When do the benefits of a trial outweigh the risks?
Don't let the ubiquity of legal TV shows and movies fool you. Courtroom drama is rare in the business world.
Companies dealing with litigation hardly ever see the inside of a courtroom, and it's becoming even more uncommon for cases to go to trial. Federal court judges nationwide saw an average of 539 civil and criminal cases last year, according to the Administrative Office of United States Courts, with only 16 of those typically ending in a completed trial.
The Ohio Supreme Court, meanwhile, reports only 1.1 percent of the state's civil cases went to trial in 2016, meaning legal squabbles are settled outside of court nearly 99 times out of 100.
“The frequency of cases going to trial today is much different than when I first began practicing law,” says Jim Davidson, a partner at Ice Miller in Columbus with a focus on commercial and employment litigation. “Cost can be daunting for businesses of a certain size, especially when you consider not only the lawyers involved but experts, consultants and other professionals who may need to be involved in making contributions to the team.”
Yet, believe it or not, a settlement isn't always the best course of action. When facing down litigation, businesses need to consider all their options. And sometimes that can mean the rewards of going to trial outweigh the risks.
A Morass of Unpredictability
Businesses usually choose to value money, time and predictability over taking a legal matter to court. By their nature, trials are a roll of the dice.
"[As a business] you hate unknown costs and uncertain outcomes,” says Vincent Holzhall, chair of the litigation section of the Ohio State Bar Association and a practicing attorney with Steptoe & Johnson in Columbus. “They like predictability. The legal system is a huge morass of unpredictability.”
Trials are time-consuming for businesses and their employees, witnesses and experts, rarely taking less than a year. Because criminal trials take precedent—due to a defendant's right to a speedy trial—civil trials move on erratic timelines and are likely to experience significant delays.
“So you've arranged for all of your client's witnesses, all of your subpoenaed witnesses, your experts to be there on certain days for trial for a week,” Holzhall says. “And now they all go home. And now you're going to have to do that again.”
Making trial cases even less appealing, tort reform in Ohio in the 1990s limited economic damages, Holzhall says. Attorneys say new technology around patent law and other complicated issues also can discourage going to trial.
“When parties have issues involving complex technical or scientific issues there can be concern about a jury of our peers—or even a judge—understanding the issues that are at hand sufficiently to get the right answer,” says Bill Porter, chair of the litigation group at Vorys Sater Seymour and Pease.
Some potential changes are being discussed, such as putting trials on dedicated timelines, to make them more tolerable to businesses. After all, trials can be beneficial beyond the parties involved, educating the public on issues that otherwise wouldn't see the light of day.
“A number of organizations involving the bench and the bar have been working together to attempt to make jury trials more affordable, more accessible and more expedient so that more people will take advantage of the institution of a jury trial,” Porter says. “If there is success in that regard that should help that trend line [of fewer trials] to decrease.”
Notwithstanding the drawbacks of a trial, there always will be compelling reasons for businesses to pursue the option. It could be the competitiveness or stubbornness of a business owner or an attempt to protect his or her reputation. The company's existence could be hanging in the balance.
But often it boils down to necessity. “You have a trial today because there's a dispute that just simply cannot be resolved, and the parties cannot walk away from it,” Porter says.
How to Proceed
Businesses should understand the pros and cons of taking a case to trial before heading down that path, beginning with a detailed discussion with their lawyers. “You talk about the culture of the business,” Davidson says. “What does it mean to win or lose at trial, how does that make a difference in the life of the business?”
Just as important is understanding the approach of the attorneys handling the case. Are they taking control without regard for input or are they open to collaboration?
“If you're a business owner, say, ‘I'm a little concerned about how we're going to work as a team,' ” Holzhall advises. “I think you would want to use the word ‘team' as the business owner, somehow, some way, and judge your lawyer's reaction to that word. Because you want a teammate, you want a team player.”
Budgeting is critical to the process, comparing the potential cost of going to trial against the cost of settling. It's impossible to know how a trial will proceed and exactly how much it will cost, but experienced lawyers will be able to provide more than a ballpark guess.
Businesses should ask for itemized estimates. Larger companies will already have litigation budgets and are able to better control costs. Some will know, for example, what they are willing to pay for a deposition.
Smaller businesses should count on experienced lawyers to know the typical cost of a deposition, an expert witness and a day of trial.
Clients should ask their attorneys whether the discovery process is likely to be mostly paper or whether there will be some component of electronic discovery.
“You need to be a wise consumer of legal services, and asking these questions of counsel that are experienced and knowledgeable and have been around the block,” says Holzhall, who concentrates his practice in the area of commercial and business litigation with an emphasis on banking and financial institutions. “No one's offended. We're happy to answer them.”
In addition to understanding potential costs of a trial, businesses should know what's expected of them to prepare for the case. Will employees have to be away from the office testifying?
“As a business owner I want to limit it to me, so that I can plan as to how this is going to disrupt my business,” Holzhall says.
Ultimately, collaboration with attorneys will help in navigating the complexity and uncertainty of a trial.
“Have an open and honest conversation with attorneys,” Holzhall says. “Lawyers are just another vendor. And the good ones are happy to talk about all that stuff.”
Evan Weese is a freelance writer.