Risk Manager
Should You Litigate or Not?
Filing a lawsuit isn't always the answer when you're wronged. Sometimes you're better off adopting a practical strategy.

BY JEFFREY D. WEINSTOCK, ESQ.

One of the easiest things to lose sight of when dealing with legal matters is the difference between the legal and practical aspects of an issue. This is the question that arises when you're evaluating whether to sue someone to collect $5,000 from an "ironclad" contract even though it may cost $4,500 to pursue the suit.

It's also very easy to lose sight of the fact that a contract -- or any legal obligation -- is only as good as the word of the parties to the contract. This is why landlords require security deposits even though they also ask you to sign a comprehensive lease agreement.

TRY TO THINK AHEAD

When you enter into any transaction, it's a good idea to develop a practical strategy for dealing with contingencies that could arise if the relationship or deal goes sour. Here, I'll discuss common-sense solutions that don't require a call to your attorney.

Start by asking yourself what you could do if the other party doesn't live up to his end of the bargain. Sometimes, suing is the preferable option, but often it isn't. It's easy to get caught up in the wording of a legal document. But it's even more important to remember that getting a judge to require the other party to actually live by those words is a time- consuming, expensive process.

Let me give you an example of a real-world legal issue that you may have to deal with more than once during your medical career. You hire a physician and he signs a typical noncompete covenant. He can't then defect and join another practice down the street, right?

But he does just that.

You have the right to file suit to enforce the noncompete covenant in the agreement. In this situation, it appears at first glance that it may be worth it to file the suit. From a financial standpoint, you may lose a number of patients by not suing. From an emotional standpoint, you're angry. You've been wronged. You want justice.

IS SUING WORTH THE COST?

Of course, filing suit would require you to hire an attorney and pay all the costs associated with bringing a legal action. At $250 or more per hour, attorney fees add up quickly. And even if you prevail in your suit, the physician can't be forced to return to your group. So you will have spent a significant sum that you may not recoup, even in victory.

Contracts often contain sections that provide that the losing party in litigation will pay the attorney fees of both parties. However, what if you enter into a settlement before litigation? Also, you may prevail in court, but if you can't collect your judgment, then your attorney will want you to pay the bill yourself.

YOU CAN PROTECT YOURSELF

The question "to sue or not to sue" is a thorny one. When drawing up a contract or other legal agreement, you can protect yourself to at least some extent by requiring payments or penalties that help to ensure that the other party performs to the terms of the agreement.

If you've purchased a new house and then entered into a contract to sell your current house, what could you do if your buyer doesn't complete the deal? You may have a valid claim against him, but if you were planning on using the money from the sale of your house in your purchase, time isn't on your side.

But if you required the buyer to tender a large nonrefundable deposit, he may think twice about backing out. Or even if he does, the nonrefundable deposit could be applied to your new purchase. This is an example of a practical action you can take to reduce the necessity of litigation. Clearly, each situation or transaction has its own unique issues, but taking a practical approach could save you time and money down the road.

Jeffrey D. Weinstock, Esq., is the Assistant General Counsel of Cyber-Care, Inc. Based in Boynton Beach, Fla., Cyber-Care is a technology-assisted health management company. Risk Manager provides a general summary of legal issues and should not be construed as personal legal advice. Application of these principles varies according to individual situations.