Litigation vs Arbitration - A Primer, Especially For International Companies - Part II

In Part I, we examined the civil litigation system and how it works. We also examined issues of concern regarding the civil litigation system, particularly for international companies. In this Part, we will examine how arbitration works and will compare arbitration to litigation.

Mediation

Before turning to arbitration, I want to say a brief word about mediation. Both arbitration and mediation are alternative dispute resolution ("ADR") methods. Both are widely used. However, they are very different. Mediation is a structured settlement negotiation process with a neutral third party known as a mediator. Mediation is not a binding process. The mediator does not decide anything. The mediator tries to help the parties reach a settlement, and nothing is decided unless the parties agree. Mediation can be used whenever there is a dispute. Often, parties will mediate before they file for litigation or arbitration. Parties can, however, use mediation after a lawsuit has filed. Mediation can also be used after arbitration is filed. As stated, mediation is simply a method to help the parties try to reach a voluntary settlement and is often very successful.

Arbitration

Arbitration is a true alternative to the civil litigation process. Arbitration provides a means for a dispute to be decided in a binding proceeding. The key difference between litigation and arbitration is that the parties agree to have their dispute decided by an arbitrator or a panel of arbitrators (typically, a panel consists of three arbitrators instead of a judge and jury. 

Arbitration is a creature of contract. The parties can agree to submit their claims to arbitration in advance by including an arbitration clause in a commercial contract. A very simple arbitration clause might read: "The parties agree to submit any and all disputes arising out of or arising under this agreement to binding arbitration to be administered under the Rules of Arbitration of the International Chamber of Commerce ("ICC"). The arbitration shall be conducted in the English language. The situs of the arbitration shall be Atlanta, Georgia, U.S.A. The award of the arbitrator shall be enforceable by a court of competent jurisdiction."

If the parties have not agreed in advance to submit their claims to arbitration, they can agree to do so after a dispute arises pursuant to a submission agreement. A submission agreement has similar language to that contained in an arbitration clause.

Generally, it is clear which parties have agreed to arbitrate because they will have signed an agreement. However, there have been instances in which non-signing parties (often affiliates of the signatory parties) are bound under various theories, including agency, alter ego and the like. Such issues do not often arise, and, when they do, may spawn litigation about whether the parties are required to arbitrate.

In the U.S., most arbitrators are lawyers or retired judges. However, business people can sometimes serve as arbitrators. There are a number of organizations that administer arbitrations, including the aforementioned ICC and the American Arbitration Association Parties can also agree to a non-administered arbitration, in which they agree to a method for appointing the arbitrator or panel, and then the arbitrator or panel administers the proceeding.

It is important to understand that, by agreeing to arbitration, a party is giving up the right to litigate in court, and, in particular, the right to a jury trial. Arbitration agreements are generally enforceable under the Federal Arbitration Act if they involve a transaction "in commerce" (meaning it is not entirely intrastate). Most states also have statutes enforcing arbitration agreement.

In the past several years, some parties have tried to avoid arbitration agreements under various theories. For the most part, these efforts have not been successful. The U.S. Supreme Court has generally been very supportive of enforcing agreements to arbitrate.

It should be mentioned that there are some on-going efforts to make arbitration agreements in certain settings -- particularly consumer transactions involving form contracts -- unenforceable. Given the current political climate, it would not be surprising if these efforts gain traction. However, it would seem unlikely that any legislation would affect the enforceability of arbitration agreements in commercial contracts.

How Commercial Arbitration Works

Commercial arbitration usually begins with the filing of a demand for arbitration. The party filing the demand is called the "claimant." The administering organizations have different rules, but arbitration rules do not typically provide for a default for failure to answer the demand. The failure to answer is typically viewed as a denial of the claim. The other party (the "respondent") can file a counterclaim, just as is in litigation.

Administering organizations often have relatively high administrative fees. Lawyers would probably debate whether the "administration" provided has any value, particularly relative to the fees, but the fees must be paid. The failure to pay the fees will typically result in nothing happening until the fees are paid.

In addition to the administrative fees, measures have to be taken to pay the arbitrators. Unlike litigation, where the taxpayers pay the salary of the judge and the minuscule stipends paid to jurors, the parties must pay the arbitrator or arbitrators. The arbitrators typically charge hourly rates comparable to commercial litigators ($300 per hour and up), and it is easy to see how the arbitrators' fees (particularly for a panel) can become significant. Normally, some deposit (usually split equally by the parties) will be required for the arbitrators' fees.

The arbitration clause (or submission agreement) may specify how the arbitrators are to be chosen. If the clause or submission agreement does not specify the procedure, the arbitration rules will provide a method. Although the methods vary, common procedures include the administering organization submitting a list from which the parties may strike unacceptable choices (with the arbitrator or panel appointed from the balance), or each party nominating an arbitrator, with the nominated arbitrators choosing the chair. Needless to say, a lot of effort often goes into the selection process.

There is one side issue I should mention. In the past, it has not been uncommon for appointed arbitrators to serve as "party arbitrators," meaning that they felt free to advance the case of the party appointing them. In 2004, the American Bar Association, in conjunction with the American Arbitration Association, revised its ethical rules to establish a presumption that all arbitrators -- whether party appointed or not -- would serve in a neutral capacity. However, it is still preferable, in my view, to specify in the arbitration clause or submission agreement that each arbitrator will serve in a strictly neutral capacity. In my view, it utterly undermines the integrity of arbitration when a party arbitrator acts as a secondary advocate for a party.

