How could trying to recover a $47,000 bill end up costing $75,000 in legal fees?
It sounds crazy, but it’s all too true: a limited-stakes dispute over $47,000 costing more than one-and-a-half times that in legal fees in a failed attempt to recover it. That might sound impossible, or worse, outright fraud. But it happens far too often.
It happened to me in a case I handled for a small family-owned animal testing lab. The lab was owed $47,000 from a pharmaceutical company that was refusing to pay. It was a case that was ripe for an alternative dispute resolution but instead fell into the trap of traditional legal jousting and costly adversarial wrangling.
The whole story of my attempt to recover the debt is detailed in my new book Just Right: How Neutral-Driven Resolution Can Close the Gap in American Civil Justice. The case had all the elements that make these types of common disputes so expensive, frustrating, and ultimately unsatisfactory for everyone involved: a client determined to get what’s rightfully his, lawyers for the opposing side hard-wired for confrontation and battle, legal costs and court fees that quickly run into the thousands of dollars.
I calculated that if the case went to trial, it could take at least a year and cost more than $75,000 in legal fees plus other associated costs, swamping the amount of the disputed debt. As it was, by the time we were able to stop the bleeding and recover in settlement only part of the disputed bill, legal fees exceeded that amount as well. It was not anyone’s definition of success.
This was the case that launched my search for a better way to deal with situations like this, an alternative dispute resolution method that would be faster, easier, less costly and, more important, would provide real justice. I call it NDR – Neutral-Driven Resolution – a way for parties to agree upfront, at the signing of a contract, to use the NDR process should a dispute arise. it’s a way to deliver real and economically rational justice, and it works better, in my view, than traditional alternative dispute resolution processes.
NDR takes the heat out of limited-stakes business and legal disputes and replaces them with a process that takes weeks instead of years, is affordable with few hidden costs, and produces a binding, satisfactory outcome. As you can probably guess (and you’ll get the fully story in my book), NDR has become a passion of mine. I want to spread the word about this innovative method to do exactly what my book title says – close the gap in American civil justice.
It’s not just about the cost of these cases. Disputes like this one – even ones that involve less money, $10,000 or so – can be extremely costly in terms of aggravation, lost sleep, damage to relationships and reputations. They can cost lawyers too by taking them away from larger, more lucrative cases to spend time on what have come to be known as “dog cases” – legal disputes that might result in meager fees but leave their clients angry, bitter, and poorer than when they started.
You can get a detailed look at how these cases can run up all these costs with our Total Cost of Litigation Calculator on our website. It’s an easy-to-use tool that will enable you to estimate roughly your total legal costs through trial or arbitration of any given dispute involving financial stakes between $10,000 and $2,000,000, regardless of whether you win or lose. Plug in your information but be prepared: the results may shock you.
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