17 Essential Factors to Evaluate & Respond to Legal Dispute Risks

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Regardless of the type of litigation – premises or products liability, tort or contract, employment or commercial – each case needs to be evaluated, initially and periodically, to minimize risk to the client. Consider these 17 key factors when making your assessment.

No. 1 – Opposing Counsel

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It makes a difference whether you are dealing with a young lawyer with limited experience or one that is highly experienced and sophisticated. Does the lawyer have a great reputation that might command a higher valuation of risk, of loss or a higher settlement value? Is the lawyer a bully who likes to bury the other side with discovery difficulties? Or is counsel a sole practitioner who is over-burdened and non-responsive?

No. 2 – Prose Plaintiff

The non-represented plaintiff presents unique challenges. They may have no knowledge of relevant law, or they may have researched information on the Internet and fancy themselves an expert. They may have very unrealistic expectations about their likelihood of success, or what they are “entitled” to. They can also devote their lives to their case, increasing costs exponentially. Is mediation appropriate, and if so, when and with whom?

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No. 3 – Need for Outside Counsel

When is outside counsel needed from the get-go? It may be possible for in-house counsel to resolve a claim early through direct negotiation or an early mediation, which can save significant expense for the parties.

No. 4 – Impact of Negative Publicity

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Some cases carry a high risk that an executive could lose their job if the allegations became public. Stock values can be impacted. A client may face bankruptcy if there is a disastrous result. This can highly affect a client’s risk tolerance.

No. 5 – Jurisdiction

It matters whether a case is filed in New York, in California, or in a smaller state with less restrictive litigation rules. Where the claim is filed, and whether it is filed in state or federal court, will impact the likelihood of success, potential jury verdicts, and general settlement ranges.

No. 6 – Potential to Generate Other Cases

Does this one case have the potential to generate a class or collective action? Will there be copycat actions in other jurisdictions? Is it in the client’s best interest to have a precedent set to deter other actions, or to avoid that precedent? Can the company survive a multiparty litigation that goes on for years?

No. 7 – Arbitration

Is there a contractual pre-existing agreement to arbitrate? If so, should the client enforce it? Arbitration is supposed to be a more efficient, less costly forum for resolving disputes, but that is not always the case. Is it worth it to try and enforce a class action waiver, if your client might be arbitrating 140 individual claims?

No. 8 – Afforney’s Fees

How much is it going to cost the insurer or the client to defend, and has that amount been budgeted for and/or reserved? Is there any way to control those costs with an alternative fee arrangement? Costs of defense matter greatly to some clients, and less to others. A contractual or statutory provision that allows a party to recover attorney fees can also significantly drive up the exposure.

No. 9 – Offers of Judgment

Consider the effectiveness of filing an offer of judgment. Is your client willing to have judgment taken on record? Will it cause a plaintiff to take the offer seriously? And what kind of impact will it have on the judge’s consideration of the amount of attorney’s fees to award?

No. 10 – Insurance

Is the client self-insured or is an adjuster located on another coast making the calls on how to defend the case? If there is insurance, what is the deductible, and are there coverage defenses? It helps if defense counsel has a solid relationship with the insurance adjuster, but when that relationship is untested, it can complicate potential resolution.

No. 11 – Multiparty Litigation

If the litigation is a class action, defense costs, ultimate potential loss and plaintiff’s attorney’s fees can be astronomical. If there are multiple defendants, on the other hand, is there a potential for joint defense, and contribution to settlement that can aid resolution?

No. 12 – Likelihood of Summary Judgment

Evaluating whether and when to file a dis-positive motion is critical to risk analysis. If the case is too fact-intensive, or the focus is on “reasonableness” or “good faith,” summary judgment may be realistically out of the question. It can reduce exposure if there are solid legal issues that can be disposed of by motion.

No. 13 – Likely Outcome at Trial

What is the likelihood of prevailing at trial? Caps on damages, and the range of jury verdicts in the area, will be important factors. If it is a high-dollar case, it may be worth using a mock jury to vet the risk. Also important is the existence of appealable issues, and the likelihood of success on appeal.

No. 14 – Need for Experts

Expert involvement can take a case to whole different level. A “battle of the experts” is costly. They require retainers and can charge high costs to research, report and testify. If the other side has an expert, must you hire one to rebut, or can you get away with undermining the expert’s qualifications or opinions without doing so?

No. 15 – Extent of Discovery

Does the case call for extensive document review, requiring many months of e-discovery? Are there 30-plus depositions needed? Is counsel’s perception that it will take at least a full year or more of discovery before a dispositive motion can be filed? Do counsel get along, or do they continually argue over discovery disputes?

No. 16 – Mediation

It’s the rare case where mediation is not a good idea. Most good mediators enjoy at least a 90 percent success rate and, at a minimum, the chance of settlement at mediation is more likely than not. But when is the best time to mediate, to set it up for success? Early, so that the client can avoid the “tail wagging the dog” situation? Or aft er all discovery is done, aft er motions are filed, or aft er they are actually ruled on? And who would be the best choice to mediate for you? Should your client offer to bear the full expense, or should you insist the plaintiff pay for half or at least a portion of the cost?

No. 17 – Impact of Litigation on the Client

Does your client have the workforce to put behind the litigation? Is a “good time” to have your clients focused on work outside of the business or will the litigation be viewed as an unnecessary distraction from their primary focus? Amy Lieberman

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