Once the panel is chosen, there will usually be a preliminary hearing to decide how the arbitration will proceed. The various rules have differing requirements, which are beyond the scope of this article.

It is often said that arbitration is cheaper than litigation because it provides for less discovery. Although this may be true in theory, many practitioners have noted a tendency in U.S. arbitrations to allow very full discovery, at least between the parties. The reason, I would submit is cultural. Most U.S. arbitrations are going to be presided over by U.S. lawyers, most of whom are well steeped in the tradition of "full discovery." So, just as the old saying, "when in Rome ..." goes, when arbitrating in the U.S., anticipate the possibility of full discovery. Full discovery may not be allowed, but do not be surprised if it is.

After discovery is allowed, the arbitrators will specify the pre-hearing procedures. (In litigation, there are "trials"; in arbitration, there are "hearings"). The procedures will typically include the preparation of detailed exhibit books containing copies of all documentary evidence and pre-hearing briefs. The procedures are often as detailed as those required in court, if not more so.

The arbitration hearing is supposed to proceed less formally than a trial. However, in practice, the hearing tends to proceed almost exactly like a civil court trial. The rules of evidence may be applied less strictly, but the basic presentation is pretty much the same. Some arbitrators ask everyone to work while sitting, as if this is somehow a meaningful concession to "informality." With all respect to this view, I prefer to stand in examining a witness, and do not think it is appropriate for any arbitrator to tell me how to present the case.

Following the arbitration hearing, there will typically be a round of post-hearing briefing. Then the parties sit and wait -- often for months -- for a decision. The decision, called an "award," is typically in writing.,

After an award is issued, the winning party may file a court proceeding to "confirm" the award and make the award the judgment of the court. The losing party may file a motion to vacate or overturn the award. Although motions to vacate or overturn the award are often filed, they are seldom successful. The standards for challenging an arbitration award are very difficult.

Assuming an arbitration award is confirmed and made the judgment of the court, it can then be enforced the same as any judgment. In practice, many losing parties will simply pay the award.

Comparing Arbitration to Litigation

Proponents of arbitration have long advocated that arbitration is "faster, cheaper, and better" than arbitration. In my view, it is not nearly so simple.

"Faster"

Whether arbitration is faster than litigation really depends, in large part, on the court system to which it is compared. If a court regularly takes two to three years to dispose of a case, then arbitration may well be faster. However, compared to some courts, such as the "rocket docket" of the Eastern District of Virginia, arbitration will almost certainly not be faster.

There are also some practical factors that tend to slow arbitration down, perhaps more than was formerly the case. First and foremost, at least in the U.S., arbitrations have come to be conducted in a manner very similar to litigation. Much of the litigation discovery process seems to have become incorporated into arbitration proceedings. Anything less than a full exchange of documents would be unusual. Depositions are also becoming quite common in arbitration, and depositions of expert witnesses seem to be allowed as a matter of course.

Second, arbitrators do not tend to dispose of a case without a full hearing. The Federal Rules of Civil Procedure provide for several opportunities for the court to throw out a case that is lacking in any real merit: a motion to dismiss at the outset of the case, a motion for summary judgment, typically filed after discovery, and a motion for directed verdict filed after the presentation of the plaintiff's case at trial.

Although there is nothing that prohibits an arbitrator or panel from considering a dispositive motion, and although some effort has been made to modify some of the arbitration rules to accommodate such motions, they just do not seem to work in arbitration. Rather, the preference of arbitrators always seems to be to "hear the case." This means, in effect, that almost every case that is not settled has to go through the full hearing process. A cynic might argue that this approach is to the financial benefit of the arbitrators.

Third, because arbitration has a relaxed evidentiary standard, arbitrators tend to allow the parties to put into evidence anything they want to talk about. This sometimes results in rather lengthy and meandering proceedings.

A final thing that slows arbitration down is that arbitrators often seem to put consensus ahead of efficiency, even in scheduling. Thus, for example, a week may not be set aside for the arbitration hearing unless everyone (the arbitrators, counsel, and the witnesses) has a clear calendar. Trying to coordinate the schedules of many busy people is difficult. This results, sometimes, in arbitration hearings being set far into the future. Further, if the hearing is not concluded in the originally allotted time, the process to schedule a new week starts all over again. A court, in contrast, generally tells the parties when to show up, and they had better show up at the appointed time.

In sum, my experience is that arbitration is seldom significantly faster than most court proceedings, at least in reasonably complicated business cases. In terms of comparing which is "faster," the result is a about equal.

"Cheaper"

The argument that arbitration is cheaper than litigation is based primarily on the belief that there will be less discovery in arbitration and that the hearing will be conducted more quickly and efficiently than in litigation. This may have been true at some point in the past. However, as arbitration, at least as it is practiced in the U.S., has come to resemble a court proceeding in form, any such advantage has likely disappeared. This is particularly true for cases that, if brought in court, would likely be dismissed on a pretrial motion.

