MANAGING AND CONTROLLING LEGAL COSTS IN 2012
The purpose of this article will be to discuss ways of minimizing legal costs for those engaged in the construction industry, both prior to litigations and once litigation is filed. Some of these methods will involve modifying current strategies and business practices, invariably making them better. Some of these methods will involve changes in attitudes. Some of these methods will involve managing legal costs with your attorney. If you can think of other methods you have found successful in the past, send me an email and I’ll include them in the next revision of this article.
As you will see, to reduce legal costs will require some changes in the specific ways you look at contracts and their issues. After all, in a dispute situation, the lawyer throws the snowballs but the client provides the snow. When there is not much snow but a lot of rain or slush, this tends to make resolution of disputes that much longer and more difficult.
1. Use Written Contracts.
The number one thing you can do is to be sure to have written contracts. Without one, you can’t file a mechanics’ lien in Massachusetts, for example. Without written contracts, resolving payment bond disputes takes longer.
Litigation is the process of establishing facts for the trier of fact and then applying the operative law to those facts, resulting in a finding or judgment for one party against another. ‘Discovery’ in litigation involves processes - some expensive - where facts are ‘discovered’ by one side as to the other and as to knowledge held by third parties. Minimizing potential factual issues is a key strategy and one of the best ways of doing that is using written contracts. A number of articles on my website discuss all that is necessary to have a written contract and this is also discussed in some of the articles being emailed to the construction industry as a series. Not having written contracts invites disputes - making things like litigation more likely - and makes the disputes more complicated once they are in litigation. Quite simply, a good written contract clearly identifying the scope and price of the work in question with a clear identification of incorporated contract documents will make your life easier and will help minimize disputes.
Trying to prove what an oral contract is is more work. It may require additional witnesses as to contract formation than would be necessary were there a written contract. For example, you might need the testimony of someone who observed the conversations some party is contending created the contract. Since most witnesses in litigation have visited the Blarney Stone - some quite often and rather liberally - having a written contract simplifies the case.
2. Daily Reports and Pictures.
These are two of the best sources of evidence in a construction dispute. Daily reports are part of what are considered “business records” meaning that they can go into evidence in the form they are kept. Therefore, identifying how many workers you had on site, current job problems, differentiating between contract work and extra work and comments about things even such as the weather are important. If these reports are kept in your ordinary course of business, generally everything in these records go into evidence.
These are important for several reasons. For one thing, most litigations do not take place until two to five years after the dispute arises (depending on what court you are in, what county you are in and factors such as what ‘track’ your case is assigned to). Many of your current employees will be ex-employees at the time of trial. Some of them will leave under bad circumstances so that there is some ‘attitude’ towards you as the former employer. Some of them will be working for competitors or will be competitors to your business. Some of them will no longer live in Massachusetts and in civil cases, the general rule is that a subpoena for trial can not be issued as to out of state witnesses. Memories fade with time, including your own.
Good reports list the temperature when work starts, at the middle of the shift and at the end of the day. Proving temperatures in court involves a degree of expense and uncertainty. If they are listed in your daily reports, they are prima facie evidence, meaning that they tend to prove your point subject to possible rebuttal evidence. Activities like painting, pouring concrete, application of caulking and paving are temperature sensitive. For some of those activities, there are minimum temperatures which must be maintained when the work is done and for a period of time after that to allow for curing and drying.
Now, we are trying to save legal costs here, right? I don’t know how many times I have been told by business owners that their employees don’t like to write these reports. They simplify proof issues relative to cases. They help you to establish elements that are necessary to your case, either as defendant or plaintiff. As I recall, you are the individual who signs that employee’s check, right? A word to the wise! By the way, daily reports on your form are much preferable to a foreman’s log book. Those log books don’t always end up in your files, as many foremen see them as their own records. And, here’s a big point. To be a ‘business record’, the document has to be one that your business keeps in its ordinary course of business. A judge is likely to see a foreman’s log as a personal record, not your business record. This affects the evidentiary value of the document.
Pictures are useful to help explain what the problem and issue is. Fact finders in court - even judges - may be unfamiliar with construction activities. Members of the jury may be housewives, students and retirees. Being able to show them what your issue is makes your chance of being successful more likely.
Pictures are especially helpful for all manner of presenting and defending against delay claims. Dated pictures establish progress of similar trades, such as the mechanical trades, which can be especially effective in defeating delay claims due to issues involving things such as concurrent delay.
Videotape each of your jobs at least once per week as to the progress of your trade and the progress of the work, as a whole. One project manager I know says he tapes all of his jobs Thursday at 5:00 pm. Meaning, at this point in time, it is not necessary to advertise to other trades, the general contractor or the owner that you are keeping good records.
