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At Least 10 Reasons Why You Should (Almost Always) Negotiate Before You Litigate – PART II

Continuing with our last blog topic:

7.     Most employment law plaintiffs lose. This is a fact of legal life which both plaintiffs’ and defendants’ lawyers do not like to speak about, since it is bad for business, but I believe the truth is that far less than 50% of all cases filed on behalf of employees, particularly in Federal court, are successful. Such cases are frequently thrown out before trial after elaborate and expensive motion practice, and in those situations where a case does make it to trial, the plaintiff often loses.

Naturally, like any generalization, there are exceptions. Some executives have excellent breach of contract cases or some variety of discrimination case, but just because an executive has been wronged, and may be legitimately outraged, it does not necessarily follow that he or she has a claim for which the law allows compensation.

8.     And even if they win, many executive plaintiffs do not win as much as they may be entitled to. In addition to proving a legally compensable wrong, executive employment plaintiffs also must prove their actual damages, and the damages the law allows are often less, sometimes meaningfully less, than the true damages the executive has suffered. Then, when you take into account the portion of any recovery which is owed to the plaintiff’s contingency attorney — 30% or more — even a full recovery of damages can be monetarily unsatisfying to the executive.

9.     Bringing a lawsuit against an employer can work continuing damage to an executive’s reputation and job prospects. This is, or should be, a serious cause for concern of any executive employment attorney who is more concerned about their clients’ overall welfare than their own pocketbook. For many executives, and particularly for executives under the age of 55, the additional risk of bringing a lawsuit, even if they win, is that the record of that lawsuit can follow the executive forever, and these days may be trumpeted far afield by all the crazy internet and social media outlets. All the laws on the books cannot prevent employers from doing their own quiet investigation, and the mere existence of a lawsuit may well convince a prospective employer that the executive who brought one lawsuit, no matter how meritorious, could turn out to be “difficult” or “litigious” and is perhaps better avoided. This is both unfortunate and unfair, as well as potentially illegal in many states, but it also is a fact of life. (One of the relatively helpful aspects of arbitration is that arbitration supposedly is a confidential procedure, but that still is no absolute guarantee that the controversy won’t become public.)

10.     Finally, many times the best use of the threat of litigation is before one has actually been started. In our experience as executive employment attorneys, a very real possibility of litigation is often most psychologically effective before a lawsuit or arbitration is actually filed. The prospect of litigation with an executive, if it is not frivolous, really does have a meaningful downside for most employers. That downside often can be used most effectively in a negotiation — where each side is balancing its risks, advantages and costs as part of their thinking about whether and how to reach a deal — before the executive actually “pulls the trigger.” Accordingly, the prospect of litigation in the absence of agreement is often more fearsome and powerful in contemplation than in reality.

Frequented Asked Questions (FAQs)

1.     Q.     “You offer so many reasons why an executive should not commence litigation, why would any executive even think of doing so?”

A.     Note that the reasons given above do not rule out litigation in every situation, but are only offered in support of the idea that litigation is a final remedy if negotiation fails.

2.     Q.     “So would you admit that there are situations where litigation is necessary, perhaps even before negotiation?”

A.     Of course. Some serious controversies simply cannot be resolved short of a court action or arbitration. There are always extreme situations when it is clear from the beginning that nothing will “move the needle” in a controversy except immediate litigation, but we are skeptical of attorneys who always urge litigation as a first rather than last resort. When properly handled, in almost all executive employment situations, there is little or no downside to discussing a potential resolution of the matter before concluding that it can only be resolved by submission to a third party, whether a court or an arbitrator.

3.     Q.     “Doesn’t attempting to negotiate before commencing litigation or arbitration make the executive look weak?”

A.     Absolutely not, and, even if so, who cares? Negotiation is a good way of opening dialogue, building relationships between attorneys as well as the parties, and, above all and always, gathering information about the other party’s position, beliefs and concerns. If an executive strongly believes, after legal guidance, that he or she has a good legal position, a conversation between the attorneys will at minimum provide valuable insights into the defenses which may be raised, and whether there are hidden factors preventing a settlement. These things are always worth knowing at the earliest possible moment.

About the Author

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George Birnbaum

Since 1980, sophisticated business people have relied on George to apply the meticulous preparation, attention to detail, and devotion to his clients he learned from fabled trial lawyer Louis Nizer. A graduate of Harvard College and Harvard Law School, George has over 35 years of distinguished deal-making, litigation, mediation and arbitration experience which he has used to negotiate high-stakes agreements for senior executives and select business clients throughout the United States.