How does a business begin to weigh whether the benefits of pursuing or defending a claim are outweighed by the costs of litigation? By satisfying itself that it has a reasonable estimate of the various stages of the litigation. In some cases it is not particularly difficult to estimate, within a certain range, the likely out-of-pocket costs of certain types of litigation. The costs of preparing initial pleadings, litigating provisional remedies (such as temporary restraining orders, preliminary injunctions, and attachments), and conducting discovery, motions, trial, and appeals, can all be estimated based upon benchmarks and prior experience. An estimate is more likely to be accurate when the scope of the potential claims and defenses is well-defined, the scope of likely document production can be reasonably projected, and the identity of all relevant witnesses is known.
These estimates allow a client to decide whether to pursue mediation or settlement, and enable it to budget appropriately if it does decide to litigate. Financial projections can also serve as a restraint on fees, as they can require attorneys to explain why the costs for the litigation are exceeding estimates. By accurately estimating the out-of-pocket costs of litigation, the attorney brings value to the client by a
via EDD Blog Online: The Financial Implications of Litigation: Weighing the Costs and Potential Benefits.