3. Know and Understand Notice Provisions and Dispute Provisions Relating to Claims.
Certainly, this is important for you to do, both for the purposes of establishing claims (notice provisions) and resolving claims (dispute provisions). But look at it from a cost standpoint. Granted, under certain circumstances, a failure to give proper notice might not unequivocally defeat your claim. But, since notice provisions are reasonably strictly enforced, attempting to prove that you come within an exception to the usual rules will require a lot more of your attorney’s time and efforts, as the exceptions are quite legal (and technical) and will involve more legal research, which means you will have a greater cost.
4. Write Enough Letters.
After daily reports and pictures, the next most desirable form of documentary evidence is
Since cases get tried years down the road where witnesses may not be available or might have memory problems, having contemporaneous statements about the events in your job and contractual relationship seem to be acceptable evidence in many instances. When I went to law school - back when Teddy Roosevelt was riding horses in Cuba - I recollect distinctly being taught that a statement in a letter is only evidence of the fact that the party writing the letter made the statement, not that the statement is true. But, having tried numerous cases, I have found that finders of fact seem to accept what is said in letters as evidence, whether this might be technically correct or not. This is especially true in arbitration. And, statements in letters by one party to another are deemed to be evidentiary admissions, meaning that the statements in the letter are accepted for their truth. In those situations, this could minimize the number of witnesses you need, which minimizes preparation time and trial time, which can save you legal fees.
I recall a lengthy arbitration I handled for a town in litigation with a general contractor over issues as to the sufficiency of construction of a police statement. For every letter the town (or its architect) wrote, the contractor seemed to write five. There seems to be something in human nature that when one sees a contention repeated over and over again (such as in letters), it must be true.
If, in an important situation, you receive an important letter - e.g. “You are in breach of contract” - you had better answer that letter and reasonably quickly. Now, you don’t necessarily have to go letter for letter with someone on less important letters. Perhaps, you will answer five letters with one letter. But a failure to answer the letter leads to some negative inferences. This makes your case harder. This increases your legal costs.
Remember John the Baptist crying in the wilderness? Some people listened to him and some didn’t and some believe after our time on the Blue Marble is over, we’ll find out which of those people were smart and which weren’t! I have found many successful presidents of contractors who are terrible at writing letters. They either aren’t any good at it or refuse to do so because they don’t like paperwork. My standard response would be to have someone in your organization who is pretty good at this. Perhaps, English abilities and the ability to write an effective letter might be some criteria to consider in hiring your project managers.
And, when I reference letters, I also include emails. Since 2004, Massachusetts has had an extensive statute, Chapter 110G, also known as the Uniform Electronic Transactions.
“§ 7. Electronic signature; enforceability; satisfaction of legal requirements
(a) A record or signature may not be denied legal effect or enforceability solely because it is in electronic form.
(b) A contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation.”
5. Involve your lawyer while a situation is fluid and not after the fact.
Let’s talk about Mrs. O’Leary’s cow. If the farmer was right there when the cow contemplated taking a road trip, he might have thought: “Might be a good idea to close the barn door, I reckon!” Problem solved. However, if the farmer is not there when the cow takes off, bringing in the cow police three hours later may be a lot less fruitful. Cow police: “It seems like the cow has left the building. Possibly because the barn door was left open.” Duh!
But, this is what many clients do with their lawyers in a lot of situations. The lawyers are brought in after all the fur has flown and when a matter has reached a certain result. Then, the client wants the lawyer to reverse the result.
Sometimes this is difficult. Sometimes it is impossible. But, it is almost always more expensive than bringing your lawyer into a situation while it is still fluid and capable of being affected as to the final result.
Now, having said this, be mindful that there are a couple of different types of lawyers.
Suppose someone has been terminated. Going to your lawyer at that point involves what response you will make to the termination. Do you sue? Do you wait to be sued? Getting a good negotiator involved while there are job problems but prior to termination might help prevent the termination. Sometimes clients are hurt by being pig-headed. Sometimes, the clients may simply need two trained, experienced lawyers who have a different vantage point as to possible results (and how lengthy and difficult and expensive a court resolution of this issue might be). Perhaps the termination can be avoided. Some kind of recovery schedule might be possible. A termination for convenience might be capable of being negotiated. Perhaps, there is another way!
A recent case in point. A bonded public works contractor put up a wall for a town. Shortly after the wall was erected, it began to bulge in the middle and the town asked the contractor to take down the wall and rebuild it. The contractor did not think the wall failure was all of his fault. The town had elected not to use a better fill material behind the wall, which was a unit price item in the contract, to save money. The architect had designed a less successful draining mechanism to deal with water behind the wall. And, the architect had not insisted on the frequent compaction tests his specification included, to save time. A subcontractor had erected the wall against its better judgment due to the improper fill material. The contractor was owed some money on the contract and a bond claim letter was sent to his surety. An inability to get further bid bonds would put this contractor out of the public works business, a preferred work environment. And, the wall was directly adjacent to a new small office building, which was about ready to open and which couldn’t open with the adjacent wall, which might have been dangerous with regard to cars in its small parking lot. A possible suit from this developer could be anticipated.
