I’m a lawyer in Southern California. I do some transactional work, but most of what I do is litigation. Lawsuits are my life. Well, a big part of my life, anyway. I’ve handled a number of lawsuits since I started practicing, mostly on the defense side, and I’ve learned that there’s one universal truth to having to defend yourself in a lawsuit: it sucks. For about the past year, I had to defend myself in a lawsuit. It finally settled. I hope it never happens to any of you. But just in case, here are some things I learned after I got sued.
The Basics of Our Legal System
There are a lot of good and bad things about our legal system. One very good thing about our system is that anyone can bring a lawsuit against anyone who they think has wronged them, and they get a chance to prove their case in court. But there’s a flip side. One of the worst things about our system is that anyone can bring a lawsuit against you if they think you’ve wronged them—or if they just want to try to get some money from you—and you need to spend time and money and lose sleep to prove that the person who is suing you is wrong.
Attorney’s Fees: Who Pays?
The American Rule
Another hallmark of the American legal system is that each side generally has to pay for their own lawyers, even if they win. (It’s actually called the “American Rule.”) There are exceptions to the rule, the biggest one being an attorney’s fees provision in a contract. There are also a few select statutes or judicially-created exceptions that will get you attorney’s fees if you win (elder abuse claims, insurance “bad faith” actions, etc.). But in the absence of a contractual provision or one of those rare exceptions, you have to pay your own lawyers, win or lose.
So let’s think about how that works in practice. Let’s assume it costs about $120k in attorney’s fees and costs to take a case through trial. In reality, that’s a very modest estimate. Let’s say you get sued and you win. You’ve spent $120,000 in attorney’s fees defending yourself. You don’t owe the plaintiff a dime, but you’re still out the $120k. That stinks.
Let’s say you’re a plaintiff instead. You want to sue someone else for $50,000, and you win. You get your $50k award but still end up $70k in the hole after attorney’s fees. That stinks, too.
The English Rule
Shouldn’t the loser have to pay the winner’s attorney’s fees? It seems like a fairer result. That’s why virtually every other legal system uses the “English Rule,” which is that the losing party pays the other guy’s legal fees. For the most part, the English Rule is fair. It can get distorted, too, though.
Imagine your neighbor is carrying groceries from his car to his house, and he drops a bag. An orange rolls onto your lawn. Your neighbor steps onto your lawn to grab the orange. You could sue your neighbor for trespass. (You’d be a jerk for doing that, but being a jerk isn’t against the law.) Legally speaking, your neighbor did trespass on your property. Your damages might only be nominal damages of $1, but you should win that case. Should your neighbor have to pay $120k in attorney’s fees to defend himself, and then also have to pay your $120k in attorney’s fees for that lawsuit? No way. It was a dumb lawsuit to begin with. You only won $1, but the attorneys got paid $240k.
The other way it can get distorted is if the dispute is real, but one side spends a ridiculous amount on attorney’s fees. Say it’s a potential claim for $200,000, but the defendant spends $50,000 on attorney’s fees and the plaintiff spends $500,000 on a dream team of fancy attorneys. It was a close case with legitimate arguments on both sides, but the defendant lost. Is it fair to make the defendant pay the full $500,000 for the plaintiff’s lawyers, when the defendant was only willing to spend $50,000 on her own defense?
Contracts: Make Your Own Attorney Fee Rules
If you don’t like the default attorney fee rules, you can always draft something different in a contract. You can say, for example, that the loser pays the winner’s attorney’s fees, like the English Rule. If you want to safeguard against frivolous or low-dollar lawsuits, you could also cap the amount of legal fees recovered.
But remember that a contractual attorney fee provision only applies in a dispute based on that contract. Lawsuits based on torts (car accidents, assaults, etc.) are not contract-based, and so would follow the default rules.
Things I Learned After I Got Sued
Now that we’ve got the basics out of the way, here are the things I learned after I got sued. Most of these were things that I knew before. But there’s something about being on the receiving end of a lawsuit that really cements them into your mind.
Lesson #1: Being Right Doesn’t Save You From a Lawsuit
I’ve been a big fan of justice ever since I was a kid. I’ve always been guided by a pretty strong sense of what was wrong and what was right. And I think a small part of me always feels like if you’re doing the right thing, you can’t ever get in trouble. Well, that’s not entirely true.
