Commercial Litigation should be Driven by Economic Principles Not Emotion.
Commercial litigation sounds like a fancy area of law. Many people hear the term commercial litigation and they think of big law firms, with big corporate clients engaged in litigation over big money. While commercial litigation can be thought of in these terms, the playes are not always big. In fact, small business clients need attorneys too, for their small commercial litigation cases. Unfortunately, in my experience, the smaller the case the bigger the headache because the more emotion that is involved.
As far as the commercial litigation attorney is concerned, generally, it takes the same amount of work to fight over $10,000 as it does to fight over $1,000,000.00. And therein lies the problem. A commercial litigation attorney who charges a modest $250.00/hour, can easily rack up 40 hours of work for a $10,000.00 bill to his client within a few months of litigation, if not sooner. So the commercial litigant with the small $10,000.00 case needs to think economically about a litigation strategy, needs to evaluate likelihood of recovering attorneys fees from the other side, and must have an exit strategy.
Since in the smaller commercial litigation case of my example (the $10,000.00 dispute) becomes economical unfeasible very quickly as attorney fees rack up, the commercial litigation client with the small case has to be the most economically-minded, since he cannot afford to have emotions cause the so-called commercial litigation train to pick up too much steam and then be driven by attorney’s fees. Simply put, the commercial litigation client with a $10,000 case is far less likely to settle for $10,000 when he/she has already spent $7,000.00 in attorney’s fees. However, the small commercial litigation client is rarely conomically-minded, since they are small businesses where a $10,000.00 swing may make the difference in making or breaking one’s month or even year.
If you have a small commercial litigation case, be sure to ask the right questions when consulting with an attorney regarding the long term costs of the litigation, and the likelihood of success. Further, ask if the opposing party collectible, meaning if you get a judgment can you collect. But most important in any commercial litigation matter, you need to look at dollars and sense. Ask your attorney about options to reduce the costs of litigation, including mediation or methods to recovery attorneys’ fees in litigation.