To Sue, or Not to Sue? That Is the Question

A. Singer & Associates

As an average person, you have probably had little reason to need a lawyer or, particularly, to ever have to sue anybody. But, in business it is a completely different story. Often people break their promises (contracts). They don’t pay their bills. They don’t come through on their end to do what they promised to do. Sometimes, they may even attempt to steal your ideas or steal your customers! And if so, you are on the hunt to find someone who will represent your interests. So, what can you expect?

Like any business, there are all kinds of attorneys. Some are good. Some are kind. Some are rude. Some are totally incompetent. But one thing you can be sure of, it’s going to cost you a lot of money!

Lawsuits are expensive in time and money and emotional toll. So, how do you decide if you should sue or not?

I usually tell clients that a lawsuit is an investment and when evaluating any investment, you need to determine if it will pay off in the end. So, the first thing to look at is what will the law suit produce if you win. Attorneys call this your “damages.” Every legal claim has to have certain elements to even be brought in a court of law – things that have to be proven in order to obtain a judgment in your favor. One of the most important is that of damages and if you don’t have any, you can’t proceed – nor should you want to!

If you were going to purchase a beach lot, let’s say, for investment purposes. Your whole goal is to make sure that the property will increase in value so that when you sell you, you will have made a profit, right? Well, the same is true of a law suit. What can you expect to gain at the end of the suit? If you are in an auto accident, you will be compensated for your injuries, for damage to your vehicle and for the pain and suffering you experienced as a result. Most such cases are taken on a contingency basis so that the attorney is very motivated to get good (and profitable) results for you as they don’t get paid unless you do. The amount of payment is also based on a percentage of what you receive, so again, the attorney is motivated to get the highest return.

One of the most common types of lawsuits (other than accidents or injuries) is breach of contract. So how do you determine the damages you have suffered? Let’s say you purchase a house and don’t find out until after you move in that the roof leaks. The seller was aware of the leak, but covered it up by painting the ceiling and putting in new carpet. This is a violation of law as a seller has to disclose every defect they are aware of or it is a “breach of contract.” Your damages are what it will cost you to have to make the repairs along with any damage that may have occurred to your furnishings and personal property. In such a case, if your claims are proven true, you will be awarded the total of your damages and, in some cases, you can get reimbursed for what you spend on attorney fees. But realize that in most instances, your attorney fees are out of pocket so the total you receive will be reduced by the amount of damages you pay.

Another thing to consider is the length of time that it will take to recoup your losses. In California – and I’m sure in most courts across the land – the legal system is backlogged. Financial cutbacks have reduced the personnel available to assist the court in processing the voluminous amount of documents as well as a shortage of judges. As a rule, therefore, your case can languish through the courts for a minimum of a year and more often than not for up to two years. I always ask clients “how will you feel at the end of two years?” I guarantee that after a year or more of ongoing litigation and ongoing fees and costs, you will not be nearly as angry as you were the first day you spoke to an attorney about representing you!

So a good attorney will advise you at the very beginning what to expect both time-wise and cost-wise. If you determine that after a year or more of litigation you are going to come out even or with a small profit, then that’s the time to reevaluate whether proceeding with a lawsuit is a good idea. It is not a good investment if you spend $50,000 in attorney fees and only get $40,000 back or even $60,000 back.

In one case I had, my client had purchased an apartment building in Long Beach California – an expensive project to begin with. After the close of escrow, they found that the building (and numerous apartments) were riddled with mold. Two years later, we got a judgment for my client of over $1.2 million. His investment in attorneys fees and repairs was $638,000. In the end, aside from the emotional toll, my client was more than satisfied with the outcome. Yes, it took nearly two years to get the result and a lot of stress and anxiety along the way, but it was worth the investment. My client ended up with more than a half-million dollars in his pocket in the end.

So, before you consider filing suit, evaluate all of these things. Interview multiple attorneys and get multiple opinions but, bottom line, make sure you get an answer to the preliminary question. How much will I have to invest to get a return on my money? If the answer to that question is minuscule or that you come out even, then it may be best to walk away – even if it makes you really mad that the defendant screwed you over. In those instances, one can only hope that karma is a real thing and will come to get them eventually!