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Hourly Fee Cases and Pre-Suit or Very Early Mediation: A Can’t-Miss Combo!

May 10, 2013

There is nothing quite as dispiriting to a mediator than discovering that the most likely, any fair mediation resolution that can be achieved in a particular dispute , if one can be reached, will leave everyone mad!

That’s right.  The claimant is mad because they find they cannot recoup their alleged damage after paying their attorneys their fees accumulated.  The defendant is mad because they find they could have settled with the claimant for less than they now also owe their attorneys.  Both parties learn they are facing more costs and fees by going to trial than they can achieve in success by trial.  And, because the claim is one of liquidated (or worse, no dollar-type) damages and neither party can achieve prevailing party attorneys fees as part of their litigation issues, even the attorneys are mad. 

Why?  Because the lawyers find they will now have to try to collect their outstanding fees from their already mad clients!

And, worse, because mad clients don’t return and don’t refer their friends!

Not a pretty picture, is it?  And, all because the fees and costs of pursuing (and defending) some claims cannot be recovered by the litigation and the relief sought is, dollar-wise, less valuable than those fees and costs.

Yet, much of our day-to-day, hourly fee representation and litigation fall into this category.

Those of you who work only for a contingent fee have not faced this particular issue.  (Other issues, for sure, but not this one!).  Those of you fortunate to have some basis in your hourly fee litigation to make the opposition pay prevailing party fees, also, may not relate.  And, of course, if a client is one of the “I-don’t-care-what-it-costs”, or the damages are huge, (maybe) you will not face this issue.

But, the guys and gals in the trenches, serving these litigation needs, do.  Everyday.  And, many are younger or less-experienced lawyers who seek to serve the needs of small claimants and homeowners associations and clients seeking equitable relief, etc., but perhaps have not considered this end-game to their good intentions.

Needless to say, there is nothing better to avoid such grief than a frank disclosure of this bleak, financial future in many of these legal matters.  But, many of the public will still demand your hourly fee representation.

Thus a few thoughts for those of you who are now the most likely to feel the brunt of those mad clients.

First, rather than the usual rush to formal litigation,  how about formally pressing for pre-suit mediation, very, very early in your efforts for your client?

After signing up the client and getting the gist of your clients issues, claimant or defendant, do your early, preliminary legal research, honestly and fully evaluate your client’s likely future trial success (making reasonable assumptions), but, first write (so the opposition will have to pass on the offer to their client) and formerly offer to mediate the issue, early.

And then truly make every effort prior to and at mediation to resolve the case at as little cost (and fee?) as possible.

If you opposition is paying attention, and is also seeking a happy client, they should accept and quickly.  Mediation is the cheapest way to find out what the claim (or defense) is all about and what evidence is available for any future trial.

However, Second, if you get no acceptance to a pre-suit mediation from your defendant (or plaintiff), file your suit (or answer) and then, prior to any extensive discovery, “demand” immediate early pre-trial mediation.  (Think of mediation as another form of a “pure bill of discovery”!)

Remember, your opposition has no choice but to mediate, if you request it!  In Florida, either party may demand mediation, unilaterally, and the Court must grant the request!   See, Mediation Tip:  Litigators, Use Mediation to Move Your Case, March 23, 2012,

Then, similar to any pre-suit mediation, do your early (basic) research, a reasonable evaluation, withhold all discovery and use mediation, instead, to at least set the parameters of your litigation efforts to be taken if your mediation is not successful.

Remember, most mediations cost YOU (and your opposition) less than one expert deposition!

I know there are always negatives to early mediations.  See, i.e., Early Mediations Require Claimant’s Deep Discounting, August 29, 2011.  But, I submit, in many, many of these liquidated damage or non-dollar damage cases, deep discounting will usually still leave a much happier client than those who fail to offer this “early-out” alternative to their client.

The reason? Costs and attorneys fees always quickly outstrip the recoverable damage (or what could have been paid to resolve the case); a predictable downer to even those clients you “warn”, in advance.  (How quickly they forget anything you have not placed in writing!  And, many even your written warnings.)

And guess what is one of the major “persuasions” any mediator uses in pushing for a “business decision” in any dispute?  Fees and costs!  Past and still to come.  It is not a popular discussion with many attorneys, but a very necessary one for every mediator.

The cure?  The mediation options presented of resolution or continuing full litigation they receive at an early mediation where you and the mediator outline the likely future recovery by trial, the likely future costs and fees and the obvious:  they may not prevail,  set the “win-win”, “can’t lose” stage.

If your clients still elect to go forward in the face of what they now know they can achieve at mediation, and in the face of your written affirmation of their election and caution of the fees and costs to come, at best you have an informed client who better accepts a bad outcome (by winning OR losing); at worst, you can remind them of your earlier advice and their informed election.

Thus, you can’t miss with this combination of early movement of the claim (or defense),   very, very inexpensive legal discovery, an early, inexpensive way to obtain resolution (a happy client), or at absolute worst, having a client now fully informed (by others) of what the future likely holds!

In summary, much of the “mad” that mediators see is what I believe is more likely “uninformed-mad”. 

Either your client forgot your verbal cautions, did not read your written advice, or, could it be, possibly, “someone” did not let them know (or even did not really fully evaluate in the glow of a new client) what the likely future held?

Mad clients are probably not totally avoidable, but most should be.  A pre-suit mediation or at least a very, very early mediation in the litigation of cases of small or no-dollar damages and no recoverable prevailing party fees, should either result in a happy client with an early mediation resolution, or an informed one, who is forewarned and thus forearmed to avoiding “mad”.

Just my thoughts of a “can’t miss combo” for those of you litigators who fight these small, but highly important “people-issues” everyday.

Dan, from The Villages, Florida.

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