The “try everything” lawyer would have sued the Town and possibly filed some kind of declaratory judgment action to try to keep its surety from completing. This would have cost a fortune, would have taken three to five years to run its course and would have eliminated bonding for that period of time. By involving counsel from the contractor, from the town and from the architect early on, the parties came to an agreement to rebuild only a portion of the wall, where it was bulging. All three parties agreed that they had contributed to the bad result. The wall subcontractor made certain concessions to the general contractor to minimize costs. Therefore, all parties split the cost of correction approximately equally. The contractor rebuilt the wall in about three weeks. Everyone was happy, including the adjacent business owner.
Now, this is a particularly good result. Suffice it to say if your construction counsel is competent and experienced - and not addicted to trials - some improvement of the problem is often possible before the parties have backed themselves into a corner and achieved an end result. So, consider involving your counsel while the problem is still a problem. Don’t wait to involve him and her only when the problem has become a nightmare.
6. Submit payment bond claims and demands for direct payment and other routine matters yourself.
You don’t have to involve a lawyer with every problem from the beginning. If you understand the basic fundamentals of bond claims, you can sometimes submit the claims themselves. (Another article in the emailed series addresses how to do this. Also, there are articles at www.sauerconstructionlaw.com, which explain how to do this. Similarly, in a situation where a demand for direct payment is possible, sending this yourself might save you some money. (An article on the website explains how to do this.) In some situations, for the truly intrepid, you might even file a notice of contract yourself, although this is not recommended for condominium projects or mall projects or where the lien is for a large amount of money. Certainly, a notice of identification can be prepared yourself - an article on mechanics’ liens at the website has a form - and you can do the 65 day notice letter to the general contractor yourself on public bond claims if you are second tier.
Again, you will have to educate yourself on what is required for each of these five activities. Particularly in submitting the payment bond claim, by giving the bonding company your information and documents before suit is necessary is likely to save some discovery if the case has to get filed in court, which will save you legal costs.
7. Get Third Party Verification Letters on Jobs Where There Will be Issues.
Particularly for payment bond claims, getting letters from the Architect, Clerk of the Works or other Owner representative can be very helpful in the further progress of that claim.
Very important that this is put on something that looks like letterhead
“To whom it may concern:
With regard to a project known as "describe", I served the project as _____________. (Clerk, Architect, Owner's Representative, etc.) For this project, your general contractor’s name was the general contractor and your company name was the subcontractor who performed the following work: give a description of what your subcontract provided in terms of scope of work. At the present time, all work required to be performed by your company name at this Project has been fully and completely performed to the best of my knowledge. There are no pending punch list items to be performed by your company name, whose work is fully satisfactory to the Owner’s name/firm of person writing this letter.
Very truly yours”.
I mentioned above ‘love me’ letters. These have any number of uses. They are particularly helpful with bid disputes and protests, particularly where you have a close case – it could go either way – and when there are issues as to whether or not you are a ‘responsible’ bidder, which is a term of art. More knowledgeable contractors get a ‘love me’ letter at the end of every successful job of any significance.
When you need one, you are likely to need one in a hurry. Getting them at the end of the job will be easier than a year or two later when the details of the job are fuzzier and the potential writer has moved on to projects and contractors.
8. In an appropriate situation get records by a Freedom of Information Act Request, copies of payment bonds and subsidiary mechanics’ lien documents before seeing your attorney.
Massachusetts has a Freedom of Information Act, which allows you to get copies of public records under certain circumstances. This is an exception to the usual rule that the only way to get someone’s records is through the use of a subpoena, which requires an existing lawsuit.
Let’s imagine that you are a subcontractor on a public job. You have requisitioned to the general contractor to get paid for your work. You need to know - would like to know - (a) did the general contractor requisition for your line items to the same percentage that you requisitioned to him; (b) did the general contractor get paid; when and how much?
You can submit a FOIA request to the public agency who is running the job and that might look something like what follows:
“CERTIFIED MAIL - RETURN RECEIPT REQUESTED
February 21, 2012
The Honorable Joe Blow
RE: Request to review records pursuant to C. 66, s. 10 of the General Laws
Dear Mayor Blow:
I am the Credit Manager of __________________________.
On its behalf, I hereby respectfully request pursuant to the Massachusetts Freedom of Information Act, M.G.L. C. 66, section 10, that you permit me to inspect and to examine the following public records. Unless otherwise agreed to, I will be at City Hall on Monday morning, October 3, 2011 at 10 am to examine such documents. This is what I wish to see:
Put in here what you want to see in terms of job records for your particular project. Be sure to clearly identify the general contractor and project.
