Questions Clients Should Ask Commercial Litigators — #2 What Is This Going To Cost?

You are meeting with a commercial litigator over a business dispute. You have asked him what your case is worth and he has given you his best estimate. Here is what you should ask him next: what is this going to cost me?

It is always interesting to me how few clients (including the ones who have been through litigation before) ask me this question. It doesn’t seem logical to me given that we live in a set price society. Whether its a box-fan at Walmart or an oil change at Jiffy Lube, we expect and get a set price BEFORE we agree to buy the thing. This is the way markets for goods and services work in our country, except (apparently) for legal services. Not only do the providers of legal services not put a price tag on them, but the consumers generally buy them without any idea as to what they might ultimately cost.

I think there are three reasons for this:

1) Clients are afraid it will be a big number and don’t want to know.

2) They assume that there is no price competition between lawyers, so there is no point to knowing.

3) They don’t know how to ask.

Assuming these are the three reasons (or at least three of the reasons) that clients don’t ask what litigation will cost, here is my two cents.

First, the cost is likely to be “big”, but you need to know it so that you can decide whether to proceed with the case. Once the lawyer has answered the first question (what the case is worth), you are going to need to decide what you would be willing to pay to see it through. Only the client can make this decision. If your case is worth $100,000, would you be willing to pay $10,000 to litigate it? Probably. $50,000? Maybe. $80,000? Heck no. How can you make that decision unless you know what the cost is?

Second. There is in fact price competition between lawyers. Try as we might, we have not yet managed to transcend the law of supply and demand. What there is not, is an efficient market for legal services that facilitates rapid price comparison. So, clients have no other recourse but to ask Lawyer Jones what he will charge, and then ask Lawyer Smith, and so on until they get the best possible price. Nobody would buy a box-fan at Walmart if it cost half as much at Target. It should work the same way with lawyers.

Third. Here is one good way to ask (there are certainly others): “what is your best estimate of fees and costs by phase of litigation?” Since business disputes rarely get tried to a jury (the great majority are settled somewhere along the way), the total cost is not that informative. It would be like knowing the cost to ride the bus to California when you are likely getting off in Memphis. I divide up litigation into the following phases: Pleadings (investigation, research and filing the complaint or answer); Discovery (getting documents, information and taking depositions–this phase also includes motions and mediation); Trial (including preparation and post-trial motions); Appeal.

An experienced commercial litigator should be able to give you a pretty decent estimate on what he will charge you for each of these phases. It won’t be exact because there are a lot of things outside of his control, but it should be in the ballpark.

By | 2018-02-13T11:31:08+00:00 November 2nd, 2015|Business and Commercial Litigation|0 Comments

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