How Fixed Fees Ease the Pain of Commercial Litigation & Increase the Chances of Favorable Outcomes
Any business that has experienced a lawsuit knows how complicated, costly, time-consuming, and unpredictable it can be. Much of this is the unavoidable consequence of being involved in a dispute. The same business partner/vendor/client who bent over backwards to make the deal happen will most likely fight you on every issue once a dispute erupts into commercial litigation.
Still, when parties cannot resolve their differences, they’re supposed to be able to turn to the court system for resolution. But with the spiraling costs of litigation and even arbitration, the court system has become a non-option for many, if not most businesses. This means that receivables go unpaid, plaintiffs get “paid off” in order to avoid further court battles, and businesses face the prospect of closing their doors rather than suffer through a long slow “death by legal fees.”
Just like health care, there is no easy fix for this problem. But there are steps that some lawyers in the industry have taken to start making the courts a more viable alternative for businesses that need them.
Specifically, clients need greater control over a key factor in any dispute resolution process: the cost. By offering fixed fees for most of the primary tasks that occur during the course of a lawsuit or arbitration, a client can work with experienced counsel to make educated decisions about strategy and budget.
Any workable fixed fee approach should be based upon three principles:
1.Fixed fee budgets must contain appropriate price points that allow clients to better manage their disputes and increase the chances of a favorable resolution. The fixed fee must make financial sense in light of the complexity of the dispute and the amount at issue. For example, briefing and arguing a motion to dismiss in a straightforward breach of contract claim involving $150,000 should cost less than the same motion in a multiparty lawsuit involving financial fraud claims with $900,000 at stake. Further, although no one can predict all of the twists and turns a case might take, the fixed fees should be specific enough to allow the client and its lawyer to make reasonable assumptions and to establish a budget up front.
2.Experienced counsel who focuses on commercial litigation – and understand the value of managing its costs – are crucial to minimizing the burdens of a dispute. Finding the right lawyer to handle a matter can make all of the difference. When it comes to an alternative billing approach such as fixed fee budgets, it is important to have an experienced commercial litigator who not only focuses on representing businesses, but who has also bought into the fixed fee approach.
3.A client who is educated about the dispute resolution process can dramatically increase its chances of a favorable resolution. Business executives and owners cannot be expected to become experts in litigation that is why you hire a lawyer. But by achieving a basic understanding of the steps in the process, the timing and (again) the fees for each step, a business can make informed decisions and not be at the mercy of its lawyer.
By combining these three principles in an organized manner, the goal of fixed fee commercial litigation services is to bring more standardization and rationality to the decision-making process involved in fighting a lawsuit. That is the first step to making the courts more accessible and useful to businesses that need them, and to increase the chances of a favorable outcome for the dispute.
