Does Litigating Make Economic Sense?

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One of the most important factors to consider when taking a case is whether the cost of litigating is likely to outweigh the gain. Even if the potential clients are willing to pay your fee, you may better serve them by saying “No.”

Each case raises its own unique concerns, but there are at least 7 common practical problems that every plaintiff’s attorney should consider before accepting a case:

  1. Liability. Is liability clear? Evaluate the evidence supporting each element of each cause of action and the strength of anticipated affirmative defenses. Also, consider the credibility of and empathy likely to be given to the prospective client and any known witnesses.
  2. Damages. Assuming success on one or more theories of liability, what damages can realistically be projected as the client’s recovery? Assess whether any causes of action will support claims for punitive damages or multiple (e.g., treble) damages, and whether any statutory limitations on damage awards exist (e.g., CC §1431 limits liability for general damages to that allocated to a joint tortfeasor; CC §§3333.2 limits general damages in medical malpractice actions).
  3. Attorney fees. Is there a possibility of recovering attorney fees if the action is successful? Besides contractual clauses covering attorney fees, there are California and federal statutes that provide for attorney fee awards to a successful litigant.
  4. Case management. To what extent would you have to streamline service to make the litigation economically feasible? Consider whether it’s possible to cut back on case preparation sufficiently to make the litigation economically practicable while meeting professional obligations and maintaining professional standards, particularly if an opposing party escalates the litigation by requiring responses to various discovery methods. If case preparation will be curtailed to allow the client a day in court, disclose this fact fully and frankly to the prospective client and get it in writing.
  5. Costs. How expensive will it be to prove actual damages? In addition to the costs of discovery, consider (1) in a business case: the cost of analyzing and tabulating lost profits; the time involved in locating, organizing, and analyzing documents; the fees of an expert, if needed, to analyze and testify to losses; and (2) in a personal injury case: the cost of obtaining medical and employment records; the fees of medical and other experts.
  6. Confidentiality/Publicity. Will the proof of injury or lost profits entail discovery of sensitive personal or business information? Ascertain whether information—even if protected by court order from disclosure outside the litigation—will cause embarrassment or competitive disadvantage to the client.
  7. Enforcing judgment. Even if the case on liability and damages appears solid, is there a good chance of recovering an award from the target defendant? For example, is the prospective defendant solvent or does he or she have applicable insurance coverage, or will the plaintiff have to pierce the corporate veil or pursue another theory of vicarious liability to reach sufficient assets?

Get more advice on accepting new cases and clients in CEB’s California Civil Procedure Before Trial, chapter 1.

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© The Regents of the University of California, 2014. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

Topics:  Attorney's Fees, Case Management, Confidentiality, Damages, Liability, Litigation Fees & Costs

Published In: Professional Practice Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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