When to Litigate

When to Litigate

By
Chris Honeyman

Updated April 2013

 

Definition:

The decision as to whether to pursue a court case, rather than some other dispute resolution process.

Users:

Parties, attorneys, and other representatives who are either in a dispute that does not have a specified dispute resolution procedure which they must follow, or who are designing a system for negotiating a contract which is to contain specified methods for resolving disputes which may arise in the future.

Description:

Litigation is most useful in disputes where the parties feel that direct negotiation has failed, and that mediation has either also failed or will be ineffective; where they wish to obtain a decision that is governed by legal norms; where they anticipate a stream of cases involving similar facts, and must have a precedent established; and where a desire to obtain a decision based on specific expertise, or to maintain a working relationship with the other party are not strong factors.

Example:

The classic example of a case which must be litigated is Brown v. Board of Education, the U.S. Supreme Court desegregation case which established that racially separate schools were inherently unequal. The cost of litigation was not a serious impediment to either side, given the extreme importance of the dispute. The fact situation was repeated all over the southern states of the United States, and feelings ran high, so a settlement reached in negotiations or mediation would have had little impact elsewhere; a precedent was essential. Arbitration would not have provided such a precedent, because arbitration awards are not binding on any future arbitrator or court. And the basis for the decision, for it to have widespread meaning, had to be the basic law of the land, the Constitution. Only litigation at a high level has these characteristics.

At a less elevated level, some parties require a decision that can be relied upon elsewhere through the force of precedent, or need a decision that is clearly based upon public law as opposed to private contract. For example, if it is alleged that 50,000 buyers of a defective product have been injured — and have been injured in a new way that was not caused by any previous defective type of product — upwards of 49,900 of these cases will almost certainly be better handled by negotiation, mediation, or arbitration. These processes are faster, less expensive, and more flexible than litigation. But the first few cases will almost certainly have to be litigated: Until the culpability of the manufacturer has been established in a public forum, i.e. the courts, and a baseline is set for the degree of remedy our society finds appropriate for a new type of injury, the parties to the remaining cases are without the guideposts that make settlement, or even agreement on terms of arbitration or mediation, likely.

Application:

This concept is applicable to any situation in which a client, attorney, or other representatives has the capacity to decide what process will be used to resolve a given dispute, or what process should be written in to a contract in which the parties anticipate the possibility of disputes in future.

Links to Related Articles:

Alternative Dispute Resolution (ADR)