Of the millions of contract disputes that arise annually
Uncertainty, Costs and Delay Are Major Factors
Uncertainty – The reason that there is a dispute is there are differing views as to the facts, interpretation of the contract and/or the law. The outcome of a lawsuit, especially the amount of any final award, is seldom certain and in the end, a plaintiff may end up with nothing, possibly paying the defendant or the defendant may have to pay damages that are an unhappy surprise.
Costs - Litigation Is Time Consuming, Complex, Requiring Experienced Specialists, And, Therefore, Costly - A Lawsuit Typically Involves –
Discovery is time consuming requiring meetings with the client to formulate numerous requests for admissions and interrogatories and drafting document requests and to respond and formulate objections to numerous requests for admissions and interrogatories posed by the other litigant and poring over thousands of pages of documents to be produced and those produced by the other side.
With the advent of electronic discovery, e-discovery, the costs for each side to try a typical commercial dispute have doubled. E-discovery results in each side producing tens to hundreds of thousands of pages of emails and other electronic records. This is orders of magnitude more documents than were involved in trials as recently as the year 2000 and, in terms of value received for the investment of time and money, this may well be the least efficient means of uncovering relevant facts. The ratio of pages produced to pages entered as exhibits at trial can easily be 1000/1.
Witnesses have to be prepared for and counsel has to attend or conduct hours of depositions.
Counsel must correspond with opposing counsel as to and research, brief and prepare for and argue discovery motions, motions to dismiss, motions for summary judgment and other procedural motions.
Often counsel must review hundreds of pages of transcripts and thousands of documents in preparation for depositions and trial.
Testimony is oral, which can be far from perfect in such a tense setting. Witness preparation, as well as cross examination and oral argument are skills that require considerable experience and expertise.
Presentation of the case before the Court and the argument of motions are live, which requires considerable practice and skill.
Trying a case, before a judge or jury, requires considerable experience, practice, time and is costly.
While there is not a lot of data available on legal costs, our best estimate of changes in the costs of litigation is that, since 2000:
Delay - To compound the problem, the uncertain resolution, may be two or more years in the offing.
This can give rise to Unfairness - Disproportionate costs can give rise to unfair behaviors. For example it is neither fair nor just if:
(a) only a fraction of a meritorious claim for hundreds of thousands of dollars is paid, because the breaching party calculates that it is too costly and uncertain for the claimant to pursue through trial and therefore offers only a fraction of the amount due, or,
(b) a claimant which appears to be insensitive to costs can force the other party to pay more than is rightfully due and owing by threatening to bring or filing suit and imposing costs that may be equal to a reasonable verdict.