Can I Be Sued If…? Some Basics Of Litigation, Part II

We will begin this article where we left off last month. A lawsuit has been filed against you. You have met promptly with your attorney to discuss the case strategy and to enable her to record the facts you believe to be true. Your attorney, on your behalf, has moved to dismiss for failure to state a claim but the court has ruled that the facts alleged, if proved, make out a valid claim under the law. Thus, the case must be readied for trial.

As an aside, if the judge had concluded that the essential facts were not in dispute—even if there were some differences on minor points of fact—he may treat your motion as, or require a new motion for, “summary judgment.” This means that because the critical facts are not in dispute, there is no need for a trial and the court can decide the case based on the pleadings.

Returning to our hypothetical case, we are now at the point at which the legal fees begin to mount up. If there is a significant dispute about the key facts, it will likely be necessary to conduct “discovery.”

In the lowest-level trial courts, discovery is sometimes not permitted; cases in those courts are tried before a judge based on what each party has to say. These situations are dangerous to both sides, because each attorney is armed only with his client’s side of the story. The advantage of discovery is that each side gets to see and understand the other side’s case before trial.

But when it is permitted, discovery includes demanding documents from the other side that may reveal important facts and taking depositions. A deposition is an interrogation of a party or other person with knowledge by the attorney. The deponent is required to answer “under oath,” just as if he were testifying at trial.

Document discovery and depositions are essential to trial preparation. These steps enable counsel to ask questions at trial to which they already know the answers, the key to effective cross-examination of a “hostile witness.” Depositions can be wide-ranging and contentious. There is no judge present and the entire proceeding is recorded so both sides have access to it for further study and use at trial.

Discovery has another important role. Aside from the personal discomfort of being examined under oath where opposing counsel has wide latitude to explore the facts, a deposition can affect the parties’ determination to proceed to trial. While costly to both sides, well-done discovery can expose the weaknesses and strengths in each side’s position, and often leads to a new willingness to consider settlement.

Let’s assume, though, that the parties go through discovery but decide to fight to the end rather than settling. Because of congestion on most court calendars, a long time may pass before trial can be held. The judge may call “status conferences” and often will attempt to persuade the parties to settle and thereby remove the case from the trial calendar. More lawyer fees accumulate throughout this process.

One interesting phenomenon about litigation is that most cases settle “on the courthouse steps,” meaning that as the moment of truth arrives, the parties, perhaps prodded by the judge and their own counsel, make a final assessment of the risks of going to trial. The complaining party who chooses trial risks the possibility of getting nothing at all. The defending party, your agency in our hypothetical, faces the possibility of a total loss, including court costs, which must be paid or appealed. Appeals are hugely expensive because counsel for each side must file briefs to the appellate court, often accompanied by copies of key documents from the trial record.

As a business person in the community, you should also consider that trials in the United States are public affairs. Anyone can observe the trial, including reporters looking for a story that their editors will want to publish. I will return to this question in a later article.

A final thought for this installment: despite what you see on television and in the movies, trials are generally rather dull affairs, conducted under the tight control of a judge applying the rules of evidence that determine what kind of information and statements can be admitted. In most cases the only excitement is experienced by the parties themselves—who, in a public setting and under oath, must testify to what they did and possibly disclose business records and practices they would prefer to shield from the public’s, and competitors’, eyes. Ben Franklin reportedly said, “Experience keeps a dear school, but fools will learn in no other.” That aphorism applies in full measure to litigation.

In the next article, I will examine a way to avoid lengthy contentious discovery and costly trials with uncontrollable risks.

Part two of a three-part series. Read part I here.