Further, there are other costs associated with arbitration that parties do not incur in litigation. First, the administering organization often charges substantial administration fees. This can be avoided by using a non-administered arbitration. However, in the U.S., many lawyers who draft arbitration clauses default to the American Arbitration Association or the ICC. Both organizations charge substantial fees.

In addition, as noted earlier, the parties have to pay the arbitrator or arbitrators. Arbitrators, who tend to be lawyers, charge hourly or daily rates that are similar to lawyers. At between $300 to $700 per hour (or more), this can add up quickly. Arbitrators charge not only for the hearing time, but for time spent reading briefs or otherwise preparing, and in their deliberations. In contrast, the taxpayers foot the bill for the judge and jury.

"Better"

Many business people - particularly international business people - think the prospect of six or twelve citizens picked at random deciding complex business cases is not an optimal decision-making process. This concern is heightened by the fact that some lawyers try to eliminate any person from the jury with any knowledge of the subject area. The potential problem is also heightened by the fact that juries may act to protect local interest, which can be a substantial detriment to international companies.

The jury system may not be the most rational system designed for resolving complex business disputes. The good news is that it seems to work pretty well in the vast majority of cases. However, one still hears of seemingly irrational verdicts or "runaway juries." The concern is especially acute in certain notorious parts of the country.

Arbitration, in contrast, typically involves lawyers or retired judges with either a clear understanding of the legal issues and often some experience in handling legal disputes in the particular industry. At times, business people with particular industry experience will also serve as arbitrators. Arbitrators may have to go through a vetting process with the arbitration provider before they are allowed to serve on the provider's roster of potential arbitrators. Further, the parties will typically have the opportunity to investigate the background of each potential arbitrator (or at least the chair) before they are appointed.

For this reason, many companies and their counsel believe that arbitrators generally reach more consistent decisions - and decisions based on facts and not emotions - than juries. It is also argued that arbitrators are far less likely to reach an extreme result - an outlier - than a jury. Finally, many contend that arbitrators are far less likely to be swayed by local political or business interests. As we would say in the South, there is less chance of being "home cooked" in arbitration.

I tend to agree with these views, particularly in cases involving (a) complex business transactions, (b) matters that require a detailed (or counterintuitive) understanding of a particular industry or field of business; or (c) international companies. In such instances, a company would be wise to consider including arbitration clauses in all or most of its contracts.

Limitations on Arbitration

This is not to say that arbitration is a perfect system. There are bad arbitrators, just as there are bad judges and jurors. It is also commonly said that arbitrators often "split the baby" in a dispute, meaning that they reach a compromise result instead of the result demanded by a fair view of the evidence. In my experience, arbitrators do not always compromise, but it sometimes happens.

There are other instances in which arbitration might not be a good choice. First, arbitration is not really well-equipped to deal with situations in which a quick legal remedy might be available in court. For example, a party seeking to collect on a promissory note or other liquidated debt, or seeking to remove a defaulting tenant from a rental property, would probably be better off in court.

Second, parties seeking equitable relief - such as an injunction against the further use of trade secrets or requiring a party to turn over confidential information - might also be better off in court. Courts are used to handling emergency equitable proceedings. Although equitable relief is theoretically available in arbitration, arbitration is not really well-suited for obtaining emergency relief.

The concern over the possible need for equitable relief can be dealt with through an exception to the arbitration clause. It is not uncommon for a contract providing for arbitration to provide that a party may nevertheless seek purely equitable relief - such as an injunction - in court. Such a provision needs to be crafted so that it does not effectively gut the arbitration clause, but that can be done by making clear that the court is allowed only to award equitable relief, with all damages issues to be addressed in arbitration.

Third, parties need to realize that they can generally require arbitration only of persons with whom they have a contractual relationship. Thus, for example, it is generally not possible, at least absent a submission to arbitration after the claim arises, to require arbitration by injured parties of product liability or other tort claims.

Conclusion

Arbitration is not necessarily "faster, cheaper and better" in all instances. In fact, it is rarely faster or cheaper. However, it can be better and can provide more predictable and rational results, particularly for certain types of cases and international companies. In such instances, parties should consider insisting on an arbitration clause in their commercial agreements.

Serious Injury Motorcycle Accident Cases Are Complex Litigation - Part 1

Motorcycle accidents, unfortunately, often result in serious and catastrophic injuries. Some of the reasons are obvious, such as that motorcycles don't have the surrounding metal cage, the safety designed interior padding, seat belts and air bags that protect auto drivers. Some of the reasons are less obvious, such as the "inattentional blindness" that impairs many auto drivers' ability to "see" the oncoming motorcycle often leading auto drivers either to pull out into intersections from side streets or turn left directly into the motorcyclists' path.

Motorcyclists may suffer quadriplegia, paraplegia, other spinal cord injuries, traumatic brain injury, TBI, debilitating internal injuries, catastrophic orthopedic injuries and limb amputations. Our serious injury motorcycle accident lawyers will discuss two of those categories of cases, involving TBI and spinal cord injuries. However, every serious injury motorcycle accident case is "complex litigation," much more complicated than "who ran the red light," and so it is very important that the seriously injured client obtain the representation of qualified lawyers, highly experienced in the preparation and presentation of complex litigation, motorcycle accident attorneys capable of competently presenting to the settlement judge and jury the full measure of the motorcyclist's general and special damages.