In the alternative, or if you prefer, I would accept copies of these records if they are mailed to me within two weeks of your receipt of this letter. I will pay all reasonable postage and copying costs and will send you ___________________’s check in advance of the release of these records once you advise me of the amount.
Should you determine that some portion of the documents requested is exempt from disclosure, I request that you release any reasonably segregable portion of the documents which are not exempt. I reserve my rights to appeal any such decision, whether administratively or in court. Where such documentation represents documents having to do with public construction work, it would seem all such requested documents are “public documents” not subject to any recognized Massachusetts privilege. If you determine that a requested document, or any portion of a requested document, is exempt from disclosure, please note the applicable statutory exemption and explain why it applies to the requested record.
Please contact me if you have any questions regarding this request. Thank you for your attention.
Getting these records yourself might save you the legal costs of your attorney’s having to serve them with a Keeper of the Records deposition notice and subpoena. And, generally speaking, the use of subpoenas can only be employed once a case is filed. There could likely be material in the records material to your dispute, which might change what kind of case is filed. For example, if your general contractor submitted your requisitioned amount in his requisition and got paid for it from the owner, what would be the defense to not paying you? This is a way to get to the bottom of a potential ‘pay-when-paid’ situation. Providing this information to the payment bond surety will probably hasten your payment.
And, before you bring your payment bond claim to your attorney, get a copy of the appropriate payment bond(s) yourself. An explanation of how to do this may be found in the article “Submitting the Payment Bond Claim to the Surety”, which is part of the emailed series of articles and can be found on my website.
Similarly, since a great many of the registry of deeds have records on-line, in a potential mechanic’s lien situation, you might want to get copies of many of the applicable documents necessary to prepare a lien. These would include the deed to the current owner. These would include an accurate real estate description of the project. This might also include prior mechanics’ liens (e.g. notice of contract) filed. Your attorney may have to get additional records but these are at least a starting point and might speed up the filing of your lien with some possible reduction in the cost.
When there are important meetings where important things are said about significant issues or when some other event occurs on the jobsite which might be important down the road, create a written record of it. Similarly, do the same when an employee has an important telephone conversation. In any such circumstances, have the employee write out what was said or done fairly comprehensively and have them sign and date the statement.
For one thing, this will help your attorney determine who the witnesses in a case might be. For another thing, such a statement might be useful in “refreshing the witness’s recollection” (an evidentiary thing) if testimony is later required. Also, where this person’s testimony is necessary for you down the road, the individual will be in a poorer position to deny the statement if it is in his own handwriting and signed. This is particularly useful for circumstances with hostile former employees. I have had any number of cases where ex-employees have completely refused to help their former employers and have even suggested that the employer will be sorry if he/she calls the former employee as a witness. I can’t do anything about human nature. Having an employee write out and sign a statement, although not admissible generally in this form, helps the cause in many situations, including for impeachment purposes if this ex-employee takes the stand.
10. Be Open to the Idea of Non-judicial Resolution of Disputes.
The example for this one is ‘hearsay’: someone told me this story, the so-called ‘third arbitrator’, who happens to be an electrical subcontractor, someone I both like and admire.
There was a dispute between joint-venturers as to issues involving the subject of their joint venture. Each person picked an ‘arbitrator’ and then the two arbitrators picked a third ‘arbitrator’ (my story teller) and then everyone went to a bar! The arbitrators heard their dispute and gave their opinion of what the result should be and both parties accepted it. This sure makes celebrating an end to the dispute by having a sandwich and a beer when you are already at an establishment which serves sandwiches and beer!
In addition, there are arbitration and mediation services available to people to take their disputes to. There are some ideal situations where one of these services might be useful. First, if both parties to the dispute want to keep their working relationship irrespective of how the dispute resolves. (Litigation, by the nature of the beast, tends to destroy relationships.) Secondly, when the dispute is for an amount of money that neither party sees as being significant. Thirdly, when the nature of the dispute is fairly simple to understand and is an ‘either or’ type of situation, as in ‘this item is either contract work or an extra’. A claim by a subcontractor subject to a potential significant counterclaim would not qualify.
For small claims, consider handling them yourself. There is small claims court jurisdiction in the state district court for cases up to seven thousand dollars. Filing fees are very minimal and reasonable and you essentially fill out a complaint form and have a hearing date assigned. Frequently, the individual hearing these cases is not a judge but someone from the clerk’s office.
11. If you work in Massachusetts, obtain and read a few basic statutes.
Remember that the root word of ‘contractor’ is ‘contract’. A contract is a document with legal significance. Very often, your contract will be considered within the context of a statutory
Those engaged in private work would do well to get a copy of Chapter 254, the mechanic’s lien statute.
