When you hire an attorney, you will likely sign a fee agreement ranging anywhere from a page to a dozen pages (or more!). In spite of the seemingly excessive terms and conditions – all of which have a purpose, even if that purpose isn’t inherently obvious – most clients are primarily concerned with the fee that they will be paying to their attorneys. (You should always ask if there is a provision of a fee agreement you do not understand, even if it seems inconsequential.)
Generally speaking, the fee that you pay to your attorney will take one of three primary forms: (1) flat fee, (2) hourly fee, or (3) contingency fee. There is a fourth way to structure a fee agreement, combining any two of flat fee/hourly/contingency into a “hybrid” agreement.
Attorney fee agreements must be fair, reasonable, and fully explained to the client. (Alderman v. Hamilton (1988) 205 Cal.App.3d 1033, 1037.) Attorneys also have a “professional responsibility to make sure clients understand their billing procedures and rates.” (Severson & Werson v. Bolinger (1991) 235 Cal.App.3d 1569, 1573.) An attorney may not recover a fee in excess of that which was explained to the client, and to which the client has consented. (Id.) Moreover, an attorney may not charge an unconscionable fee. (Cal. Rules. Prof. Conduct 4-200.)
Before addressing fee structures, it is also important to note that another component of your attorney-client fee agreement is the “costs” portion of the agreement. Costs include everything from court filing fees to deposition transcripts to faxes, copies, and postage. Some attorneys, generally on contingency fee cases, will pay the costs (or “front” the costs), to be reimbursed at the conclusion of the case. I will front costs on occasion, however a wise attorney (and past president of the San Diego County Bar Association) once advised me that it is important for clients to “have a stake” in the outcome of the case, and to pay costs as a case proceeds. I have heeded this advice, and have found that it is important for clients to understand, and pay, the costs as they are incurred.
One final note on costs: as indicated above, some attorneys will charge for faxes and copies, on top of their other fees and costs. To me, such charges are nickel-and-diming the client, and are excessive. Yes, attorneys incur costs for faxes and copies, but those costs are negligible. When the client is charged $1.00 per page for these services, the costs are no longer negligible, but rather are a revenue stream for the attorney. (If there are 1,000 pages of discovery in your case, at $1.00 per page the attorney could buy 33 reams of paper (at $30/ea.) for the $1,000 you have paid for your two reams ($60) of paper.)
As far as fee structures are concerned, criminal cases are generally charged on a flat fee basis. Based upon the allegations leveled against you, the skill and experience required to defend those charges, and amount of time that will likely be required, the attorney will decide how much he/she is going to charge to defend you to the conclusion of your matter. The fee is generally required to be paid up front, and if the matter resolves the day after you pay your fee or a year later, you still pay the same fee. Flat fees in civil cases are rare.
An attorney may take a case on a contingency, generally 25% to 40% of the gross recovery, if it appears to be a case of clear liability and if the damages are ascertainable and adequate to compensate both client and attorney. Generally speaking, civil plaintiff’s cases can be taken on a contingency basis. Defense cases generally are not suitable for a contingency as there is no prospective recovery at the conclusion of the case. Similarly, certain cases, such as breach of contract cases, may have multiple prospective goals, including but not limited to monetary recovery. Therefore, plaintiff’s breach of contract cases are often taken on an hourly basis.
Civil defense cases and certain categories of civil plaintiff’s cases – including breach of contract cases, as set forth above – are generally taken on an hourly basis. Hourly fees generally run from $200-750, depending on the experience level and subject matter expertise of the lawyer. Hourly fee cases are generally charged in 6-minute (or 0.1/hour) increments. Some lawyers will bill in minimum 0.2 (7-12 minutes) or even 0.3 (13-18 minutes) increments, meaning that reviewing an email or talking briefly to opposing counsel is going to cost you several times the actual time spent. My belief is that fees should be billed in 0.1 (0-6 minute) increments; similarly, if you are told that you will be billed in 0.1 increments and then your bill reflects all charges of 0.2 or greater, the attorney has misrepresented how you will be charged and, in my opinion, is guilty of misrepresenting the terms of the agreement, and also of charging an unconscionable fee.