Remember that one good/bad point about our legal system above? Anyone can sue you for anything. It doesn’t even have to be a good claim. I could sue you for intentional infliction of emotional distress for dyeing your hair yellow and walking past my house every day, when you know I hate the color yellow. Am I going to win? Nah. But I could sue you for it anyway, and cause you to spend a good deal of money and time defending yourself against a totally baseless lawsuit.
I could even sue you for something you didn’t do. Say my cat goes missing, and I think your dog killed it. I have literally no proof that your dog killed my cat, and you know for sure that your dog was in the house the whole night that the cat went missing. But I can still sue you for it anyway. You might have to go all the way to trial and spend a lot of money in attorney’s fees to prove that your dog couldn’t have killed my cat.
Lesson #2: You May Not Be Able to Prove You’re Right
Even if you are right, and you stick it out all the way through trial and present evidence showing you’re right, you might still lose. Going back to the cat/dog example, let’s say your dog was inside the entire night. But let’s say I got your neighbor (who hates you, by the way) to testify that he saw your dog jump over your backyard fence and chase my cat in the street that night. Now I’ve got myself and the neighbor as witnesses, and you’ve only got yourself. The judge or jury might believe me instead of you. You might lose your case, even though you know for a fact that your dog didn’t do it.
The justice system is supposed to flush out the liars and end up at the right result. It’s great in concept. But in practice you know that the judge/jury gets it wrong sometimes. If you’re a defendant in a lawsuit, being right doesn’t always make you feel secure. The unpredictability of the system is is why so many lawsuits settle before trial.
Lesson #3: The Legal Shortcuts May Not Help You
There are a few “shortcuts” built into the legal system that might help you resolve your case faster. But those shortcuts won’t always help you.
The two biggest shortcuts are the demurrer and the motion for summary judgment. I won’t go into too much detail here because this isn’t law school. (You’re welcome.) But here’s the basic idea behind each of them, in plain English:
What it means in plain English: even if everything the plaintiff says in her complaint is correct, the plaintiff still loses under the law.
Example: the plaintiff who lives in the apartment next door is leaving for work in the morning, right as you’re moving a heavy piece of furniture through the stairwell. Your furniture moving delayed her by 5 minutes. As a result, she was hurrying to work and crashed her car into someone else. She files a lawsuit against you, blaming you for crashing her car. You file a demurrer to have the court rule that even if you made her late, you’re not responsible for the car crash.
Will the demurrer succeed? Probably. Even if everything the plaintiff said was accurate, you shouldn’t be responsible for her car accident based on those facts. Is it worth bringing the demurrer to avoid having to fight the whole lawsuit? Maybe. If you bring a demurrer, though, the odds are very good that the plaintiff will have a chance to amend their complaint. You might end up having to file several demurrers before the court throws out the case entirely.
Under these facts, it’s probably worth it. Under other scenarios, where there is some possibility that the plaintiff could plead something that sounds credible (even if it’s based on outright lies), a demurrer would probably not be worth it. You might spend several thousand dollars just on that stage of the pleadings, and end up having to go to trial anyway.
The Motion for Summary Judgment
What it means in plain English: These are all of the important facts, and none of them are disputed. Based on these facts, I win under the law.
The motion for summary judgment goes a step further. Remember that for a demurrer, you have to assume that everything the plaintiff said in the complaint was true. You don’t have the chance to introduce your own facts. In a motion for summary judgment, you can introduce facts.
Example: you sue me for crashing into your car on the first Thursday in August. I have plane tickets showing that I was out of the country that day, and a receipt for my car being parked in the airport parking lot at that time. I could file a motion for summary judgment introducing that evidence and showing that it was impossible that I did it. If I win, the court throws out the lawsuit.
Will the motion for summary judgment succeed? Probably. BUT, if any of the facts I cited are disputed by the other guy, the motion will fail and we will have to go to trial to prove who’s right. Even if the other guy’s evidence is weaker than mine, my motion will lose because the fact is in dispute.
Motions for summary judgment are complicated and take a long time to prepare. You will probably spend thousands of dollars in attorney’s fees preparing the a motion. And the other guy can defeat your motion just by disputing any one of the material facts.
The Shortcuts Might Not Help You
The shortcuts exist for a reason, to try to speed up the process. A defendant in a lawsuit could use either one of those tools to try to get the case resolved faster than taking the case all the way through trial. But the downside to these shortcuts is that they don’t always help.
