Since I first heard about it around six months ago, I (like much of the country) have been obsessed with the television series “Yellowstone.” As regular viewers of the series may know already, a recurring theme is how one of the main characters deals with people who have disputes. Essentially, this person leaves the two people with a dispute alone so that they can beat each other up for a while until they get over whatever is troubling them and can make up and move on. At least in the series, this tactic is effective, since people get exhausted over fighting after a while and want to bury the hatchet. Duking it out in litigation can be very similar to this scenario, and sometimes, clients just need to exchange salvos during the course of a lawsuit before they can finally come to the table and negotiate a resolution.
Throughout the course of my career, I have handled hundreds of lawsuits, and most of them were probably capable of being settled even before a complaint was filed. Parties often know the extent of damages and claims of liability even before litigation is commenced, but parties are often unwilling to settle at this stage. Sometimes clients have an axe to grind, so they do not want to hand over money to this other side right away without a fight. At other times, parties cannot really comprehend how it might make sense to settle early to avoid the uncertainty of litigation and reduce legal costs. Time and again, I have seen even clear-cut cases being litigated even though they seemed capable of resolution.
Then, during the litigation process, each of the parties gets roughed up a bit. During documentary discovery, the parties need to be closely involved with the process since they need to scour their archives for materials that might be relevant to the litigation. In addition, the parties need to be involved in answering written questions propounded by the other side if the parties ask interrogatories of one another.
Later during the litigation process, parties may need to be deposed. This can be a stressful process even for the most experience parties. Depositions are often hostile affairs, and they can be extremely time-intensive depending on the facts of the case. In some situations, more than one deponent needs to be produced for a company, which can have a bigger impact on the resources of a party.
Throughout this entire process, both parties likely need to spend an inordinate amount of money fighting the case. It is nearly impossible to estimate how much litigation will cost at the beginning since this expense often depends on developments which occur during the litigation itself. Even the most deep-pocketed client may balk at litigation costs after a case has been pending for a year or two. As a result of all of the foregoing, usually a few years into many lawsuits, after each side has gotten its licks in, do the parties really get serious about settling the case.
I have handled a few cases in my career in which settlement numbers were discussed before litigation was even commenced. At that time, settlement numbers were rejected on the reasoning that a party would be able to obtain more favorable results during the litigation process. Invariably during the litigation process, the parties get bruised up by expending time, resources, and money on the litigation. In more than one instance, after costly litigation, the parties settled for about the same amount of money that was offered before a case was even commenced. The only difference is that now, the parties have spent money on the litigation itself and did not get to enjoy the time value of money.
This principle does not just apply to parties to litigation but other stakeholders as well. In many instances, I have spoken to insurance professionals and other stakeholders in the litigation process about an early resolution in order to save the time and expense of a lawsuit. In most instances, insurance professionals wanted the litigation to proceed beyond early settlement stages. In many instances, the case eventually settled for similar numbers discussed at the onset of litigation or on numbers that were even far less favorable than prelitigation demands. Among other reasons, insurance professionals and other stakeholders might want to make litigants duke it out for a while before settling.
All told, the physiological impact of duking a matter out in litigation for a while can make a resolution more likely. As a result, lawyers should recognize that even though an early resolution may not be possible, the sheer impact of litigation may bring the parties to the table to resolve a matter.
Jordan Rothman is a partner of The Rothman Law Firm, a full-service New York and New Jersey law firm. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at jordan@rothmanlawyer.com.