Finally, some cases may call for a unique, hybrid fee arrangement. Generally this will take of the form of a reduced hourly rate (say, half of the attorney’s standard rate) plus a reduced contingency percentage (again, half or thereabouts) of the gross recovery at the conclusion of the case. I saw one fee agreement in which the attorney, on a false arrest case, charged a hybrid fee of $350/hr. plus 40% of any recovery. In other words, there was no reduction in either the attorney’s hourly or his contingency, leading to the strong likelihood that the attorney would bill in excess of the value of the case. I have taken hybrid cases when there is a possibility (but not a strong likelihood) of recovery at the end of the case, and in cases where there is both a defense component and offense component to the case, which can occur in breach of contract litigation.
If you have a concern about the fee your attorney is going to charge you, you should either ask your attorney or seek out alternative representation. If it feels like your attorney is looking at you as a blank check, and/or if you receive a bill and realize that the attorney saw you as a blank check, then it’s probably in your best interest to seek alternative representation.
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A prospective client informed me that his Certified Public Accountant (CPA) indicated to him that the part or all of the proceeds of his personal injury action, in which he and his son were severely injured in a car vs. motorcycle accident, may be taxable. I was aghast. As far as I knew, personal injury settlements, verdicts, or awards were non-taxable and employment-related settlements, verdicts, or awards were potentially taxable as income.
Fortunately, my simple understanding was more or less accurate, albeit oversimplified and incomplete. The IRS looks at whether the settlement, verdict, or award is intended to make you whole (non-taxable) or whether it is income (taxable). The definition of “income” is an accession to wealth, clearly realized, over which you have dominion. Since that means nothing, we have to dig a little deeper and get into specifics to determine what is and is not taxable. The IRS uses the term “excludable from gross income” to mean non-taxable. Why can’t they keep it simple? It’s the IRS. If it was simple then we’d all understand, and the IRS couldn’t sleep well at night if we were to collectively understand the tax code.
Here’s what the IRS says about physical injuries[1]:
If an action has its origin in a physical injury or physical sickness, then all damages (other than punitive) that flow therefrom are treated as payments received on account of physical injury or physical sickness whether or not the recipient of the damages is the injured party. [These] damages…are excludable from gross income [i.e., non-taxable]. [T]he exclusion from gross income under IRC section 104(a)(2) also applies to any compensatory damages received based on a claim of emotional distress or mental/emotional injury that is attributable to a physical injury or physical sickness.
In an employment context, damages received to compensate for economic loss, for example, lost wages, business income, and benefits, are taxable unless a personal injury caused the loss. Back pay received on a claim for denial of a promotion due to disparate treatment or discrimination is taxable.
Any other non-physical injury is taxable, whether the claim is for emotional distress (without a physical injury underlying it), breach of contract, fraud, or negligence. Because these are nonphysical injuries, under the current version of IRC section 104(a)(2), only out-of-pocket amounts for medical costs incurred to treat any emotional distress claims would be excludable from income. All amounts determined to represent punitive damages are taxable under IRC section 104(a)(2).
Finally, any interest associated with a settlement, verdict, or award is always taxable.
The bottom line is that you will definitely want to consult a lawyer when constructing your settlement agreement, and you may be wise to consult your CPA as well.
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A civil deposition is sworn testimony under oath, often taken in a lawyer’s office or at the offices of a court reporting firm. In a civil deposition, a court reporter takes down everything that is said in the room, later producing a booklet with questions, answers, and objections that reads like a play or a manuscript. A deposition may be videotaped as well, generally if a witness is going to be unavailable at trial or if the attorney noticing the deposition believes the witness is going to lack credibility.
Each deposition is its own separate event, meaning that only one witness can be questioned per deposition. If the witness has an attorney, that attorney will “defend” the deposition. Defending a deposition means objecting to questions posed by the questioning attorney; the artful counselor will also attempt to coach his or her witness as necessary during the course of a deposition, however coaching (or making speaking objections) is expressly forbidden and is to be avoided. Sanctions can issue for the defending attorney who impedes, coaches, or counsels on the record during a deposition proceeding.