Even if you should win on your demurrer, the judge will probably give the plaintiff a chance to re-plead their case. You might have to bring two or three demurrers against their newly amended complaints before the court finally throws out the case for good. Likewise, even if you should win on your motion for summary judgment, the other party might make up some new disputed fact (even if it’s false), which could sink your whole motion.
In short, the shortcuts seem like an easy way to resolve a baseless lawsuit, but they could prove to be an expensive distraction that actually slows down the process. In my lawsuit, the plaintiff’s claims were complete horse-droppings, but the lies he told in his complaint would have made it nearly impossible to win by demurrer or motion for summary judgment.
Lesson #4: Read the Contract Before You File Your Lawsuit
My lawsuit had to do with the sale of my condo. One of the biggest factors that led to the settlement of claims against me was the attorney’s fees provision in the real estate contract. If you’re suing on a contract and you don’t read the whole contract a dozen times over, you’re an idiot. You have to know everything about that contract before you file your complaint.
In California, the basic real estate purchase agreement created by the California Bureau of Real Estate includes an attorney’s fees provision. More importantly, there is a mediation provision built into it. If you don’t ask the other side to participate in mediation before you file your lawsuit, you won’t get your attorney’s fees paid, even if you win. So if you’re planning to sue on a real estate contract, and you want the ability to win your attorney’s fees, you’d better offer mediation first.
In my case, the plaintiff (the buyer of my condo) didn’t seek mediation first. He simply filed a lawsuit. Big mistake on his part. If he lost at trial, he would have to pay my attorney’s fees. If I lost at trial, I still wouldn’t have to pay his. He gave himself a huge downside risk. This ended up being a big motivating factor in getting him to settle.
Lesson #5: Don’t Be Too Cocky
When you’re in a lawsuit and you know that you’re right, it’s important not to get too cocky. Remember that even if you’re right, you still might lose. There’s no such thing as a slam dunk in litigation.
I represented myself in the lawsuit up until the time of settlement. You know the saying: “an attorney who represents himself has a fool for a client.” The reason it’s bad for an attorney to represent himself/herself is because it’s harder to objectively evaluate your case when you’ve got an emotional stake in it. I did it anyway because I’m cheap. Fortunately, I also had the advice of the partners at my law firm.
Before the settlement conference, I spent a few minutes taking an objective view of my case. I had to get out of my own head and think about what I would advise a client to do. I wanted the plaintiff to lose at trial and have to pay my filing fees and other costs. But if I were talking to a client, I would say that paying a few thousand dollars to eliminate the risk of losing at trial is totally worth it. Consider all the time spent preparing for trial, and all the lost sleep. How many days of work would I lose? It would easily be worth a few thousand bucks to get all that lost time back, not to mention eliminating the stress.
I walked into the partner’s office and said “I need you to tell me not to be stupid. You have to tell me that it’s worth a few thousand bucks to get rid of this case, even though I’m right, and this guy’s an asshole and doesn’t deserve any money.” The partner agreed and gave me some negotiating tips.
Try to Set Emotion Aside and Consider All of the Real Costs
I’m glad I geared myself up for the possibility of having to pay a few grand to get rid of the case. Emotionally, I was furious that I might have to pay this guy anything. He is a colossal liar and an asshole. During the escrow process, he tried to hijack the closing and renegotiate the deal several times. Even at the very end, just days before escrow closed, he discovered that he hadn’t set aside enough money to cover his own closing costs, so he demanded that I reduce my sale price by a few thousand bucks to close the deal. I said hell no, he would have to borrow the money from somewhere.
So imagine how angry I was when he sued me a year later based on a defect that was disclosed as part of the home inspection. He knew about it, and waived contingencies and closed escrow anyway. He was just trying to squeeze another few thousand dollars out of the deal after the fact.
In principle, there was no way I was going to pay him anything. I didn’t let him bully me around during the escrow process, and I wasn’t going to start now.
But that’s the emotion talking. In principle, I was totally right. But it would have been pretty stupid to stubbornly insist on going forward with the trial over a few thousand bucks, which would have involved over a hundred hours of prep work, plus stress, missed sleep, and missed work time. And after all that, I might have lost.
Fortunately, the case settled, and I didn’t have to pay a thing. I didn’t get my filing fees reimbursed, but I wasn’t out of pocket for any more money than that, either.
And while I wouldn’t wish that scenario on anyone, it was a useful experience. Before, I knew how emotions came into play on an academic level. Now I know firsthand how that feels. And I know how good it feels to have the weight lifted from your shoulders at the end of a case, too.
Have you ever been sued? How would you have handled it?