Claims Update: So, Your Company Has Been Sued
The phrase “Millions for Defense, Not One Cent for Tribute” is oft cited by clients who find themselves or their company in what appears to be a non-meritorious lawsuit. In these cases, we can become enamored with our defenses and we embark on a scorch the earth litigation. We want to win, we want to tell our story, we do not want to set precedent and we want to make sure the plaintiff and the attorney know we will not give up.
It is all well and good to put a tough face on what appears, at the outset, a winnable lawsuit. For experienced litigators, however, the vagaries of the U.S. judicial system are matters to contend with. Each state has its own laws and procedures, each court has its own rules and, most importantly, every jury is different from the last and each individual juror is unique.
Therefore, as we begin our journey to defend the lawsuit, we must always be mindful of the twists and turns of litigation: surprise witnesses, adverse rulings and unhelpful documents. Although it is a statement of the obvious, the only way to put on a successful defense or to come to a successful resolution before trial is to be prepared.
The receipt of a Summons and Complaint is a routine event for some and for others a first-time experience. In either case, there are general steps that should be taken. At Global Aerospace, we have developed an outline of how we, in partnering with our clients, manage litigation.
At the onset, we believe in collaboration with the insured, insurer, retained counsel and broker. Under the common interest doctrine, we are able to share ideas, strategies and reserve information while allowing us to preserve confidentiality. We work as a team to set forth a course of action from date of service to the ultimate resolution—by settlement or verdict—of the lawsuit.
Although many times we would like to try the case until verdict, the risks of trial must be carefully assessed. At the outset, the defendant must establish a Litigation Hold that advises the relevant employees of the pending litigation with instructions not to destroy documents or any relevant data. Early retention of defense counsel with expertise in the matter is critical for early evaluation and protection of privilege.
A common pitfall in litigation is the late discovery of documents and witnesses that may have an adverse effect on the defense. Therefore, it is incumbent upon the defendant to self-discover, i.e., to know the documents, identify the company witnesses and understand the pros and cons of the defense.
Assessing the Landscape and Evaluating Our Defense
Understanding the relevant legal landscape requires the defense team to identify key issues in order to evaluate the chances of success or early resolution. Considerations include: jurisdiction, state or federal court, codefendants, choice of law analysis, joint and several liability (a finding of 1% liability exposes us to 100% payment) and pre-judgment and post-judgment interest (this varies by state and can be as high as 12%).
In evaluating liability and damages, a mock jury or a focus group is a great resource. In these exercises, lay people from the same or similar backgrounds of the eventual jury pool are presented with both the plaintiff and defense arguments and witnesses. We learn what jurors think of our defense, our witnesses and our counsel. Most importantly, mock jurors are asked to award damages. If punitive damages are alleged, a mock trial gives us the ability to assess the amount, if any, jurors are willing to award.
Other Costs to Consider
Consideration must be given to the possibility of appeal, regardless of which party prevails. The cost of an appeal includes appellate counsel fees, interest on the verdict and a bond on the verdict as well as the amount of time in months or years before a decision is rendered.
With these factors in mind, we must be open to possible settlement opportunities either by mediations or informal meetings. If the defense is well prepared, this puts us in the best position for a favorable settlement. Not a cent for tribute may be a reasonable reaction to being sued, but the fact is that millions spent for defense does not guarantee a favorable verdict. Case resolution may be the most successful outcome.