We'll contrast the ordinary and serious injury motorcycle accident case without in any way discounting the importance of the ordinary case, because every motorcycle accident case is important for the client and should likewise be important for the attorney. However, it would be inaccurate to say that the preparation or presentation of "general damages," "past and future medical expense" or "past and future loss of earnings" is similar.

For many motorcycle accident lawyers the term "general damages" means "pain a suffering"; but for the true serious injury motorcycle accident attorney, the most persuasive general damage evidence is what we call "loss of enjoyment of life damages." This is commonly the way our seriously injured clients see it. And it can be presented poignantly by juxtaposing the evidence of what the client enjoyed most in his life before the accident, through the testimony of friends, family, home videos and photographs, against a professionally produced "Day in the Life" film, demonstrating the courage of the serious or catastrophically injured client as he confronts and overcomes the challenges of his post accident daily life.

In the ordinary motorcycle accident case the Motorcycle Accident Attorneys might have to present some evidence of past medical expense, but presenting future medical expenses for the seriously injured motorcyclist is hugely more complex. For a more general discussion of motorcycle accident litigation you may consider >"How Motorcycle Accident Lawyers Present Liability Evidence". The presentation of the motorcyclist's future medical expenses commonly requires a number of treating doctors as well as medical experts engaged by the serious injury motorcycle attorneys, and then perhaps most importantly, a life care planner and forensic economist.

In the briefest summary, the life care planner, under the direction of the lawyer will consult with the treating doctors and other medical experts first to derive the client's post accident "life expectancy," and then identify all of the medical expenses, such as additional surgeries, rehabilitation expenses, anticipated convalescent home costs, replacement prostheses, wheel chairs, all the way down to the cost of the medical supplies and sundries that the injured motorcyclist will likely require over the remainder of his anticipated life expectancy.

The serious injury motorcycle accident lawyers will then present the life care planner's report to the forensic economist who will increase the individual medical costs over by the anticipated date they will be required by use of medical cost inflation government statistics, and then with use general inflation statistics to reduce that number to "present value." There is no other proper way to present future medical expense, and if not properly prepared, the Court will likely not permit the evidence to be presented.

What is Lawsuit Financing and Why Should I Use It?

Lawsuit financing (commonly known as lawsuit loans or lawsuit advance) is a means to pay living expense during a pending litigation. Most of the time the plaintiff has financial burden as a result of the legal expenses.

In the case of a personal injury lawsuit, where injury affects the plaintiff's ability to work, he or she will lose income, accumulate unpaid bills and owe medical expenses. The medical expenses are often expensive due to the nature of the injury.

Because of the added financial burden, the plaintiff should consider lawsuit financing.

While plaintiffs who claim personal injury may eventually receive settlement, it may take a long time to receive the compensation. Defendants that are large companies may prolong the litigation to force the plaintiff to settle for a lower compensation or drop the litigation. When this happens, a litigation advance can help you persevere against the delay in settlement and eventually receive the fair amount of compensation.

Even though conventional means of funding (such as credit cards and bank loans) are less costly, they require checks on your credit ratings, employment and net worth. If you do not fulfill the stringent standards that show your ability to repay the credit/loan, your loan will not be approved. And these standards will likely be unmet without a job and maxing out your credit card.

This is where there is an advantage with lawsuit loans. Lawsuit financing companies review your lawsuit and determine if there is a high probability of you receiving settlement. In most cases, this will be so. And that is the main requirement for a lawsuit financing application.

Moreover, you only repay the lawsuit cash advanced to you if you win the lawsuit or receive out-of-court settlement. If you lose the case and compensation, you do not need to repay the lawsuit 'loan'.

LPO's Future in India

LPO's future:

India as we all know is one of the most upcoming economies in the present times. Its growth has been immense in the past 5 yrs and it is expected to rise more in the coming days. The country's stock markets have become a regular feature nowadays that they are touching the mark of 20k which shows the mighty growth of the economy. Everybody knows that dollars are pouring in but there are so many other areas where India can earn more, make its economy strong. One of such growing industry is the LPO or legal process outsourcing or LPOs which is expected to rise to $20 billion by 2015. It is helping in the success of law schools that will be able to absorb as many as 15,000 law graduates which pass out every year. LPO opportunities can transform the legal industry by drawing law graduates into work that's not just large in volume but diverse in nature.
According to Nasscom there are presently just 700 Indian lawyers who are working in the various LPO's throughout the country. Forrester Research estimates that there could be a demand for as many as 79,000 LPO professionals in the next 7-8 years. Are you aware of that at law firms in Delhi, Bangalore and Mumbai, who serve the legal requirements of several MNCs which are based in the US and Europe, the work of such companies is outsourced.

Legal outsourcing to India had earlier begun at a very low level and the quality of work was low-end which included transcription. With rising legal costs in the U.S. and in the EU, they are amongst a variety of other factors that are driving the legal work to India. The recent trend is that there is now offshoring work is done at every level of expertise which appeals a number of legal professionals. The major factor is that Indian legal services are affordable and more efficient too. As for competency, Indian lawyers work out cheaper for the foreign firm as to get the same kind of work done in India as compared to a US law firm. Everything done from patent application drafting, legal research, pre-litigation documentation, advising clients, analyzing drafted documents, writing software licensing agreements to drafting distribution agreement is presently being outsourced to India. The kind of work that Indian lawyers do is that they make pleadings ready and provide back-up support for litigation-related research.

