To Sue Or Not To Sue. That Is The Question

Many lawsuits have merit and a court is required to clarify a conflict. Essentially, it is to resolve a difference of opinion, or interpret a clumsily drafted agreement. In the vast majority of these, emotion is not a significant factor.

Other lawsuits are designed to punish someone, or with the hope of financial gain.

Before suing consider the playing field.

What is the probability of winning? 80%, maybe 90%, 100%. Be assured there is no 100% option. 90% is optimistic. While the law, the evidence, and the judges are generally predictable, no one ever knows all the nuance in their case. No one ever knows all the possible evidence. Think of 80% as a very good to excellent case.

What is the likely cost to pursue your case? Trial lawyers are expensive. It is not difficult to spend $200,000 on a complex case where there is a 50% chance of winning. The other side can see how they win in that situation. You spend more on iffy cases. Understand the consequence of your losing, too.

If you win, will you win more than you spend in costs after any recovery from the loser. I have no idea what the numbers might be today, but in the mid 90s a litigation lawyer I knew had information that said the average win was $52,000 and the average net cost to get it was $37,000. It is likely much different now, but the ratio may not have changed much. Ask about it.

Will it likely be appealed? Possible in close cases. More costs, not much chance of a larger gain.

If you win, can the defendant pay? It might be an important issue in choosing your strategic position. Investigate.

All very rational. If you can see the merit in this process, then a trial is likely not so necessary as you think. Consider arbitration if the defendant is also being rational.

When people are emotional

Some family law cases fit here. It is remarkable how often a couple will spend their entire net worth and borrow more to make a point that seems not worth the trouble. I have seen things in these cases that would make petty seem a great virtue. In some, there is nothing too small to fight over. How about a$1,000 in fees and costs to get possession of a $130 cuckoo clock. Or a motion to deny copying family pictures.

The problem with family law lawsuits. It is the last chance to get even. If emotion is a big issue, there can be compelling reasons to carry on a lawsuit solely for the purpose of hurting the other. I recall a case where the first offer to a spouse was, simply we will divide the value evenly.

It went like this. “I will give you the easy to use assets – investments, RRSP, car and cash to equalize.” The response was, “Do you think I’m crazy?” So a new offer. “okay then, You take my half, I’ll take yours.” Again, “Do you think I’m crazy?” As you can imagine this eventually ended up in court.

The result was the spouse who felt wronged was awarded $25,000 less than first offer. In addition they paid about $60,000 of the defendant’s costs and their own legal fees.

If you are in a situation where emotion prevails, you should hope your opponent has an experienced lawyer. Sometimes they can keep things reasonable.

Alternatively, if the emotional opponent makes an offer you deem to be unfair, but you could live with, take it. Closure is important. You can replace money easier than time and turmoil.

Lawsuits for money

These are common with class-action cases, and copyright or patent infringement. If you are the defendant, be highly rational. It’s often just business, but not always.

What happens if it goes on for a long time and at great cost. Notice Chevron and 30,000 farmers and indigenous persons in Ecuador. The case was raised in the 90s and still drags on. Chevron claims the case is without merit because the matter was resolved decades ago with the then Ecuadorian government. The facts are obscure and Chevron claims they are fabricated. There is a judgement in an Ecuadorian court for $9.5 billion.

The lawyer who won the big judgement,, Steven Donzinger, was recently found guilty of withholding evidence. Chevron has always claimed the trial was rigged.

I think a comment more than a decade ago from a Chevron lawyer explains the nature of the conflict. Emotion.  “We will fight this until Hell freezes over and then we will fight on the ice.”  Pretty entrenched position.

Appeals continue.

Many lawsuits for money involve emotion eventually. Even cases that begin rationally swiftly become emotional once the conflict and cost rises. Be the second to become emotional. You might still have a chance.

The takeaway

Be sure you have a rational and affordable reason to go to court. The fight may be energizing in the beginning, but its costs rise and often become debilitating. Think longer term.

Lawyers are Paladins – champions for a cause. The best take cases they think are honourable and winnable. Some never lose. Look up semi-retired lawyer Gerry Spence. He has never lost a criminal case either as defence counsel or as a prosecutor. He has not lost a civil case since 1969. A cynical lawyer once told me that you can’t litigate in vain if the client pays. It’s best to have a lawyer who doesn’t need your case.

Lawyers know far more about what is possible than you know or even can know. Many will do what you want even if it is irrational. Listen more humbly to their expertise.

Most lawsuits are more economically settled outside court. The perfect compromise is one where all of the parties are equally angry about it.

Be sure you want to spend a lot of time and emotion before you start..


I help people have more retirement income and larger, more liquid estates.

Call in Canada 705-927-4770, or email don@moneyfyi.com 

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