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Non-economic costs of litigation - What are your thoughts?

What might be the non-economic (and perhaps less quantifiable) costs of litigation that parties, counsel and, indeed mediators, all too often marginalize or ignore altogether?

Please provide your thoughts/comments below.

Comments (11)

The most significant non-economic cost we have faced in litigated matters is delays caused by the courts. Despite rules for a decision to come down within ninety days, courts often take nine months or more to decide uncomplicated motions, severely frustrating the process and increasing the cost to the litigating parties.

One of Voltaire's famous quotes: "I was never ruined but twice: once when I lost a lawsuit, and once when I won one.” There is a large literature on the psychological stress of being a litigant. There is a similar stress on counsel who are being paid to win, not just to do a good job. A senior insurance executive, lecturing to the International Academy of Mediators, said that a doctor who has been sued for malpractice is likely to be sued again for malpractice - not because the doctor ever malpracticed in the first place, but because the stress of being sued distracts the doctor from the demands of her practice. The spike in subsequent malpractice is especially evident with surgeons and is correlated with deposition and trial dates. Quite simple, before deposition or trial, the doctor is distracted, cannot sleep and may not perform well in a 7:00 a.m. surgery the next day. I have never had a client who has said he can't wait to sue or be sued again.
Judith Meyer

Judge Gerald Harris:

The strict application of evidentiary rules in litigation may unduly complicate a party’s ability to fully present its case. The relaxed approach favored by arbitration facilitates a swift hearing and affords greater opportunity to place in evidence all relevant material.

It is difficult, if not impossible, to quantify the time required to prepare the client for deposition and trial testimony. Almost never can a client understand in advance the loss of time during the trial, much less the puzzling and confusing evidence objections and rulings. In a jury trial, the parties are at the mercy of unknowable. irrational, irrelevent emotions that grip jurors from sources no one can anticipate. This risk cannot be adequately evaluated much less quantified.

In business or investment disputes,in organizations having a limited number of key people, litigation diverts their attention away from critical tasks and decisions. The heavier and more prolonged the litigation process the greater the adverse impact. The full impact, including lost opportunity costs, will be difficult if not impossible to quantify.

I completely agree with Judith Meyer’s observation that the stress of litigation weighs very heavily on parties, whether plaintiffs or defendants. Attorneys often absorb their client’s stress. The cost is incalculable.

William G Bassler:

The stress due to delay and the unpredictability of jury trials is enormous.

Micalyn S. Harris:

Agreed. Stress, distraction from business and family and friends and social life, uncertainty adversely affecting business investment decisions, sadness at losing friends, missing all kinds of events.... The list goes on.

Anonymous:

Litigation carries a heavy non-economic price. The cost to a litigant of being forced to continually relive the "event" is anxiety, anger, and recrimination. Litigation is like a black hole for a parties' creative energy. The lost opportunity costs, both personal and business, can far exceed the monetary recovery.

Several years ago, I told a senior Judge at a CLE that, in my experience, the courts get it right only 70% to 80% of the time. He responded: "That often?" I told him that what a court can be counted on to provide is finality, which I believe is extremely important. A decision allows the parties to move on.

Arbitration is no different except, (1) the process is quicker, and (2) arbitrators [being specialists] tend to get it right more often, perhaps 80% to 85% of the time.

I agree with the comments above that the biggest non-economic cost is the stress from the pendency of a dispute the ultimate resolution of which is of course unknown. While many have opinions about the relative merits of litigation and arbitration, one difference that is now well-documented is that arbitration is much faster when cases of similar size are compared. That speed inherent translates into few sleepless nights for the adversaries.

Agita, stress, and aggravation. Most people do not account for this in an arbitration or litigation. They also usually fail to realize how much time they will need to dedicate to this.

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This page contains a single entry from the blog posted on April 7, 2019 8:59 AM.

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