’s favor. It is a lawsuit against the plaintiff for having brought a frivolous lawsuit. It could potentially cost the plaintiff thousands of dollars.

Every case is different, and some cases involve very little risk (a simple rear-end collision with substantial property damage and visible injuries). However, it is important for individuals to consult with an experienced attorney so that he or she may know the risks, if any, before proceeding forward with a lawsuit.