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“Settle or Sue?” The Value of an Expert’s Second Opinion

“Never guess, Watson. It is a shocking habit — destructive of the logical faculty.”

Sir Arthur Conan Doyle put these words in the mouth of his immortal detective Sherlock Holmes. They should be engraved on the tablets of all executive employment lawyers and their clients. They are certainly scripture in our own firm’s practice of executive compensation law.

This is not to say that an executive and his or her attorney can ever totally remove the elements of guess work, estimation and cost/benefit analysis when they have to approach a business problem, but the scope and parameters of the unknown can be substantially narrowed, particularly when it comes to major decisions about legal strategy.

A surprising number of sophisticated executives, confronted with their own legal problem, such as their entitlements in a contract dispute or on the occasion of their separation from employment, start by seeing the situation in stark “either/or” terms: Do I sue my employer or accept what the employer is offering by way of settlement? Some executives recognize that a third option is to negotiate, or have us negotiate, over the terms of the contract or the separation settlement, but even these executives often require guidance to think about what legal and business elements they should consider in formulating a negotiation strategy.

If they are angry or distressed about how they have been treated by their employer (such feelings are common, and often warranted), they assume that if the employer has offered “x,” they should offer three times “x” and be prepared to commence a lawsuit if their counteroffer is not accepted. I would like to have a dollar for every time a client said, “I would rather pay you to litigate this matter than take anything less than the full amount to which I am entitled.” This kind of thinking is the antithesis of the sort of careful, rational decision-making which leads to good, and sometimes great, results in executive employment matters.

Here are just some of the typical considerations: How strong is the executive’s legal position viewed in the cold, hard light of reality? How long will a claim take? How much will it cost? Since litigation can be extraordinarily expensive — 25 years ago, the senior litigation partner at one of New York City’s most fabled firms publicly said that he couldn’t afford to hire himself! — is there a lawyer willing to handle the executive’s claim on a contingent fee basis (i.e., being paid only if there is a monetary recovery)? What is a realistic assessment of the amount of recovery which the executive is likely to receive, calculated after his or her lawyer has taken their fee? How does this amount compare to what the employer is offering or what can be achieved by negotiation, discounted to present value? Are the executive and his or her lawyer prepared, emotionally and monetarily, to take the case through a trial and possibly an appeal? (Almost nothing irritates me as much as lawyers who entice clients, while the client is emotionally distressed and often not thinking straight, into litigation on the strength of the lawyer’s (unfounded) assurance that once a lawsuit is actually commenced or an EEOC claim filed, or sometimes even just threatened, the employer will rush to settle. My experience is the opposite, that when actually confronted with a lawsuit or claim, employers dig in their heels and the employer’s lawyer realizes an opportunity for a long and profitable engagement opposing the claim.)

Often most importantly, what effect will a lawsuit have on the executive’s career in this day and age when all public details about an executive’s career follow them on the internet forever and are routinely seen by prospective future employers? And there are a number of other relevant questions, such as how old is the executive? (Such a simple question actually has a significant bearing on the answer to the previous question.)

Despite these and other considerations, of course, there are situations where a lawsuit is the best or only option, but they do suggest that the negotiation option should be carefully analyzed before it is rejected.

Frequently Asked Questions

1.     Q:     “Is it worthwhile and advisable to get a second opinion from a different attorney?”

A:     Very possibly yes.

2.     Q:     “I am already paying one highly recommended and experienced executive employment attorney, doesn’t the second attorney just add to my cost?”

A:     Depending on what is at stake, and particularly when an executive is contemplating lengthy and expensive litigation, such a second opinion is often extremely cost-effective, representing only a modest addition to the overall legal costs, far less expensive than making a mistake. Just as a medical patient suffering a serious illness and confronted with the question of major surgery often seeks a second opinion, an executive confronted with litigation — a legal equivalent of surgery, which only happens once or twice in an executive’s career — should not be hesitant to seek a second opinion.

3.     Q:     “Won’t I offend my executive employment attorney by seeking a second opinion?”

A:     If you have an executive compensation attorney who is sufficiently insecure that they are disturbed by being second-guessed, that is a good reason why you should be looking for another attorney’s input!

We routinely are asked to give an independent second opinion, and we always support our client’s desire to have another experienced attorney review and comment on our own conclusions.

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.