The Neutral Zone – Surviving Single Plaintiff Cases

In some ways the biggest cases are the easiest. If you have the misfortune of being hit with a major class action, you have no choice but to fight for the best result, whether it be an outright victory or reasonable settlement. Small value nuisance cases also present a straightforward choice between a nominal settlement or pushing a motion to dismiss.

What’s challenging are small and low merit, but non-frivolous, cases filed by a single consumer or employee. Examples are a discrimination claim based on a he said/she said, or a claim of fraud based on a private conversation. Even when you are right, the likelihood of prevailing on summary judgment is low, meaning you probably have to go to trial to win outright.  

These types of cases are challenging because between potential damages, statutes that provide for attorney’s fees for prevailing plaintiffs, and fees to your own counsel, your total exposure is scary enough that you can’t cut too many corners. At the same time, scorched earth litigation by a large law firm could cost more than the case is worth in the first place. Odds are your case will settle, but if you settle too easily, the plaintiff’s bar will soon realize that it only takes a mean letter or two to get your company to pay up.

This leaves you in a neutral zone where you have to make a strategic bet about how to get the best result for your company.

So what do you do?  Three tips:

1.       Create risk for the plaintiff before you talk settlement. Remember most plaintiff’s attorneys take cases on contingency. If you can file a motion that even has a somewhat compelling case for dismissal, you’ve upped your leverage considerably. The prospect of a total loss may give you some room to discuss settlement from a position of strength.

2.       Put a price on your principles. While you don’t want to settle too easily, few companies have the budget to fight each case to its fullest. Some cases warrant tough stances, but choose those wisely. The smart business move will often require paying more to settle than you think fair at some point.

3.       Implement best practices before you get sued. You likely know where your company has risk. In those places, work with your counsel to implement policies and procedures that minimize it. If you have high turnover, have an employment lawyer examine your hiring and firing practices. If your company markets aggressively, make sure legal reviews all marketing copy. It sounds simple, but implementing even modest internal controls can go a long way and give you the confidence to take firm positions.

Fight when you need to, but be smart.

*This blog is intended to provide a general summary of best practices and does not constitute legal advice. You should consult with counsel to determine the exact legal requirements in a given situation.