Commercial Litigation: Pre-Litigation Legwork

Post authored by Alexander I. Passo

A partner comes into your office, sits down, and informs you that one of the firm’s clients is upset at his former business partner.  Apparently, the former business partner set up a competing business while taking draws from your client and their business.  After he let your client know that he was departing with an e-mail he sent at 1:00 a.m. last night, he contacted all of the business’ clients to let them know about his new company at 1:01 a.m.  Needless to say, but the client is miffed.   They inform your partner that they want to sue, and your partner is happy to oblige.  Partner wants you to draft the complaint – the ball is now in your court.

Many are apt to just dive into drafting a complaint instead of thinking about the facts, law, or strategy in resolving the matter.  This is a mistake and creates problems at the outset of the case after filing.  Too often, attorneys unintentionally take a kitchen sink approach and then run into a motion to dismiss that wipes out half of their claims.  When that occurs: a) it doesn’t look great to the client; b) influences the judge’s perception of the case and your client; c) perhaps your reputation internally within the firm takes a hit; and d) impacts your own confidence.

Instead, take a step back and analyze the facts and potential legal issues.  Pre-drafting analysis is beneficial because it reduces the risk of including weak counts and irrelevant facts that will inevitably be scrapped anyway throughout the course of litigation.  In the previous hypothetical, I have seen complaints contain some truly far-flung causes of action that were quickly tossed.  They were unnecessary to begin with and a waste of the client’s resources.  Especially when they had strong claims to pursue which would achieve the same result as the claims that were dismissed.  A far more efficient approach in such instances is to appreciate the low-hanging fruit and grabbing it.

The following are my pre-drafting steps to avoid running into problems later on after filing.

Step One: Pre-Drafting Reflection

Before diving into the drafting process, get on the phone with the client and discuss the matter: obtain a timeline of the critical facts and a list of the major players.  You may want to consider speaking to other witnesses and should ask the client to send you all of the documents and other physical evidence they have which will support their claims.  If the opposing side is the party with all of the evidence, send a preservation letter to put them on notice.

Assess whether filing the complaint will cause more problems than solve them.  For example, if your client has a beef with one of its suppliers, filing suit against the supplier may lead to it terminating your client.  If your client doesn’t have an alternative supplier, the termination could interrupt its business, make it lose revenue, and could even lead to more lawsuits – except now your client is in the cross-hairs as a defendant.

If your client is dead set on pursuing the other party, determine whether the juice is going to be worth the squeeze.  Is the other party judgment proof?  Is your client aware that your fees may exceed the judgment you will obtain?  If your client isn’t certain about whether the defendant is judgment proof, inquire if they want to perform an asset search or if you should use more informal methods like searching for real estate or checking court dockets.

Ask your client whether they believe the defendant is litigious or meek.  If the opposing party is not litigation savvy or averse to it, you may be able to resolve the matter without heavy-lifting.  If that is the case draft a demand letter outlining your positions and claims.  Conclude it with a demand, a request to mediate the dispute, or a meeting to discuss resolving the matter in person. However, if your client has previously engaged in this process, it is a likely a waste of your time and client’s resources.  A demand on letterhead from your firm has minimal benefit if the positions have already been discussed.

Step Two:  Pre-Drafting Research

After I determine whether drafting the complaint is necessary, I then typically consider every type of claim that I may be able to plausibly bring.  I write them down and then detail each element that must be pled.  Some litigators go further and pull the pattern jury instructions or previously approved ones for a second look at the strength of the claims.  I don’t disagree with this approach; but, only do so if the size of the matter justifies the extra hours expended.  After review of the elements, if I don’t have sufficient facts to establish a claim, I scrap it from my list.  After this purge, I then consider the remaining counts and whether there are any initial legal issues that may be raised by the defendant in motion practice that I will have to work around in the fact section of the complaint.  This step is critical because you don’t want to unintentionally omit facts in the complaint you can use to parry an anticipated future motion.

Step 3:  Considering Strategy and Expense with Client

At this stage, I typically will get back on the phone with the client to discuss all of the claims we may bring on a good-faith basis. I will then run through which claims I believe are strong and which are weak.  Depending on the size of the dispute and the types of claims being brought, I may advise them to drop weaker claims that I suspect will create motion practice which will eat into the recovery for the client.

However, some clients prefer being aggressive with forging ahead with every claim plausible regardless of cost.  If they are aggressive and wish to pursue every plausible claim, the key is to clearly outline and document which claims you believe are weak and that briefing a motion to dismiss or conducting discovery on them will increase litigation costs with potentially no ultimate benefit. After this discussion, I typically really dive into drafting the complaint.

Step 4:  Pre-Filing

Before finalizing the draft complaint, I typically will do another read through and will specifically make sure that each cause of action has sufficient facts to support its elements.  In doing so, I make sure that I’m not just including blanket conclusions to support the elements.  To avoid that issue, when drafting, I try to imitate laying foundation when detailing the critical facts for the claims – when, who, why, etc.  After you’re certain all of the claims are supported by facts, I then send it to the client to give them the opportunity to review and schedule a time to discuss the draft.  Providing the client with an opportunity to review prior to filing is necessary.  Not only will they be able to pinpoint whether you miscited or omitted facts, but they also may have changed their mindset on what claims they wish to pursue.  Regardless, obtaining a final blessing on a pleading or filing from a client is a good practice from a professional responsibility perspective.

About the Author:

Headshot.croppedAlexander I. Passo is an Attorney at Latimer LeVay Fyock LLC. He concentrates his practice in complex commercial litigation, including representing clients in matters involving internal business disputes, breaches of contract, fraud, breaches of fiduciary duty, emergency business litigation, unfair competition, and professional negligence actions. Alex received his Bachelor of Arts from Purdue University in 2010 and graduated magna cum laude from IIT Chicago-Kent College of Law in 2014. He’s currently a Director of the CBA Young Lawyers Section and is a past chair of the YLS Tort Litigation Committee.  On his free time, he enjoys running, golfing, playing squash, and taking his dogs for walks in the Indiana Dunes or on Lake Michigan’s beach.

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