The witness being questioned may be questioned by an attorney from one party or many parties, but never multiple attorneys for the same party. More important than the deposition itself is the pre-deposition meeting that occurs between an attorney and his or her client. Attorneys generally know in advance whether a client is going to present as a good witness. The questioning attorney – the attorney who has noticed the deposition – is looking for two things from the witness: (1) the witness’s testimony, and (2) whether the witness will present as credible and sympathetic to a jury. The witness’s appearance and manner are taken into consideration by the questioning attorney, and part of deposition preparation (“depo prep”) is to ensure that all angles, including appearance and manner, have been addressed.
Some witnesses need a lot of preparation time, whether to refresh on facts or to learn to provide concise answers. Lawyers tend to ask very precise questions. One of the biggest mistakes a deponent can make is to try to anticipate where a lawyer is going with a question and to answer “the next question.” Most lawyers are competent enough to ask the next question. Most. A witness needs to answer the question pending and to let the questioning lawyer listen, process, and proceed.
For lawyers, the intent of a deposition is to box the witness’s testimony. Expert witnesses, many of whom have been deposed hundreds of times, tend to engage in a cat-and-mouse game whereby they refuse to commit to a response. While it is primarily younger lawyers who allow witnesses to control the course of a deposition, I have reviewed deposition transcripts by highly respected lawyers who have been in the game for over 40 years (i.e., longer than I have been alive!) who have failed to nail down critical testimony. There is nothing worse than preparing for trial and realizing that you have obtained testimony that is ambiguous and that cannot be used to impeach a witness. The deposition transcript is very expensive kindling at that point.
The legal system is very difficult to navigate without a lawyer. There are numerous deadlines and tricks and traps to avoid. If you are representing yourself and trying to minimize costs, at a minimum it is wise to hire a lawyer for the express purposes of defending your deposition. You need to anticipate that a lawyer is going to need time to review the file, to interview you, to prepare you, and to sit in at your deposition. The preparation time could exceed the actual time that you are testifying under oath, but in my opinion you will find that it is money well-spent and will likely end up saving you a lot more than it costs you.
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Many people believe that large, international corporations could not possibly structure their businesses with the intent to deprive consumers of benefits to which the consumers are rightfully entitled. To put it another way, on its face it may seem difficult to believe many major insurance companies do their best to ensure that you will never get paid if and when you file a claim.
In every contract there is an implied covenant of good faith and fair dealing. In the case of first party disputes between and insured and his/her/its insurer, the insurer must not take an unreasonable stance on the validity of a defense nor investigate the claim with a conscious disregard of facts which might support coverage. (Beck v. State Farm Mut. Auto Ins. Co. (1976) 54 Cal.App.3d 347, 354; and Delgado v. Heritage Life Ins. Co. (1984) 157 Cal.App.3d 262, 276-278.) Under California law, the gravamen of the wrong in a first party bad faith action is the unreasonable refusal to pay all benefits due under the terms of the policy. (Paulfrey v. Blue Chip Stamps (1983) 150 Cal.App.3d 187, 192.) An insurer may also be liable for bad faith if it unreasonably delays payment on a claim. The exception to this rule is if the insured fails to cooperate. (Globe Indemnity Co. v. Superior Court (1992) 6 Cal.App.4th 725.)
While insurers (smartly) have proved hesitant to cooperate with the discovery process, my colleagues and I have unearthed some very damning and valuable information over the years. One major insurer incentivized its adjusters to deny claims, and kept statistics on its adjusters’ denial rates. Bonuses were offered for higher rates of denial. Another large insurance company instructed its adjusters to deny mold claims based upon a faulty reading of its own policy, and even after the courts had found that such a reading was improper.
Insurance companies work off of probabilities, and some insurers have taken the position that it’s easier to deny claims initially and overpay on bad faith claims than it is to just pay valid claims in the first place. The rationale works like this: if Insurer X denies 10 claims valued at $100,000 apiece, and it knows that only 1 of 10 people are going to sue for bad faith, and on a bad faith claim it may pay anywhere from $100,000 to $400,000, in the long run making 10 denials in bad faith results in profits of $600,000 to $900,000. (Not to mention, in delaying payment on that claim by 12-24 months, the insurer has the benefit of collecting interest on those funds during the time of non-payment, further reducing the value of the expenditure.)
