The Risks of Litigation

Why do businessmen try to avoid litigation?

Consider the lawyerly advice that a poor settlement is better than a good lawsuit. This proverb asks one to consider the money and effort required for a trial, in addition to the risks of a trial.

Most civil legal claims are settled before trial. According to a survey by the U.S. Department of Justice, over 95 percent of civil cases (in state courts) are settled or dismissed without a trial.

Many cases are settled because trials are notoriously risky.

Some lawyers say that there are several risks. One risk is the credibility of witnesses. A New Brunswick trial judge told me that the main determinant of the result of a trial is how the witnesses testify.

Another risk is the propensity of judges to select or emphasize certain facts. Regarding fact selection, see page 329 of the biography, Bora Laskin by Philip Girard (2006) and the quote by lawyer Morris Shumiatcher as follows, “The courts have always selected the facts which they have wanted to select in order to reach the result which they think fit and proper”.

Fact selection by judges may occur in cases that present difficult issues. Reason should resolve difficult issues. But Samuel Johnson (1709-1784), the great writer and lexicographer said “How rarely reason guides the stubborn choice”.

If a case is appealed, a new panel of judges may emphasize some facts that were not emphasized by the lower court and the result may change. In a social setting many years ago, I asked the late Chief Justice of the Supreme Court of Canada, Bora Laskin, about such a change in emphasis between courts. His answer was that that is one of the risks of litigation.