A common question for employers when confronted with a lawsuit is this: Should I fight or try to settle?
Unfortunately, that decision inevitably is a business one and often times depends on the facts and circumstances of the case.
Sure, there are attorneys who profess to be "pitbulls" and who claim that it’s always best to litigate to the end … no matter what the cost is. The logic is that employees (and their attorneys who defend them) will think twice about bringing suit if they know that the case will never settle and they’ll have to spend years of time getting there without any assurance of victory.
Great strategy, right?
But let’s live in the real world. Defending an employment lawsuit is typically a financial loss to companies. Executives have busy enough schedules as is; spending time in depositions adds no value to the company’s bottom line.
Even when companies "win" and successfully defend a claim, they lose because they have had to pay an attorney tens (if not hundreds) of thousands of dollars to achieve "victory". And EPLI insurance isn’t a sure thing anymore; get lots of claims and your premiums and deductibles go sky high.
Then there are practical questions. Why — when a case could settle for $5000 — is it worth spending $50,000 to achieve the same result? To "send a message"? Might it be a better business decision sometimes to pay the $5000, guarantee an end to the case and end the payment of attorneys fees, particularly where there isn’t a likelihood of recurrence? Is that a sign of "weakness" or the sign of making a smart business decision.
Beware of the pitbulls. It is easy to pick fights with judges, attorneys and your former employees and increase costs of the case exponentially but it is much harder to know and understand which fights to avoid.
For employers engaged in lawsuits, always be well prepared to fight back. And let me clear, there are times to fight, particularly when the other side is making unreasonable demands. But never overlook an opportunity to settle when it presents itself.
It just might be the right business decision at the right time.