Damages available on a bad faith claim include actual damages (the amount of the claim), consequential damages (including financial and emotional distress), attorneys’ fees, and punitive damages. Even though the law in California is very tough on insurers who breach the implied covenant of good faith and fair dealing, there are still many insurers within California who fail to operate under the letter of the law.
If you have made a claim to your insurer and that claim has been denied, you may want to check with a lawyer to ensure that the denial was proper. I offer a free 45-minute initial consultation, generally an ample amount of time to discuss the facts of your claim and to review the pertinent documents. In order to be prepared for an initial consultation you will need a copy of your insurance policy and any and all correspondence and communication related to your claim, including the denial letter. It is always best to have every communication with your insurer in writing (email is sufficient), and make sure each communication is dated. Be firm, don’t allow yourself to be railroaded, and when the time is right get a lawyer involved to ensure that your rights are protected.
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While recently browsing around on a web site where current and former clients rate and critique lawyers, I saw a comment that piqued my interest. The lawyer in question was downgraded by the client for charging what was perceived to be an exorbitant fee (around $2,000) to take some written discovery and conduct a deposition. (Written discovery is the process of asking the other side questions in writing that they must answer under oath; generally speaking, written discovery is followed up by verbal questioning under oath, which is known as a deposition. Depositions can run 15 minutes to 15 volumes (days!).)
In the review in question, the client was upset because at trial it turned out that the lawyer only used a small fraction of this discovery at time of trial. There are proper and improper uses of discovery, and discovery is one area in which litigation costs can skyrocket out of control. However, if your lawyer sends out 100 questions and/or requests for documents in written discovery, and takes a 4-hour deposition, your lawyer will probably end up with a large volume of background information that cements the facts of your case, and he/she may unearth have one or two written questions and the same number of deposition passages (per deposition) that are directly put in front of a jury at time of trial. As a lawyer, you are successful if you get one or two written questions and one or two deposition passages (per deposition) that are useful at time of trial.
To me, the criticism of the lawyer in question comes down to an issue of communication between the lawyer and the client. As a lawyer, you oftentimes do not know what is going to be useful as you are going through the discovery process. Your job is to be thorough in collecting information, and then later on review to be thorough again so you can create your case. If a jury saw every piece of paper exchanged in discovery they would walk into court, fall asleep 10 minutes later, and wake up as instructed on breaks and when it is time to go home. At the same time, it is important that a client understand what information is being sought through discovery and how much obtaining the information will cost. Having such an understanding as the case progresses will prevent the feeling afterwards that the lawyer overworked the file, and/or that the lawyer obtained too much useless information. I would argue that no information obtained through discovery is useless, but simply that a cost-benefit analysis should be utilized and if costs are an issue then the information sought must be prioritized.
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When looking for someone to mediate your dispute, whether the matter is in litigation or not, there are several factors that you want to consider:
1. What is the mediator’s background?
Most mediators have undertaken an extensive training course prior to beginning to practice as a mediator. I am on the mediation panel of the San Diego Superior Court, which requires a 32-hour course and at least six mediations of two hours or more prior to joining the panel. I took a 40-hour course through North County Lifeline in Vista, California and then mediated or co-mediated approximately 12 cases prior to joining the San Diego Superior Court panel. Equally as important, I began my career in the law working for the San Diego County District Attorney (“SDCDA”) in the area of child support enforcement; in that capacity, I generally mediated 6-12 child support disputes between custodial parents and non-custodial parents in any given day. Spending 15 or 16 months with SDCDA sharpened my mediation skills dramatically and gave me a great foundation to take into my civil mediation practice.