Those engaged in public work should get copies of at least the following: Chapter 30, sections F, M, N and O; Chapter 149, sections 44A-H; Chapter 149, sections 29 and 29A.
Why should you do this? Remember, we are talking about preparing matters for use by your lawyer. If the right things have not been done before that first meeting, some potential avenues will be unavailable and others made unnecessarily more expensive. Remember, the lawyer can only throw snowballs with the snow you have provided. You won’t necessarily understand every word in the statutes but they are in English and you can get the general idea.
12. Basic information you should obtain and keep as to your contracting parties.
This is particularly true as to your problem clients. However, and particularly in this day and age, you may not know on the go in which contracting parties are going to give you the most trouble. So, do the two following things with as many of your large contracts as possible.
Keep copies of checks you receive from your contracting party. We may need this information in filing a case to see whether or not a bank account attachment might be useful.
1. Understand the litigation process.
If you don’t understand the litigation process, how can you hope to effectively manage its costs? On my website, I have an article entitled “The Litigation Process”. This explains many of the steps in a typical litigation. Particularly if you have never sued or been sued before, having some sense of the distinct sections of the litigation process - pleading, discovery, pre-trial and trial - can de-mystify it somewhat and allow you to better discourse with your counsel concerning the case.
We all have heard horror stories about individuals who go to car repair shops and admit to the technician or service writer that you are completely ignorant of what makes a car go. (Not to compare construction attorneys with service writers of car dealerships!) Remember that your civil case is your case and you need to understand some of the fundamental steps that will take place with it. The more you continue to see your case as your case, the more likely you are to save some money. The more you see your case as your counsel’s case, the more likely the matter is going to cost more.
2. Establishing a Budget: Limitations and Updates.
Particularly non-clients or first time clients ask me: what is it going to cost if we go to court. I can give someone an idea of what the costs of attempting to get an injunction might be. I can give someone an idea of what the costs of filing a bid protest might be. I can even give someone a ballpark estimate of what filing a mechanic’s lien might be up through the point of filing suit. Trying to give an estimate for what the cost of an entire case might be requires a crystal ball or a divining rod. Will the case settle quickly or will it go all the way? Will there be a lot of discovery? Will there be motions for summary judgment and other trips to court? Since, on the go-in, these questions and quite a few more are not known, giving an accurate cost for an entire case is really not possible because, in part, it is impossible to know what your adversary is going to do in his/her handling of the case from your opponent’s side.
But, still, in certain circumstances - such as the examples I gave - a limited estimate might be possible, at least for what you are going to do in the litigation. Do you want to push it hard? Do you want to just sit and wait until you get reached for trial? Are you going to do much discovery? Are you going to do depositions? Is there likely to be a motion for summary judgment? Is there a difficult legal issue - e.g. statute of limitations or a complex evidentiary question - that you know you are going to have to deal with? Your counsel should be able to give you some idea of what your side of the case is likely to cost up and until the pretrial conference phase.
A limitation, of course, is that your counsel can’t anticipate the steps that the other counsel will take with his/her side of the case. There are at least two horses in a horse race and at least two parties in a civil litigation. Civil litigation is an adversarial process, which means both parties are working at odds with one another. I liken it to an operating room where one surgeon is attempting to take out the appendix while the other one is trying to put it back in!
Budgets can be more accurate for matters of shorter duration, such as a bid protest. The longer the matter is likely to take, the less accurate will the budget be.
Updating the budget as the case progresses has its advantages, if only to reinforce in your counsel’s mind that you are cost conscious. A contractor’s most important job is the next job.
Incidentally, trials are not necessarily inevitable. I heard a statistic some years back that only one percent of civil superior court cases goes through an entire trial. Better construction attorneys often can find a way to conclude the dispute earlier, rather than later.
3. Picking an Attorney Who Does a Lot of the Subject of Your Dispute.
Law is quite specialized, similar to medicine. The law is extensive and complex.
You don’t want to have a corporate lawyer do a construction case. You don’t want a criminal lawyer to do a construction case. You don’t want a divorce lawyer to do a construction case.
Why? The answer is that a non-practitioner will be a lot less familiar with the substantive law applicable to contracts and construction litigation. Similarly, a non-practitioner will not have many of the forms necessary to handle a construction case on his/her computer. Correcting these omissions takes time and money.
Here’s a little secret. Lawyers don’t go to law school to learn what the law is on any particular subject in any particular state. He/she studies general principles of a variety of subject matters: real property, Uniform Commercial Code, wills, administrative law, criminal law, etc.
Here’s another idea to consider. Who is going to actually being doing the work on the file? You might go into an office and speak with a knowledgeable experienced partner, who impresses you as to his/her ability and knowledge of the subject matter. And, then, when you begin receiving work product and correspondence, you find that the matter is actually being handled by a junior associate. Granted, everyone needs to be trained in his/her craft. Hopefully, in your matter, you won’t be the one paying for the training. So, in some circumstances, as part of the process of interviewing potential counsel, verify who will actually be doing the work.
