Posted on May 26th, 2020
Below find a complete transcript of this video.
What’s up, fellow entrepreneurs? It’s John Fagerholm again, and today, I want to talk about what I’m seeing in the settlement world, in the age of the COVID-19 epidemic.
But first, remember this channel is informational only, and you should seek a professional of your choice for your specific situation and needs.
So settlement, settlement, settlement, right?
That’s the lifeblood of the legal system, at least in the context of litigation. So no one ever wants to settle until they start paying legal fees.
As an attorney, one of the worst results you can get for your client is a settlement that is less than the cost in the attorney’s fees.
So sometimes clients can be stubborn and they want to spend, for example, 100K in attorney’s fees, fighting something they could’ve settled a year earlier for 25K.
In employment claims, besides the cost of the attorney’s fees, there’s the risk of a larger award from sympathetic juries, and of course, the cost of the attorney’s fees on the other side.
So for those of you that did not already know, if an employee plaintiff wins on one cause of action, the law requires you to pay all of the attorney’s fees on the other side.
Now, using my example above, even if a jury award is relatively small, if you paid 100K in legal fees to your attorney, you are likely going to pay at least that in attorney’s fees on the other side, if they win anything.
So this is why otherwise, law-abiding business owners in California settle employment claims because even if they have not done anything wrong, the risk is just too large.
In my opinion, it’s absolute theft, sanctioned by the state of California. But in law, you can’t just be right, you have to be right and right.
So in other words, you have to be right in your position, but then you also have to be right in the outcome. So in most cases, it doesn’t make a good business sense to take a 200,000 plus risk for something you could get rid of for 25,000, for example, a year earlier.
Now, this is the harsh reality of life as a business owner in California, but what I really want to talk about today is what I’m seeing recently with settlements in the COVID area.
The previous stuff was just to kind of get you up to speed on why people settle. So even though the courts are shut down and most lawyers are working from home, I’m still negotiating with attorneys every day, and conducting formal mediations about once a week via Zoom.
So what I’ve noticed is that plaintiff’s counsel are willing to be quite a bit more reasonable these days, in terms of settlement amounts and payment terms.
So for plaintiff’s counsel, I think the most important thing is not the harm they claim was caused to their client, but the ability of the employer to pay a settlement or an award, if the case goes to trial.
Now that so many businesses are shut down and are at risk, plaintiffs may not be able to collect anything, if the business goes bankrupt or the owner goes bankrupt.
I’m seeing a lot more plaintiff’s side attorneys taking reduced settlements to avoid the risk of time, basically.
So even more interesting than the settlements in cases that have been filed already, are cases we’re trying to achieve a settlement prior, to a case being filed.
Where a case has not been filed yet, I’m noticing that plaintiff’s counsel are willing to accept considerable discounts from their original demand, because it’s expected that the courts are going to be years behind when things return to normal.
When I became an attorney about six months before 9/11, prior to 9/11, the courts were following what we call the fast track rules. And with the fast track rules, it’s required that every civil case in California to either be resolved or go to trial within a year.
But after the 9/11 court closures, cases were taking about two plus years to resolve, and now almost 20 years later, they’re still not on schedule.
So currently, it’s taking anywhere between a year and 18 months for the course to try cases, at least in Los Angeles County.
So considering the past and the length of time the courts have been closed because of this pandemic, I’ve heard estimates of three or four years before newly filed cases get to trial.
I don’t know if these estimates are true or even realistic, but it certainly is causing plaintiff’s attorneys to avoid filing lawsuits, unless they are left with no other options, right?
So this pandemic is a terrible blow to business, and the likelihood that plaintiffs are going to collect anything years from now, decreases as the quarantine continues.
So anyway, that’s what I’m seeing in the world of settlement, and the age of COVID anyway.
So obviously, there’s still attorneys out there filing lawsuits and there’s still attorneys making demands on employers, but at least one good thing that comes out of all of this right now anyway, is quite a bit more reason in settlements.
All right, that’s all I have. So until next time, be productive.
