In general, business litigation clients can be classified into three groups: (1) those who have decided to file a lawsuit and are ready to proceed; (2) those who have had a suit filed against them and need a defense; and (3) those who are not sure if pursuing litigation makes good business sense.
For those who have already decided to proceed with litigation, a key consideration is the most cost- and time-efficient ways to get to a settlement or judgment. For those who must defend themselves in a lawsuit, a cost-benefit analysis is a necessary exercise to help determine the path forward to either settlement or litigation. And those who are still on the fence about pursuing litigation must weigh a number of cost/risk variables to make a final decision.
In almost every case, the decision to pursue litigation should be made as a business decision. While standing on principle may feel noble, if the cost of doing so harms your business in the long run, you may end up on the losing side of a poor decision.
Does the lawsuit involve a contract?
Under Arizona law (ARS Section 12-341.01), a court can award reasonable attorney’s fees to the prevailing party in a contract dispute. This means that if you lose the case, you will be on the hook for the other side’s fees as well as your own. Some contracts may even specify the awarding of attorney’s fees to the prevailing party. So if your dispute involves a contract, you will probably want to spend what it takes to win, especially if you are the plaintiff.
Does the lawsuit involve a legal claim that is not dischargeable in bankruptcy?
If you have a legal claim filed against you that involves something not dischargeable in bankruptcy such as fraud or defamation, you will need to defend yourself because a judgment against you can last forever.
Would a judgment be dischargeable in bankruptcy?
If you lack the financial resources to fight any legal judgment against you that could be dischargeable in bankruptcy, you may want to either defend yourself or hire someone on a shoestring since you would have the option to eliminate the judgment by filing bankruptcy if you lose the case.
Is your claim large enough to make a lawsuit worth it?
Unless there is an important principle to be fought for — important enough where money is no object — you don’t want to invest a lot of money in a lawsuit if the final award is likely to be less than what you have invested.
If you win, can you collect the judgment?
There is little point in pursuing litigation if you are unable to collect a judgment. In some cases where the defendant’s assets are in question, it is wise to conduct a pre-filing investigation to determine a defendant’s financial circumstances or whether there is insurance coverage for the claim.
One of the best investments you can make when considering whether or not to pursue a legal claim is to consult with an experienced Arizona litigator who can review your case to determine if you have a good chance of prevailing in your lawsuit.
When you are facing any type of business dispute, you need an experienced Arizona trial attorney to obtain the best possible result. Contact Mestaz Law at (602) 806-2068 to speak with us about your case.