4. Submitting Your File to the Attorney.
Try to provide such files as your attorney will need in one group. While having them electronically has some advantages, in a paper-intensive area of the law such as construction, having paper copies is important, even necessary. And, you or your secretary can print them out at no cost to you. So, it makes sense to give them to the attorney in written form, in lieu of or in addition to electronically. If you give the attorney the materials in dribs and drabs, then he or she will have to review the matter that way, which takes more time (and costs you more money).
Now, preparing a chronological summary of your situation as you understand it, referencing the supporting documents in some fashion, will allow the practitioner to absorb and understand the material more quickly and time is money. Make sure there is a narrative explaining how the matter arose, referencing important documents and contract provisions.
Here’s a tip. If there are problems with your case or position, don’t try to hide them from the attorney. He/she will find out about them eventually and he/she might have taken unnecessary steps or not enough steps not knowing about the problem. Also, as a practical matter, the ‘problem’ could have a serious impact on what your chances will be in the litigation.
If you did something that was dumb, so what? None of God’s children is perfect. I, myself, have to concede that there is a distinct possibility that at some point in my sixty-two years of living I might have made a mistake! And, if there is a mine in the field, it is better for your attorney to know about it up front. This reduces the possibility of his/her stepping on it with the increased steps and costs that might be attendant to that step.
5. Good legal writing is frequently straight forward and short.
Here’s an example. A ‘complaint’ is the piece of paper by which a plaintiff commences the case. It describes the Plaintiff’s claim. Now, up and until about 1974, a complaint that did not allege every specific element of a cause of action was subject to possible dismissal. Since that time, with the adoption of the Massachusetts Rules of Civil Procedure, a complaint is simply a ‘notice’ pleading, which means that all that it has to do is to generally give a defendant notice of what the plaintiff’s claim is. A complaint in a case seeking an injunction is somewhat more complicated and longer. This is because it is a ‘verified complaint’ and addresses some issues not normally present.
Complaints are not evidence and do not go into the jury room. A typical case in contract and against a payment bond would involve a complaint of about three to four pages. I have seen a negligence case filed by one of the state’s premier seven figure recovery attorneys that was only about a page in length.
I have also seen parties who file complaints that are ten or fifteen pages or more in length with all kinds of attachments and more than one hundred paragraphs of allegations. Particularly if you are a plaintiff and particularly if you are inexperienced with litigation, when you handle the sheer heft of it, you might be impressed. But you are paying for the time to prepare it.
So, if you get some document from your attorney - such as a copy of the complaint - and it seems more extensive than you might think, you can always discuss this your counsel. Why was this paper necessary? Why did it have to be this long? Try not to be prickly about it. Ask as if you are seeking to educate yourself about this piece of paper so that you are better informed for the next time.
Similarly, if you engage one of those larger firms that lists three lawyers on every piece of paper filed, it might not be a bad idea to ask if all three lawyers are going to charge you for the document: the one who prepared it and the two who received copies of it.
Another thing to discuss with your counsel is the level of status reports you want to receive. Some people might want more than others might want. Many lawyers, some of whom were English majors in college, might tend to just give you reports, whether you have asked for them or not. Discussing in advance this issue affects a cost issue. Quick email reports on important events are probably sufficient much of the time.
Here’s what happens with one. Mediation is a more-or-less non-adversarial process whereby the parties go in front of a non-judicial neutral (meaning, not a judge or arbitrator) for anywhere from between three and four hours - on the low end - to one day or more on the high end. (Typically, a two day hearing would be only with cases making progress by the end of the first day.) Each side pays for one-half of the mediator’s compensation, which varies from about two hundred to four hundred dollars per hour. Various organizations, such as the American Arbitration Association, offer mediation services. Many practitioners use a group of about five to ten very experienced attorneys who are good at it, which is generally cheaper. Through a controlled series of meetings, which are generally in conference rooms located outside of court facilities, the parties try to work out a solution to their problem. The mediator does not per se ‘decide’ the case. There is no written decision rendered. No one either ‘wins’ or ‘loses’. And, by statute, whatever happens in mediation is specifically exempted and kept out of any subsequent trial. This is to keep the mediation process confidential and to encourage the parties to deal with each other earnestly, not concerned about how whatever is said can be used later in subsequent litigation. What normally happens is that the mediator will require each party to prepare before the meeting a mediation memorandum explaining the case and its position to submit before the hearing, exchanging copies with the other side. Then, the parties get together in a room, typically the conference room of the mediator. Each side may make an ‘opening’, explaining its claim or defense, which is usually done by your attorney. Then, the parties are separated for the rest of the day in separate rooms. The mediator goes from one room to the other. What each party tells the mediator is privileged in that the mediator can not reveal this information to the other side, without the party’s permission. The mediator points out to each side the strengths of the other side’s position and the weaknesses in your side’s position. While all cases do not settle ‘in the middle’ a number of them will. At such time as there is a settlement, both sides will get together and the attorneys will prepare right there a hand-written memorandum of what the deal is and will sign it. The vast majority of the cases I have been involved with in mediation have settled. Part of what makes this work is that spending four to six hours in a conference room is very tiring. People get more reasonable as they get bored and tired. If the mediation does not work, this ordinarily has no affect whatsoever on your existing court case. Mediations tend to take place fairly late in the court process: around the time that the pretrial memorandum is due.