Currently, there are around 75 big and small law firms in India which are dedicated to serve their clients in the US, UK and other European countries. Already 155 of the top 200 U.S. law firms outsource atleast some portion of their work. But several leading LPOs including Quislex, Law Scribe, and Mind crest have created such business models for high-volume high-value opportunities which they strongly believe are out there for everyone to see. Research, Transaction Support, Case Analysis are good examples of high-value work that's also coming across in large volumes to the LPO's.

For a young legal professional, a career with an LPO is attractive for several reasons:

1.It is a sunrise industry which should see a boom in the next 3-5 years.

2.There is a tremendous variety of work at all levels of expertise.

3.High-end opportunities for graduates of top law schools with hefty pay packages and future management prospects.

4.Gives an opportunity to work in a corporate structure without borders.

5.A platform for those who are considering legal and paralegal careers in the U.K. or the U.S.

A person who is taking up an LPO as a profession will have to be well versed in English. Currently, 80% of all LPO work emanates from the U.S. So knowing American English, drafting and research methodology are essential. Knowing how to work on MS Office /Adobe software's is also essential. Only a tiny percentage of graduating lawyers are equipped with all the skills needed for the LPO industry. If given proper training to the U.S. legal systems and methodologies then it would not be a problem to grasp it which is the key for success.

There is a large chunk of work that can be done, or in some cases is required to be done by non-lawyers. For instance, there is a tremendous demand for engineers in the intellectual property rights for doing patent work. They are the ones who go through the patent applications. The work involves analyzing scientific and technological inventions for the purposes of crafting legal protection for the same. This work needs to be done by those with technological skills and experience.

There is one message that I would like to give for the young lawyers that who all are planning to enter the industry now, at this point of time when the LPO market is coming up, they will be the ones who will benefit when the industry booms at its best.

Attorney Fees - Part 1 - Legal Fees and Fee Agreement

Understanding the attorney fees would help you control your finances a whole lot better and help you make better financial decisions when working with your lawyer. The attorney fees could get substantial, and if you don't fully understand them your bank account would very soon. Before you enter into a legal agreement with your chosen attorney, it would be in your best interest to have an understanding of the attorney fees so you can build a strong client-attorney working relationship with your lawyer without any financial disputes, which on the other hand would help your lawyer fully focus on your case. Provided here are overviews of attorney fees that you may expect when hiring a lawyer. But this is just to inform you. Always clearly communicate with your attorney the legal fees that apply to your case and don't stop asking your attorney until you gain a full understanding of the legal costs that you will be responsible for.

Legal Fees

Some attorneys who enjoy higher reputation may charge more than the ones who don't. But, those well-reputed lawyers may get the work done faster. The keyword here is "may." That's because lawyers consider several factors when setting their fees. It depends on how complicated your case is and the amount of time it will take to resolve the matter. Even though the trial itself may not take that long, researching the law, gathering the facts, interviewing witnesses, preparing all the needed documentation and arguments for the trial may take days, weeks and even months. In some cases unexpected developments may take place that will complicate your situation even further, which would result in higher fees.

You need to feel comfortable when discussing fees with your lawyer. Actually, you and your lawyer can negotiate almost any type of fee agreement. Besides the fee that you may pay for your first meeting, your lawyer could offer you a fixed, hourly, retainer, contingency, or a statutory fee. In addition to that, the same lawyer might charge more for the time spent in the courtroom than for hours spent in the office or library. But, you can agree to any one or a combination of these fees. The most common billing method is to charge a set amount for each hour of time the lawyer works on your case. What will work for you is what you need to discuss with your attorney and find a medium that will work for both of you. Don't forget that your main goal is winning your case. The fees need not to spin you out of focus that may result in losing your case. On the other hand, if one attorney is not willing to meet you half way in regards to your ability in making the payment, consider talking to another attorney.

Fee Agreement

You need to get your fee agreement in writing. By law, contingency fees and non-contingency fees anticipated to be $1,000 or more must be in writing. But, it's best to get any fee arrangement in writing no matter the amount because it provides a written record. This way, both you and your lawyer will know what to expect from each other as you work together on your case. Also, it steers clear from any confusion and misunderstanding that may affect your outcome. Try to avoid making oral agreements. But if you do make one with your lawyer, make a written note of it.

Your fee agreement needs to include what services are and aren't covered under that agreement as well as the type and amount of fees you will be expected to pay. Also, the agreement might spell out your obligations as a client, as well as how the court fees and miscellaneous expenses will be handled. It could explain the attorney's billing practices and state whether the lawyer is going to add interest or other charges to unpaid amounts. The lawyer may have a pre-printed fee agreement for you to sign. However, nothing is set in stone. You can always ask the lawyer to change parts of the agreement or make up a new one especially for your situation. If you're not sure what to ask your lawyer regarding your fee agreement, feel free to bring some one with you at your initial meeting to help you out.

