The costs of suing

The costs of suing

Even when you know the law is on your side, you might be better off skipping a court date with Lady Justice
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May 01, 2010

Sometimes it's hard to know when the law is on your side, or, when it isn't, just how much trouble you can expect as a result. While formal education may expand our skills in practicing medicine or accounting, precious little time in high school or college is devoted to the practical matters of living — how to dance, how to safely change a flat tire and how to manage disputes within the framework of our legal system.

I see this lack of training in both new veterinary graduates and established practitioners. They talk of unfair treatment by an employer or employee, unclear terms in an equipment lease or student loan or problems in real estate agreements. All of them want to know their legal rights. What they often fail to understand is that rights don't always translate into "wins" in the courtroom.

Many doctors are painfully uninformed about the realities of seeking legal redress. They know nothing about the costs, jurisdictional limits, filing requirements and time limitations involved in the legal system. More importantly, most veterinarians have no idea what our legal system cannot do for them. The legal system may well be too slow, too cumbersome, too political, too expensive or too inaccessible to provide them the recovery or legal resolution they consider to be just and fair.

Consider the following two scenarios, both situations in which practical limitations will erode the potential value of litigation.

Using the law against a "big guy"

While it is true that we live in a nation of laws, the reality is, the most effective use of the law is frequently achieved by the litigant with the most financial resources. This means that if a veterinarian wants to avail himself of the court system, he should think carefully in advance about how financially well prepared his potential opponent might be. That doctor also needs to consider just how far the party on the other side might be willing to carry the case just to make a point.

For example, when asked to sign an excessively broad and onerous non-compete agreement to begin his first job, Dr. A has two choices. He can choose to closely evaluate the non-compete and then negotiate in good faith with the employer to pare it down to a more acceptable distance and time period. Or, he could just sign it under the notion that noncompetes are seldom enforced in his community. The implied but unstated intention is to later violate the noncompete and expect to have it voided in court if the employer tries to enforce it.

The second option is easier in the short run, but if Dr. A understood the legal system, he would almost certainly choose the first option instead?— even if the noncompete actually is flawed and completely unenforceable. Why? Because in litigation, a theoretical win is not the same as prevailing. To see why, let's follow this example through the court system and, more importantly, through the lawyer billing.

  • Talk it out. The first option involves politely discussing the noncompete with the employer in a respectful and considerate way prior to taking the job. Doing so helps establish the reasonableness of the employed doctor in the eyes of the potential boss and also yields a noncompete clause both can live with.
  • Let the lawsuit talk. The second option, on the other hand, involves a quick signature, followed by a year or two of simmering resentment on the part of the new doctor. He knows that the noncompete might have to be violated in order for him to pursue his long-term practice plans. Now he is saddled with the written promise and with the lingering decision about how and when to breach the contract.

A few years later, Dr. A decides to test the noncompete in court. He discovers that his boss (or megapartnership, or publicly traded corporate employer) wasn't kidding around with the contract. The employer actually expects it to be honored.

After Dr. A uses up his savings to build a competing clinic within the noncompete zone, the former employer moves for a temporary restraining order (TRA) to stop the new doctor's business before it starts.

No TRA is granted, but the legal and court fees for Dr. A to fight cost a couple thousand dollars, which Dr. A had to put on his credit card (at 23 percent interest). Additionally, even without the benefit of the TRA, the well-heeled former employer moves forward with a lawsuit. It isn't the first one this boss has ever filed. He's an experienced businessperson who knows his way around the legal landscape.

When the case goes to trial, Dr. A is still in business, but any profit his new practice makes is tied up in legal fees. The win at trial makes him happy?— until his lawyer receives notice of the employer's appeal. Dr. A's lawyer sends him papers to sign along with a request for a $5,000 deposit to begin drafting the defense to the appeal.

Suddenly, the first option from years ago looks like the way he should have gone. If Dr. A had thought about how economically well prepared his former employer was for litigation and how important making an "example" of him might be, he could well have seen the benefits of negotiating a better noncompete at the time or electing to take a job somewhere else.