On Being Sued

If you're involved in business long enough, particularly at a high level in management, chances are pretty good that you'll be involved in a lawsuit.  Not that you will necessarily be personally named in a suit, or have to be deposed or testify, but at the least you will have to sweat the outcome, suffering more than a few sleepless nights.

There are quite a few lessons I've learned over the years when it comes to lawsuits.

Goliath, beware.

Our legal system, most probably a reflection of the personal biases of the population at larger, tends to favor David in every "David versus Goliath" contest.  If you're part of a large organization being sued by a smaller entity -- or worse yet being sued by an individual with a sad story -- you've got your work cut out for you.  Having a very good lawyer on your side of the equation helps, but I don't think it levels the playing field.  Consequently, if you can somehow manage to convert the case to a bench trial -- one adjudicated by a judge, rather than a jury -- it is probably in your best interests.  And if offered an opportunity to settle, you should seriously consider it.

Getting sucked into the vortex.

It seems to be standard operating procedure today for plaintiffs to sue anyone and everyone that might be remotely associated with any catastrophic loss.  These cases are usually horrific in their damages, and someone is almost certainly going to pay.  Typically, as the theory seems to go, naming additional defendants in the case costs little and often leads to additional contributions to what is hoped will be a massive settlement.  On these kinds of cases, I advise you to avoid wasting time feeling violated (if, indeed, you really have no business being a part of the suit), and get down to practical matters -- how quickly can you settle your claim, and how little can you pay.  While it might feel wrong, most likely you will end up paying much more and wasting infinitely larger amounts of time if you fight.

Settle early, settle often.

Early in my career, I often found myself feeling violated by some of the ridiculous lawsuits that came our way.  I was ready to fight virtually everything to the bitter end, propelled onward by the feeling that "right" was on my side.  Trouble was, in half of the cases where I insisted that we fight, we lost or at least ended up with an outcome that was worse than an intermediate settlement proposal.  Some of this was undoubtedly due to the David vs. Goliath aspect I mentioned above, but some of it occurred simply because I was only seeing things from my perspective and was mis-reading the overall situation.  And as a corollary, I've decided it is very difficult -- if not impossible -- to really see the case from the other side's point of view.

I have decided that, despite the fact that in may indirectly encourage more claims to be brought against the company, it is almost always better to settle -- and usually, the sooner the better.  This saves you immense amounts of time spent trying to justify your actions, and also substantially cuts down the attorney fees.

Rolling the dice.

In addition to the David vs. Goliath thing, juries often don't see things the same way we do.  This is particularly true with detailed, complex questions where the jurors need to understand something complicated to see your side of the disagreement.  When that happens, many jurors seem to punt on comprehension, and focus on things like "who they like" and "who they find the most believable."  If you take a case like this to a jury, the outcome could be almost anything you can imagine.  My recommendation is to simply avoid getting into this kind of situation, and settle.

Anybody can sue anybody over anything.

Yeah, it may seem like a lawsuit is frivolous, without merit, or just plain stupid.  That doesn't mean it's going to go away.  The unfortunate truth is that you are vulnerable to lawsuits at any time for pretty much any reason.  Be prepared to take these things seriously, and make the ones you can go away as quickly as possible.


I must have asked my attorney's at least a hundred times what they thought my chances were of winning a particular lawsuit.  In the vast majority of those cases, the attorneys would start out giving me a very high chance of victory, one that inevitably declined to 50% as the trial approached.  My recommendation is that you instead explore and understand the defects in your case, and if there are major ones, you lean toward settling early.  Forget percentages from the lawyers and rely on your own judgement.  You want the odds to be heavily stacked in your favor before you even think about going to trial.

My worst lawsuit.

One of the last lawsuits I was involved in proved to be one of the worst.  This particular case revolved around a JV partner that had been removed from management of the Joint Venture company.  During that process there was a deal offered to purchase his shares, one that later fell apart because of revelations and suspicions of misconduct during the time he managed the business.  Eventually, he sued my employer to compel us to purchase the shares at the original price.  I tried to settle the case on several occasions, offering what I thought was a "fair" price for the shares based on where the financials had landed after we fixed all the accounting "errors" from his tenure (did I mention his wife was our accountant?).  The plaintiff, on the other hand, insisted on getting the original price for the shares mentioned during his separation.

There was a lot of detail that I'm leaving out here, because it doesn't change the story.  The bottom line was the plaintiff was intransigent, and unwilling to compromise.  The case went to trial -- a bench trial -- and took weeks to complete.  In the end we pretty much lost on every element of the case.

I've often reflected on this particular case, leading me to my final and last bit of advice.

Sometimes the other side is looking for vindication.

Lawsuits, while mostly about money, are also sometimes about "proving" who was right and who was wrong.  While I might think of this aspect of lawsuits as "foolish" or "misguided" it doesn't prevent your legal opponents from pursuing cases against you for that very purpose.  If you find yourself in one of these, I suggest you simply do your best to defend your decisions/position, and hang on.  You're in for a long ride.  21.5


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