Do not sign the agreement if you don't fully understand it. Also, do not sign it if something you have requested is not included or vice versa. You need to read it and fully understand it. Once you sign it, you fully agree to it. That's important because if you have agreed to (signed) something that you "didn't really agree" (as a result of not reading the agreement), or didn't want, or didn't fully understand, legal fees can add up very fast and cost you an arm and a leg. When you get your bill, it's too late. Every story that you can read about people complaining against their attorneys regarding fees, it's because the client signed up to something that they didn't fully understand. Or, they've made oral agreements with no record.

Fee Arrangements - covered in Part 2 of this article.

Disclaimer: The author and publisher of this article have done their best to give you useful, informative and accurate information. This article does not represent nor replace the legal advice you need to get from a lawyer, or other professional if the content of the article involves an issue you are facing. Laws vary from state-to-state and change from time-to-time. Always consult with a qualified professional before making any decisions about the issues described in this article. Thank you.

This is Part 1 of this 4-part article. Please refer to the other 3 parts to read this article in full.

So Your Business Has a Legal Problem - 8 Useful Tips on What to Expect From Your Lawyer

As a business owner, you are usually run off your feet with the challenges of operating your business. The last thing you need to worry about is a legal problem. Many business people put off dealing with a legal problem because they don't know where to turn, don't have the time, or most often, are afraid of how much it will cost and how much time it will take.

Legal issues come in many forms:

· A customer failed to pay an account despite many promises. · You just received a letter from a government agency. · You just found out that your former manager has set up a competing business and has stolen your best customer and one of your key employees. · You have just been sued for $100,000. · Someone told you that one of your standard form contracts won't stand up in court and you are worried about it. · You have a dispute with your landlord. · You have a problem with a US or European customer. · Your business has been defamed on the internet. · You just found that your warehouse manager has been sexually harassing a female employee. · An employee is damaging your business but threatens to sue if you fire him. You are not sure how to handle it. · You are involved with a Workplace Safety Insurance claim.

These examples are just the tip of the iceberg of the kinds of legal issues business people run into frequently.

Tip #1 - Seek out legal help at the first sign of a problem

Suppose a competitor has been passing off its business under your name and it's costing you customers and sales but it's hard to estimate the amount. Unless you act promptly, it may be too late to seek an injunction from the Court. If you think you have a claim against another party under a contract, a limitation period begins to run from the time the contract is breached and usually expires two years later. It's not a good idea to leave the claim to the last minute.

If you have an issue with an employee who is working unacceptably, it's important to develop a legal strategy as early as possible. The longer you wait, the more it may cost your business.

The short point here is that it is important to seek advice as soon you detect a problem and before anything has been done to make it worse. Crisis management is always more expensive and time-consuming than early response.

Tip #2 - Have a team of lawyers to call on when you need them.

Every business should have a team of on-call lawyers. This is less expensive or complicated than it sounds. All you need are the telephone numbers and email addresses of trusted corporate, employment law and litigation lawyers. Depending on the nature of your business, you may also need an intellectual property lawyer, who deals with trademarks, patents and copyright. You may even need a tax lawyer because not all tax issues can be solved by an accountant.

If the amount of your legal dispute is very small, such as a claim or complaint by a customer for $1,000 or less, it will be uneconomic to hire a lawyer. Fortunately, there are other helpful resources. The BBB has a dispute resolution process which permits BBB businesses and their customers to resolve disputes by arbitration or mediation. You don't need a lawyer and the only cost is a small administration fee. More information about this process is available on the BBB website.

If your case is in the Small Claims Court ($10,000 or less), you might need a paralegal who specializes in these kinds of cases. Paralegals are now regulated by the Law Society but they are not lawyers and they are not a substitute for an experienced lawyer.

Tip #3 - Learn what to expect when a dispute arises.

As a business person, you have learned that success is often the result of building relationships. The relationships you build with your lawyers can be just as important to your business success as the ones you have with your customers, suppliers, banker and insurance broker. A relationship with your lawyer built on mutual trust and respect will save you many sleepless nights over the years and probably make or save you a lot of money.

There are several ways to find good lawyers for your business:

Ask business associates or relatives if they have someone to recommend. If you get a recommendation, find out more about the firm and the lawyer by using some of the research methods below. · The internet is a very useful resource for finding a lawyer but you have to be careful. Any lawyer can list with various online legal directories. Anyone can have a flashy website. You have to move past the flash to find the substance.
When looking for a lawyer on the internet, look for someone who has experience in the field you require. The first name on a Google search may not be the best choice. Some lawyers have written extensively about the law. This is a useful indicator of expertise and standing in the legal community.
Some lawyers list cases they have been involved in on their websites. Broad litigation experience in complex business matters over many years is a good indicator of competence.
The Law Society of Upper Canada (Ontario, Canada) has a lawyers' referral service. The service provides a name but you have to check the details out yourself. · The Law Society certifies specialists in several areas of practice. Certification as a specialist signals that the lawyer has achieved a higher standard of experience in his/her area but certification isn't mandatory. Many competent lawyers have long experience in a field without applying for certification. You have to decide if this is important to you.
· If your problem is outside Ontario, find a local lawyer first. Many firms have networks with lawyers globally and are able to refer to lawyers in the USA or other countries. Refers between colleagues are often more effective.

When you call, don't expect the lawyer to solve your business problem over the telephone. The first discussion is for the lawyer to identify whether s/he can represent you and for you to assess whether the lawyer appears to have the skills to deal with your problem. If you have a legal problem the lawyer believes his/her firm can resolve, an office meeting will be arranged.

