From a Litigator’s Desk: Key Questions to Consider in Commercial Litigation

Friday, 14 September 2018 15:38 Written by  Thomas P. Donnelly

People often ask, “What kind of lawyer are you?”  After my stock (and feeble) comedic response of “a good one”, I often say I am a “commercial litigator”.  I explain that our practice includes litigation of disputes which arise between businesses and business owners.  Commercial litigation includes a wide range of potential issues ranging from business torts to breach of contract, both internal to a business entity, and between two or more separate entities.  While there are a wide range of potential issues which must be considered, there are certain basic tenets which I always discuss with our clients before recommending litigation or taking on their representation.   

First, do you have an agreement which might apply to the situation and, if so, what does that agreement say about your position?  Agreements can come is various shapes and sizes, such as corporate by-laws, a formal shareholder agreement, a proposal combined with an acceptance or performance, or even a simple exchange of emails.  Documentary evidence is key, as a litigator is challenged to explain why the written word should not be impactful.       

Second, what is your goal? The kiss of death as to our representation is a client who says “it’s not about the money, it’s the principle”. When I was a young lawyer I had a mentor who gave sage advice when he communicated the firm’s policy that litigation was only appropriate when money was involved.  He would politely say, “we don’t litigate over principle”.  In many ways and in most situations that adage applies.  However, in the corporate setting, sometimes the connection to money is not readily evident or direct such as with regard to disputes over corporate control or enforcing a covenant not to compete.  In many situations, I caution stakeholders to take the long view and weigh the probable outcomes from a purely practical standpoint, taking care never to  lose sight of their long range business goals.   

Third, what is your capacity for litigation and business distraction?  Litigation not only costs money in terms of attorney fees, accountant fees, experts and costs, but participation also requires commitment of a leader’s most valuable commodity; time.  Business people are first and foremost concerned with business (daily operations, management and the bottom line).  Litigation invariably requires substantial client involvement in developing strategy, reviewing pleadings, searching for documents, reviewing documents produced by other parties and preparation for testimony.  I advise potential parties to litigation to think long and hard about the cost/benefit to the business of such an undertaking.

Fourth, what can you hope to recover or save; and what will it cost to do so?  While a corollary to litigation about money, it is not the same question.  The evaluation of potential cost is complex and issue dependent.   In a recent case, settlement discussions in a commercial litigation setting were driven by the anticipated six figure cost to translate thousands of pages of information from Chinese characters to English.  Costs of experts on any issue involving an opinion on issues ranging from the standard of care applicable to a corporate officer, to whether a machine functioned in the way represented, can rapidly accumulate.  Unless there is a provision in an agreement which provides for the recovery of attorney fees or such recovery is otherwise permitted under law, those fees and costs are not recoverable.

The above is not to discourage litigation of bona fide disputes; of which we handle many.  It is simply imperative that the lawyer and the client be on the same page as to expectations, risks and litigation management.  These questions can assist in forming the framework of a solid attorney client relationship in a commercial litigation setting, which goes a long way toward developing realistic expectations, reducing the stress inherent in the process,  and optimizing the chances of a successful outcome.

Thomas P. Donnelly

Thomas P. Donnelly

Tom’s practice focuses on commercial litigation and transactions. In litigation, Tom represents both Plaintiffs and Defendants. Throughout his career, he has undertaken the representation of both individual and corporate clients in subject matters concerning fraud, contracts, employment agreements, breach of fiduciary duty, securities violations, real estate and insurer bad faith. Tom’s clients include individuals and businesses local to the Philadelphia area, as well as national corporations.

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