Under the contract between the parties there may be the right for the prevailing party to recover its attorney's fees if it is successful in litigation. Good attorneys will tell you though that no matter how good the case may seem, you never know what a judge or jury may decide. Thus, the filing of a lawsuit greatly increase the risk of out of pocket expenses to both parties even if a party should ultimately prevail in a trial and appeal.
Litigation is expensive because it takes a lot of an attorney's time and a lot of attorney's time translates into a lot of money. Prior to trial, discovery must be undertaken, which involves such time consuming procedures as requests for production, interrogatories and depositions. For a relatively simple matter, the attorney's fees to undertake filing suit and performing discovery can run from $15,000 to $60,000 or more. It can then cost $25,000 to $100,000 or more in attorney's fees and costs to go through trial.
For most matters, both parties are better off if they can negotiate a settlement prior to filing suit or at the latest prior to going to trial. The problem is, is that usually, either one or both parties do not act fiscally rational when trying to negotiate a settlement. One party will say it is the "principal" of the matter and will desire 100 percent recovery of its damages or the other party will say it did nothing wrong and will not pay a penny. Standing on such principals can be costly.
There are some matters that cannot be negotiated. These usually involve matters where the damages cannot be converted into dollars. An example would be where someone puts up a fence in a neighborhood where fences are clearly not allowed. The person must remove the fence. If the fence is not removed the person will most likely ultimately loose in court and will probably paying for removing the fence in addition to paying their own attorney's fees as well as the aggrieved party's attorney's fees.
Because trials are so expensive and court time itself is limited, most Judges send all litigation matters to mandatory mediation or arbitration prior to trial. A mediator's job is to try to get the parties to look at the matter rationally and give and take in order to settle the matter at the least cost to all parties. An arbitrator's job is to make a decision in the case in place of the judge or jury that can then be tried if one of the parties does not like the decision. Using mediation and arbitration approximately 90 to 95 percent of cases are settled without having to go to the uncertainty of a costly trial.
Settlements are certain, trial outcomes are not. Many say that you have a good settlement when both parties leave unhappy because one side gave up more than it wanted to and the other received less than it wanted. The result however was objectively best for both parties.
This author was fortunate to recently witness the unfolding of a non-litigious settlement of great proportions when he attended the President's Cup in George, South Africa week before last. For those unfamiliar with professional golf, the President's Cup is held every other year as a team competition between the United States and an International Team comprised of professional players from countries other than Europe.
After four days of back and forth grueling matches, the U.S.A. and the International Team tied on the last hole. The match went into overtime with sudden death head to head play between Ernie Els of South Africa representing the International Team and Tiger Woods representing the U.S. Team. Three playoff overtime holes later the teams were still tied and it was getting two dark to play. The teams had two options: continue the playoff the next day or agree to a settlement of a tie.
The cost of continuing the playoff the next day would be great. Many players, who did not have their own jets, had charted a 747. NBC had charted a 747 and almost everyone involved had tight schedules to meet to get to other far away places on time. The cost of finishing the play off the next day (just like the high cost to go to trial) would have probably been at least a million dollars and the outcome would have been uncertain.
The teams, through their Captains Jack Nicklaus for the USA and Gary Player for the International Team, went back and forth in rapid fire discussions and finally decided to split the cup for the two years with the U.S.A. holding the cup for one year and the International Team holding it for the next until the next match in 2005. This negotiation, performed in just a few minutes, was a certain outcome with no one winner and no one looser. Many would say that everyone won and the result was great both for international relations and the game of golf. None of estimated 88 million viewers had to walk away saying their team lost. Sounds like a good settlement to me.
Rob Samouce, a principal in the Naples law firm of Samouce, Murrell, & Gal, P.A. concentrates his practice in the areas of community associations including condominium, cooperative and homeowners' associations, real estate transactions, general business law, estate planning, construction defect litigation and general civil litigation. This column is not based on specific legal advice to anyone and is based on principles subject to change from time to time. Those persons interested in specific legal advice on topics discussed in this column should consult competent legal counsel.