In business matters, lawyers customarily charge a consultation fee for the first office meeting. At the meeting, the lawyer will give preliminary or urgent advice and develop a go-forward strategy. The lawyer may be able to give a partial fee estimate and will ask for a retainer to cover some of the work. No lawyer can guarantee the outcome. At this early stage, there are usually a lot of unknown matters. While the lawyer may be able to give you a partial fee estimate in a litigation matter, it's impossible to say with accuracy how much it will cost. It depends on too many unknown factors.

It will be then up to you to decide whether or not to hire the lawyer to represent you further. The decision you make will depend on your sense of confidence in the lawyer. Has the lawyer listened to you? Have your questions been answered? Does the lawyer appear to understand your problem? Has the lawyer presented the risks and downsides of your case? Every case has risks and costs. Beware of a lawyer who tells you only what you want to hear without assessing the strengths of the opposing party's case.

Some lawyers will accept a monthly or annual retainer which entitles the client to telephone advice a few times a month. More complicated issues require separate engagements.

Tip #4 - The least expensive lawyer is unlikely to be the best person to handle your legal problem

Consider this scenario: you are looking for a lawyer for a complicated lawsuit. You call Mr. Jones, who answers on the first ring. You tell your story, which has many facts the opposite party disputes. Mr. Jones says, "You have a great case. I'm sure you're going to win." When you ask how much it will cost, Mr. Jones says "Don't worry, you won't have to pay me anything unless you win. Just come on down to my office and we'll get started."

Beware of any lawyer who tells you this. While Ontario lawyers are permitted to charge their fees based on contingency, i.e. a percentage of the result, this type of fee arrangement is only rarely applicable in business cases. It never occurs when facts are in dispute, recovery is uncertain or if the amount is small.

When you retain a lawyer, you need a trustworthy advisor, who will point out the weaknesses of your case as well as the strengths. A litigation lawyer who is waiting by the phone for your call and tells you exactly what you are hoping to hear may be too hungry or too inexperienced to manage your case. He may be in over his head and will bail out as soon as your case takes a negative turn. By then, your legal situation may have worsened. It will be more expensive and perhaps impossible to repair it.

Even worthwhile cases require careful analysis and risk assessment. An experienced litigation lawyer will typically do his by for fees on an hourly basis plus GST and any out-of-pocket expenses necessary for your case.

Good litigation lawyers are often in court, at mediation or other litigation procedures, at meetings or discovery. However, good litigation lawyers always call or respond by email within 24 hours. In case of urgency or vacation, the lawyer will arrange for someone in the office to contact you.

Tip #5 - Prevention is better and much less expensive than litigation.

Legal problems are like computer crashes --- they are bound to occur, it's just a matter of time. Unlike computer crashes, some lawsuits can be avoided. Often, businesses owners deal with legal matters only when a crisis arises. They look for the least expensive lawyer to draft their leases, contracts, corporate and employment agreements without regard to skill, competence and experience.

Sometimes, business owners avoid legal steps like failing to make a shareholder agreement, failing to file a trademark application or failing to prepare a non-competition and non-solicitation agreement with a key employee. When served with a lawsuit, they ignore or tear the papers up in anger. These business owners will be caught short when the inevitable occurs. While litigation or arbitration may still occur when there are written agreements in place, you will be in a far more secure position if you have taken precautionary steps before the dispute occurs. If you respond to correspondence and legal papers promptly, you will be better protected than if you ignore them.

Competent legal advice is available for matters such as corporate organization, leases, the wording contracts and other documents you use in your business, partnership and shareholder agreements, your relationships with your employees, your company's trade names, logos and website, your regulatory compliance, your risk management and litigation prevention techniques. It's all important to arrange legal affairs to ensure that your personal liability is limited in the case of a claim against your business.

Ensure that the legal issues affecting your business are in good order. This is likely to save you a lot of money and grief in the future. You might even consider having a legal audit or a "business legal checkup". We plan to write about this topic in a future article in this newsletter. Preventative legal advice may be expensive but it is just as important as fire insurance.

Tip #6 -- Don't assume that 'going to court' means 'going to trial'

If you haven't been involved in litigation before, you may not appreciate that more than 90% of cases settle before trial. While a trial (or even an appeal) is not always avoidable, lawyers use techniques to try to resolve cases at earlier stages. Business people are looking for certainty and to limit expense and exposure.

It's never a bad idea to negotiate a settlement with the opposing party but the timing and approach will depend on the case. It is best to negotiate from a position of strength. This may mean holding off negotiations until enough facts and documents have been disclosed to favour your position.

Mediation is another technique lawyers use to achieve settlement before trial. Mediation involves a neutral mediator, who is usually an experienced lawyer, acceptable to all parties. The parties and the lawyers prepare briefs to explain their positions to the mediator. On the mediation date, after an opening session, the parties retire to separate rooms. The mediator will "shuttle" between the parties until an agreement is worked out or an impasse is declared. This process produces a high rate of settlement even in very complicated cases.

Tip #7 - Understand the risks of the litigation process: Why do lawyers emphasize settlement?