2. How do I know the mediator will be fair and impartial?
There is no way of ever knowing for sure that a mediator will be fair and impartial. That said, a mediator does not make a decision for you; mediation is a voluntary process and ultimately you choose whether or not to resolve your matter. A mediator’s job is to narrow the issues and to assist the parties in focusing on areas of agreement and disagreement, with the ultimate goal of eliminating the areas of disagreement. I believe my background makes me uniquely qualified to mediate civil litigation disputes. I have worked equally for plaintiffs and defendants in my career; I have prosecuted cases for homeowners and defended cases for homeowner’s associations. I have prosecuted insurance bad faith cases for insureds who have been denied benefits and I have defended bad faith cases on behalf of insurers. I have represented plaintiffs who were wrongfully terminated and/or discriminated against and I have defended employers accused of wrongfully terminating an employee and/or discriminating against an employee. In short, I believe one of my biggest strengths is being able to see both sides of an issue, and my background allows me to assess any given matter from both a plaintiff’s perspective and a defendant’s perspective.
3. How much will a mediator charge? Are there any hidden fees or costs that I should know about?
Mediators charge anywhere from $150/hr. (generally a reduced rate through the San Diego Superior Court mediation program) to $500-600/hr. (for a retired judge). If you use AAA or JAMS, you will also likely pay an administrative fee of $150-175 per party. Some mediators will charge you an additional fee to read your pre-mediation brief.
Whether or not you seek out my mediation services through the San Diego Superior Court, my rates are simple: $150/hr. for the first two hours (with a two-hour minimum) and $250/hr. thereafter. My fees are split evenly among the parties unless the parties agree to a different arrangement. I do not charge any administrative fee, nor do I charge for the time spent reading your mediation brief. I charge for the time we spend mediating your matter. Period.
4. How do I know that the dispute will be fully resolved if we settle at mediation?
Generally speaking, if a dispute is resolved at mediation the parties will enter into an agreement that is binding, admissible, and enforceable. Oftentimes a simple agreement will be entered into at the conclusion of your mediation, and thereafter the parties may enter into a more formal and comprehensive agreement. However, the simple agreement entered into at the conclusion of the mediation generally will stand on its own and will encapsulate the most important terms and conditions of a settlement agreement.
5. What if I do not have a lawyer but still want to mediate a case?
There is nothing to prevent a non-represented party from mediating a dispute with a represented party (or another non-represented party), and in fact if you cannot afford a lawyer or do not want to share a portion of your settlement with a lawyer then you may be wise to try to mediate a dispute prior to engaging the services of a lawyer. The court system is awfully difficult to navigate without a lawyer, and it can be time-consuming and expensive. It is presently $350 to file a civil complaint in San Diego Superior Court; hypothetically, you could spend two hours mediating your dispute for $300; if the case resolves then you’re done, and if not then you file a complaint in court but you have hopefully narrowed the issues and understand better your opponent’s strategy and claims or defenses. Really, it’s a no-lose proposition. If you have any questions about the process, feel free to call and I’d be happy to address those questions with you.
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Parties often take an “all or nothing” approach to dispute resolution, or resolving a law suit. By this, I mean that parties will give a mediation, settlement conference, or early neutral evaluation (“ENE”) one shot. Oftentimes this can be two hours or less. If the process fails, the parties trudge on with their dispute. New evidence comes out, more depositions are taken, and the case is again in position for resolution, but the parties assume they have already given alternative dispute resolution (“ADR”) a go. They thus miss a valuable opportunity to resolve a case short of trial.
As a mediator and litigator, I have noticed what often separates good mediators, settlement conference judges, and magistrates judges (who conduct ENE’s and Mandatory Settlement Conferences (“MSC’s”) in the federal court) is a willingness to follow through on a case and to keep a pulse on a case through the litigation process. I have worked with several magistrate judges in the United States District Court for the Southern District of California who are required to conduct an ENE within 60 days of the defendant’s answer. A case is often not ready to resolve at this early stage so the magistrate judge will order limited discovery on a particular issue, and will order the parties to return in a specified period of time. This keeps the litigation and the parties focused on the germane issues. Similarly, good mediators will often follow up in 30 or 60 days with a phone call or letter that lets the parties know that he/she is available if and when the parties want to return to the table.
If your mediator or judge is ineffective then it does not make sense to return to him/her in the context of attempting resolution. But if the issue in the first instance was timing then it makes all the sense in the world to return to the person who is familiar with the personalities, issues, and evidence of your case. I would stress that it is important to keep the lines of communication open, both among counsel and with your mediator or judge, so that you may return at some future date when the case is ripe for settlement.
