Friday, April 11, 2008

Thoughts on Business Litigation and Attorney Fees

I had a rather unpleasant conversation with a now former client this morning. Looking back at the conversation as charitably as possible, I am again surprised by how some business clients do not realize that lawyers also are running a business.

When a client does not pay on time or not at all, this affects service to all clients. That is as true for my business as for my business clients.

Oddly enough, the conversation did not begin about fees and what turned the conversation about fees was something I said about if the client wanted to continue pursuing the matter. I mentioned a cost-benefit analysis, was shouted down and the telephone conference went downhill from there.

I believe that every client needs a cost-benefit analysis of any lawsuit. The client should know the costs that will come from the litigation and then decide if the benefits make the litigation worthwhile. Attorney fees make up only a part of those costs:

  1. The time spent producing documents, answering Interrogatories, and attending depositions.
  2. The upfront costs of our own depositions and paying for copies of depositions taken by the other side.
  3. The time spent in court and hanging around a courthouse instead of at the business.
On an hourly basis, the attorney fees could easily exceed $6,000.00 for a simple trial that lasted only one day. The client then would need to decide if the costs were worth paying to defend a $25,000.00 claim or making a settlement offer to get rid of the nuisance.

Take a look at Two lawyers walk into a bar . . . from The Chicago Tribune for a bit more of an insight into attorney fees and law practices.