Even if you have an airtight case, your lawyer will still recommend settlement. Lawyers assess risk every day. Even the most airtight case could have problems at trial. The judge may prefer the evidence of the opposing party over yours. The other party's expert witness may be more persuasive than yours. These are just two of many possibilities. A trial is always a last resort.

Another good reason to settle is that even if you win at trial, the case may not be over because

The legal costs awarded by the court to a successful party are only a partial recovery of the legal costs payable to your lawyer. · If you lose at trial or if the opposing party does better in court than their settlement offer, you will have to pay a portion of their legal costs. · There may be an appeal which could delay payment for two years or longer.
Until a final judgment is granted, a defendant is rarely prevented from dealing with his property - unless the property is the subject of the lawsuit (or some other exceptional situations).
The judgment may be unenforceable. The opposing party may be insolvent or go bankrupt. You might not collect anything. · The defendant may conceal his assets or transfer them to family members to make the debt difficult to collect. A separate lawsuit may be necessary to find the defendant's assets or to declare the fraudulent transfer void.
The defendant may have assets outside Ontario. A lawyer in the jurisdiction where defendant's assets are located may have to be retained to collect the judgment.

A settlement involves a resolution both parties can live with. If the case involves the payment of money, there won't be a settlement unless payment is made.

Even with these concerns, some cases can't be settled. The positions of the parties may be so far apart that a trial is necessary. As the case progresses, you and your lawyer will have to revise and update your strategy and estimate the legal cost and risk of each stage of the case. Keep in mind that the opposing party is dealing with similar risk assessment and cost issues as you are.

Tip #8 -- Be a good client.

From a lawyer's perspective, a good client is a business person who does the following:

Presents all the facts of the case fairly without exaggeration or deception. Tell your lawyer everything; not just the facts that help you. The rest of the story always comes out and usually with adverse consequences. · Considers the lawyer as a trusted advisor and advocate.
Has a well-organized set of relevant documents.
Provides other documents and information promptly when requested.
Accepts that every case has weaknesses and works with the lawyer to develop a strategy to minimize the weaknesses.
Recognizes that the lawyer cannot guarantee the outcome but can only provide effective advocacy to produce the best result, often as a result of negotiation or mediation.
If an examination for discovery or trial is required, takes the time to prepare to testify.
Asks for clarification on all matters that are unclear.
Understands that in litigation matters, it is impossible to predict the fees accurately but that the lawyer will gladly provide estimates of imminent steps in the case.
Pays retainers when asked and settles interim accounts promptly when rendered.
Considers the lawyer's recommendations carefully and provides reasonable instructions.

One of our firm's clients is a technology business which started as a family operation and has grown to the point that its brand is now accepted and recognized globally. Our client's president knows hows to get the most out of his professional advisors. He is always respectful, trusting of professionalism, intelligence, experience and competence. He is prompt in responding to requests for information, appreciative of good advice and excellent service. He works hard but he usually has a happy and cheerful attitude.

Our client expects is professional advisors to have the same enthusiasm for their work as he does for the operations of his business. And another small matter: our client pays every professional account within 48 hours of receipt. He believes that if he had to challenge his lawyer or accountant's bill, the professional relationship is not a healthy as it should be. Our client expects fair treatment, excellent service, sound advice, creative strategy, experienced advocacy and determined, no-nonsense negotiations. And he gets all of them in spades! A lot of business people who are dissatisfied with their professional advisors could learn a lot from him.

These tips offer no assurance that your legal matter will turn out exactly as you expect. However, by following our suggestions, the resolution of your business dispute is likely to be a less expensive, less time-consuming and less stressful experience and possibly more successful. Keeping your business legal affairs in good order permits you more time to focus on making your business flourish.

Nurse Malpractice

In the last five years, the number of cases related to nursing malpractice has risen considerably. According to the National Council of State Boards of Nursing, RNs or Registered Nurses are now being held liable for negligence and malpractice; such as, errors on documentation, failure to assess or intervene, and medication errors.

Medical malpractice is generally defined as negligence on the part of a physician, nurse, EMT, hospital or other health care professionals. Negligence is at par with failure to perform medical obligations under normal standard of care. The nurses are also involved when patients get injured either physically and/or mentally as results of medical malpractice.

Due to current shortage of nursing professionals in the US, nurses on the job are inevitably overloaded with work and duties. Nurses are not getting enough rest that they need to stay alert at all times due to longer shifts. Inattentiveness often leads to medical mistakes that cause serious harm to patients.

Another root of the nurse malpractice is under qualification. Many practicing nurses lack training or did not complete the proper length of nursing education; thus medical malpractice sometimes occurs.

Even though nurses are less visible than doctors, nursing practitioners are not less significant whenever medical malpractice takes place. To avoid making fatal mistakes, nurses should always observe the following 'standards of care':

* Proper documentation

* Administer treatment at once

* Proper use of medical device

* Report the changes in patient's condition at once

* Obtain patient consent

* Follow correct medical procedure

Depending on the circumstances, victims of nurse malpractice may be entitled to compensation for such things as medical costs, pain and suffering, lost wages and benefits, and other losses. When the medical malpractice results in death, members of the family may file a claim for funeral expenses, loss of companionship, and loss of support, to name a few.

There are strict legal deadlines in nurse malpractice cases, so it's important to have your case evaluated by an experienced medical lawyer if you believe malpractice has occurred.