7. Issues involving arbitrations.
Here are its advantages and disadvantages. Many of these involve costs you will incur.
First of all, arbitration can be fairly expensive, a bit less so for a responding party. The filing fees are much higher than court filing fees (they can be a multiple of a court filing fee for larger cases) and depend on the size of the claim. A claim in arbitration at the AAA in the amount of $75,000 to $150,000 has a filing fee of $1850, as compared with $275.00 for a superior court filing.
Therefore, in arbitration situations, sometimes there are also an associated legal action to deal with the type of claims the arbitrator can not consider. Also, if a party refuses to pay an arbitration award, a court action has to be commenced to convert the award into a judgment. Typically, this is a relatively quick thing: file a complaint and then a motion to confirm arbitrator’s award.
Apart from this, an arbitrator’s award is not appealable for any basic reason other than clear bias in favor or against a party or failure to give a party a continuance for hearing, if he had a good reason. There are numerous Massachusetts cases holding that even if the arbitrator made gross errors in handling the evidence - including, but not limited to, not understanding it - or made gross errors in the application of the applicable principles of law, there is no jurisdiction in the courts to reverse that decision because of the philosophy behind arbitration and the Uniform Arbitration Act, which Massachusetts follows. Arbitrators know there is virtually nothing you can do to reverse their rulings and I have found more than one to be quite arrogant. Another difficulty in arbitration is the widely-believed old saw that there is a tendency to give a claimant ‘half a loaf’ so he doesn’t walk away with nothing. Therefore, where a claimant has a weak case or has failed to comply with a contract provision or is partially wrong, arbitration is a better forum than litigation, where things are more black and white - or less gray.
At the same time, arbitration does have some advantages. First of all, there is very little discovery that is allowed as a matter of course, typically only being an exchange of documents. There is essentially no motion practice and practically no pleadings. There is a lot less briefing that is required. Ordinarily, there are no depositions and no interrogatories. Also, the matter goes to hearing within three or four months of filing, which means that the case does not languish for years, as is typical with court. Thus, a construction case in the superior court does not go to trial for about four to five years whereas it is only a matter of months in arbitration. If the matter does not take too long to prepare and try - in other words, the hearings are not going to be days and days - arbitration has the advantage of getting a dispute over with fairly quickly and reasonably economically (in avoiding the prolonged discovery that can happen in court.) Since most cases settle at some point because of the imminence of trial or during trial, since arbitration gets a party to trial quicker, the chance to get to real settlement talks exists earlier because of the fact that a hearing comes earlier. For some reason, my experience is that the parties don’t fear arbitration the way they fear litigation and tend to settle less on cases going to arbitration.
For a whole variety of reasons (parties aren’t as prepared as they would be for court; the arbitrator is well-paid for each day of his/her work), my experience is that arbitration cases take longer to try than cases in court.
8. You are not generally entitled to recover your legal fees when you are successful in most litigations in Massachusetts.
As stated by the Supreme Judicial Court in the case of Preferred Mutual Insurance Company v. Gamache, 426 Mass. 93,95, 686 N.E.2d 989 (1997):
“The usual rule in Massachusetts is to prohibit successful litigants from recovering their attorney's fees and expenses except in a very limited class of cases. This rule is known as the "American Rule." See Waldman v. American Honda Motor Co., 413 Mass. 320, 321-323, 597 N.E.2d 404 (1992). Our traditional approach has been to prohibit recovery of attorney's fees and expenses in a civil case in the absence of either an agreement between the parties, or a statute or rule to the contrary, and this principle has been applied to deny recovery of attorney's fees and expenses in declaratory judgment actions. See Fuss v. Fuss (No. 1), 372 Mass. 64, 70-72, 368 N.E.2d 271 (1977); Wachusett Regional Sch. Dist. Comm. v. Erickson, 354 Mass. 768, 238 N.E.2d 369 (1968).”
This is the so-called “American Rule”, which Massachusetts generally follows. You get attorneys’ fees as part of your award when you win in only two situations. The first is that the contract between the parties provides for the award of attorneys’ fees to the prevailing party.