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Upon taking in a new file, it is my job to marshal as much evidence as possible in order to ascertain the strengths and weaknesses of your case. I believe it is important to negotiate from a position of strength. It is also important to know when in a particular cycle you are going to be in the strongest negotiating position.
I have a colleague who is working on a sexual harassment case that is in the pre-litigation phase, meaning he has not yet filed a case against the prospective defendants. There is no dispute that the harassment occurred. There is no dispute that my colleague’s client had given notice to her employer of previous harassing behavior by her supervisor. It is unknown at present, however, if there had been other prior complaints to the employer regarding this supervisor’s harassing conduct. My colleague has a strong case now. Assuming he has done a thorough and accurate job assessing his client’s credibility and likability (meaning, will the prospective plaintiff appeal to the jury), his case can only get stronger as he initiates litigation. Even if there are no smoking guns out there with respect to prior complaints, he still has a strong case. There is little risk to taking a hard line approach now to the negotiation process and initiating litigation quickly if the defendants are not properly motivated.
Certain types of cases are conducive to early resolution, while others require that evidence be collected, generally through the formal process of discovery, before they can be resolved. Injury cases are generally pretty clear early on as to liability (who was at fault) and damages (the monetary value of the injuries). The issue in those cases is getting all of the records together to make a proper evaluation, which should be completed prior to litigation. A comprehensive client interview should also occur at the outset to determine whether the prospective plaintiff or defendant is going to be a sympathetic witness. Business disputes, on the other hand, are generally document-intensive. Even a “simple” contract dispute may require collection and review of hundreds if not thousands of pages of records. And other cases, such as the aforementioned sexual harassment dispute and insurance bad faith litigation, are generally going to require significant discovery within the context of litigation before they are ripe for resolution. In those cases, the plaintiff is attempting to show a pattern and practice of a given type of conduct, and those smoking guns are only going to be unearthed with significant effort and legal wrangling.
As a client, it is important for you to ask your lawyer what evidence he/she needs in order to move your case forward, and how you can help to get that information together. As a lawyer, having a client who is actively engaged and responsive makes our job representing you infinitely easier. Remember – I need your help in the same way that you need mine.
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Within civil litigation, after a complaint is filed the parties begin the discovery process pursuant to the Civil Discovery Act (Cal. Code of Civil Procedure §§ 2016.010, et seq.). There are varying philosophies on the purpose of discovery. Clients generally want to receive every document that could potentially benefit their case (including but not limited to “the smoking gun”), while offering nothing detrimental or harmful to the other side. Unfortunately, that is not the purpose of the Civil Discovery Act, which requires the liberal production of anything non-privileged that may lead to the discovery of admissible evidence.
As a lawyer, the quickest way to profit off of a client (or to drum up massive fees) is to engage in frivolous discovery disputes. Lawyers generally know before they engage in a discovery dispute what the result is going to be. If they don’t, there is a meet and confer process required by the code whereby lawyers are forced to communicate in good faith regarding the merits of the discovery dispute. As a last resort, the lawyers may go to court (or use a discovery referee) for a determination on a discovery dispute. Courts hate discovery disputes, and with good reason. I have not encountered a discovery dispute that could not be resolved through the meet and confer process. Discovery disputes are time-consuming, costly, and generally speaking the code is going to require the party objecting to production of a document or other piece of evidence to turn over the evidence unless that evidence is protected by a privilege.
In short, the purpose of discovery is a mutual exchange. It’s a mutual exchange of facts, a mutual exchange of witnesses, a mutual exchange of documents, and a mutual exchange of expert witnesses. Some of the evidence is going to go in your favor, some of it will not. Sometimes the smoking gun, if there is one, may be in your favor. Sometimes it may not. Most often, there is no smoking gun. There are piles of documents and anywhere from a handful to many witnesses, and lawyers who, if they are doing their jobs, are working together to mutually exchange and evaluate the evidence to assist their clients in resolving a dispute.
