This article, written by attorney Jennifer Tamkin, was originally published by the NH Union Leader and can be found here.
Often, the most important business decision is choosing which hill to die on. When considering a potential lawsuit, it’s normal to want to vigorously defend your business from any claims directed its way, or to fight for rights you believe have been violated. However, you should also ask yourself: Is it worth it?
In contrast, if you’re on the receiving end of a demand letter, be mindful of any deadline imposed. Receiving a demand letter, in addition to being unsettling, is often uncharted territory for the recipient. Legal counsel can help a potential defendant understand the allegations and their repercussions, as well as organize an effective path forward — whether that be by gathering more information, making an initial offer of settlement or withholding any response to see if the party takes formal steps to initiate action. This stage might be the cheapest time to settle because minimal legal fees have been incurred. Because of this, many businesses decide to settle a case before it even begins — and they may be wise to do so.
The life cycle of a case
Once your dispute elevates from an informal dispute to formal action, you will find yourself subject to somewhat predictable “stages” of litigation. It begins with the initial pleadings — the complaint that begins the lawsuit and the defendant’s answer, which may include counterclaims against the plaintiff. Based on the pleadings, a party facing claims has the option to attempt to dismiss the case from the starting gate by way of filing a motion to dismiss. A court can dismiss none, some, or all of the claims. If some or all of the claims remain, parties will move through what is known as discovery, where each party will share documents, answer written questions, and attend depositions to discuss the facts of the case. The discovery process is typically the most expensive and time-consuming part of litigation because it is the foundation upon which a case rests. Attention to detail is imperative, and follow-up discovery is often necessary.
Based on the facts, parties may opt to engage in a subsequent stage — summary judgment. At this optional stage, a party files a motion requesting that the court resolve the case in its favor without a trial because, on the undisputed facts collected, that party prevails on its claims. Summary judgment can be another costly venture, but it can prove advantageous. If successful, you and your business could avoid an even more costly trial in its entirety. However, you and your counsel should weigh your likelihood of success prior to this stage. Consider what facts remain disputed and if they matter to any of your business’s claims or defenses.
Finally, depending on what is at stake, seeking alternative dispute resolution such as informal settlement negotiations, mediation, or arbitration at any point during this process could save significant time and money. As the majority of cases settle before trial, you should not be thinking merely about whether to engage in settlement discussions with the other side, but when is strategically advantageous to broach the topic.
The door to settlement is always open
Parties can settle at any time during the litigation process. Courts appreciate good faith negotiations between the parties and often suggest or require mediation. It is likely in your and your business’s best interest to come into negotiation discussions with an open mind, a goal of resolving your disputes, and an understanding that although a settlement may not feel like a “win,” it often leaves parties in a better-off situation than enduring the complete litigation process.
Ultimately, whether to litigate is yet another decision associated with the operation of your business. Be sure to engage in a cost-benefit analysis, including deciding whether or when to engage counsel to aid in that analysis. Just because you’re in a dispute, doesn’t mean litigation is the right or only answer.