1. Serve the other side with interrogatories and document requests with your complaint or with your answer. This tends to flush out what the claim or defense is fairly early in the litigation, which allows the parties to focus in on it and not waste a lot of time on extraneous issues that, while interesting, might not be important. I can think of one general contractor I have sued a number of times. This general contractor is a bit different than others I have been involved with in that if there is no issue with your claim, no attempt is made to manufacture one.
10. Be Open to the Idea of Using Smaller, Non-Boston Firms
For better or worse, most legal services are paid for on some form of an hourly rate.
Why do these firms charge that kind of money? Possibly, in part, because they can. Certainly, in part, because they have to where they generally have a higher fixed overhead structure than do much smaller suburban firms. Located in a Boston tower means that the firm is paying greater rent. At least in good times – no one is completely sure of what the rules are in this depression – support staff make more money in the city than they make in the suburbs. Compensation has to be higher to cover urban costs, such as the cost of coming into the city. Parking rates downtown are in the area of thirty dollars a day or more. Many of these firms have secretarial support and paralegal support. Some have IT people and some may even have librarians. Certainly, the partners have a sense of what their draw and compensation should be, which may not be completely realistic in today’s Brave New World, where everyone seems to have to make do with less. Bigger firms have a reception area with a receptionist. Some may have art. Many of them have multiple conference rooms. You get what you pay for and pay for what you get. Often times, there is more than one lawyer on the file with one attorney being the senior or reviewing attorney of the younger attorney’s work. Are you getting charged for both?
I’ll compare the ‘Boston structure’ with one I am familiar with, being my own firm when it was in Norwood. Our office rent was fixed for a number of years and was low on our three room office. (We were on the fourth floor, which is space the landlord has had trouble renting in the past, in part because there is no elevator!) We don’t have any secretaries or paralegals. The IT guy also is the senior attorney. Since the vast majority of modern legal research is done over the internet, we certainly don’t have librarians. Having only two people on the malpractice policy is less expensive than having ten or more. The parking is free. Living less than three miles from the office meant that our commuting costs were quite low and that we would not be worn out or stressed by the commute. (My last year in Boston, I averaged a commute one way of one and one-half hours.) Our rates are less than two hundred dollars per hour and for a good many of our clients, they have had no increases in rates for quite a few years. When we were in Norwood for almost fourteen years, the basic hourly rate has been raised forty dollars per hour from our first day in Norwood in December of 1997 until when we left that address last October. How much have the rates you are paying increased over the same period of time? A significant percentage of our cases have been with Boston lawyers through the years.
We have recently moved our office into our home. The several flights of stairs at our Norwood office were getting harder to handle, particularly where we are avid runners, who often have knee pain. With the kids gone, there were a lot of extra rooms. And, the landlord is really quite reasonable!
The State Law Library of its own volition links to my web-site on mechanics’ lien issues. Our firm has written for several years a section of the “Manual of Credit and Commercial Laws”, a book published annually by the National Association of Credit Management, which book many people feel is the bible for commercial credit managers. If you look at our web-site and consider the vast number of articles on it and the number and quality of the current series of emailed articles, it is clear that, for better or worse, I am a prolific writer. All of these resources, which cost us substantial amounts of money and time to develop and maintain, are offered to the construction industry without charge. Certainly, these resources are intended for marketing purposes. We also see them largely as to our contribution to the industry which supports us. How much free information and assistance do you get from your lawyers?
In the final analysis, clients should go where they feel most comfortable. If you are happy with the counsel you are using and satisfied with the cost structure, you may have no reason to consider a change. I have found that the longer the relationship is between client and attorney, the better the communication is and the better the relationship is.
At the same time, in evaluating your fixed overhead costs, this is an area where a cost savings is possible. You might consider how much you would save paying less than two hundred dollars per hour when compared with three hundred dollars an hour or more.
This section only suggests that you might consider whether or not your choice of firms is largely based on only an assumption concerning larger firms as compared with smaller firms,
I have spent a lot of time thinking about this subject and writing this article. I hope some of these ideas will assist you in handling your disputes more economically and in having better and more effective relationships with your attorney. I welcome any feedback and ideas you have on this subject and with regard to this article at firstname.lastname@example.org. As we try to update our more important articles periodically, it may pay for you to check our website out every now and then. We added this article in 2011 and have already revised it.
(Copyright 2012 Jonathan Sauer)
(The purpose of this information is for general education only and for the purpose of discussing the issues involved. This information is not intended to be specific legal advice and should not be considered as being legal advice. For any legal problem/question, consult competent counsel of your own choosing.)
Attorney Jonathan P. Sauer
Phone: (508) 668-6020
“Knowledge is Money in Your Pocket”