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So, you have a dispute, maybe a lawsuit, what happens next?
Many clients express concerns that if a case is not resolved prior to the filing of a complaint, which initiates the litigation process, that it will not have further opportunity to be resolved by way of a pre-trial settlement. However, the reality is that there are several stages to a dispute, each with a dispute resolution mechanism either built in or available:
(1) Pre-litigation: Generally speaking, there is an opportunity to resolve a dispute or a claim prior to initiating litigation. In some instances, it is appropriate and necessary to shoot first and ask questions later, meaning that you skip past a pre-litigation attempt to resolve your dispute. The majority of the time, however, it is in your best interests to see if you can resolve a case before it is filed in one of the California Superior Courts.
There are several reasons that it makes sense to try to resolve a dispute before it becomes a litigation case: First, neither side presumably has incurred much in the way of costs or fees in the pre-litigation stage. Therefore, each side should have more flexibility and room within which to work in attempting to negotiate an agreement. (This is true for both contingency fee cases and hourly cases; generally speaking, contingency fee agreements call for a smaller percentage of the gross recovery pre-litigation versus once the complaint has been filed.) Second, there is generally less emotion to block the path to resolution in the pre-litigation phase of the case. Once the matter enters litigation, it is much more likely that one of the parties will become emotionally entrenched and will start making decisions emotionally as opposed to rationally. Third, once the matter enters litigation, there is generally going to be a discovery process (more below) that requires the expenditure of certain costs and fees. This process, as detailed below, is not only time-consuming but can also be costly.
(2) The CMC: A litigation case is started by filing a complaint in one of California’s Superior Courts. After the complaint is filed, the defendant(s) has 30 days to answer. Generally speaking, filing and service takes anywhere from 2-4 weeks. For planning purposes, you can estimate 60 days from filing of the complaint until the defendant files a responsive pleading. In San Diego, the Superior Court orders a Case Management Conference (“CMC”) within 90 days of the defendant’s filing of a responsive pleading. At the CMC, the parties will have an opportunity to select an alternative dispute resolution (“ADR”) procedure, including mediation or a settlement conference. Thus, within 6 months of the filing of the complaint, the parties will generally have a second opportunity to resolve the case.
(Note: in Federal Court, there are different ADR processes and procedures available. The District Court for the Southern District of California orders an Early Neutral Evaluation (“ENE”) in front of the magistrate judge within 60 days of the defendant’s responsive pleading to the complaint. This is effectively an early settlement conference that takes place in front of an eminently qualified and experienced federal judge.)
(3) Discovery: It is important to know the facts of your case before you enter into settlement discussions. It is also important to know what evidence the other side has and will be producing at time of trial. These are factors that ultimately influence the value of the case. The discovery process includes written questions (interrogatories, request for admissions, and request for production of documents), oral questions (depositions), and document subpoenas to third parties. While this process can be time-consuming and costly, it can also be extremely valuable. Oftentimes, this process will lead to the “discovery” of a case-changing document or witness statement. A case-changing event can often lead to expedited settlement discussions and, if the stars align, resolution.
(4) Pre-Trial: Should the matter make it all the way to the eve of trial, courts will often order the parties to attend a settlement conference in front of a Superior Court judge in order to give the case one last chance to informally resolve. There is also the possibility of resolving a case “on the courthouse steps,” which may entail jury selection and can even include making opening statements and taking trial testimony. It is never too late to settle, but at the same time pushing your adversary into court with hopes of then resolving your dispute is a very risky game of chicken and is generally not advisable.
There is nothing precluding the parties from initiating settlement discussions at any point. While it is important to negotiate from a position of strength, sometimes you are forced to try to resolve a case wherein the evidence is stacking up against you. I call it “pulling the parachute.” You may also hear me talk about good money chasing bad money. (The flip side of that is when the evidence stacks up in your favor. You may hear me talk about “holding the cards.” If we’ve got the cards, we’re not going to overplay them. But we’re going to play them.) These are discussions every lawyer should have with his/her client in order that the client can make a logical, informed decision as to how to proceed. As set forth above, there are many mechanisms built into the process to allow parties to resolve their disputes informally.
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