Litigation – a word almost nobody likes to hear aside from a small pocket of lawyers who like to be unhappy. If we are being honest, when any investor hears that L-word, they see money going away that they will never get back. Litigation is expensive, time-consuming, and exhausting for a business-minded person. But, sometimes, litigation is also unavoidable.
First of all, I’ll give you a quick and dirty definition of litigation so that we are all on the same page. Litigation is the process of taking a dispute between two or more parties to the courts. Litigation, if it plays all the way out, typically ends with a judge or a jury getting to decide who the ‘winner’ is and who ends up being the ‘loser.’ In between those two steps, there is a lot of lawyer work, including discovery (each side exchanging with the other all the information they have on the dispute), motions (asking the court to make a decision in your favor based on law and some fact), and preparation. All of that lawyer time costs you, the investor or business owner, a lot of money in legal fees.
So why even litigate a dispute if it is so expensive and time-consuming? Well, sometimes, despite your best efforts to reach a voluntary resolution that works for everyone, the other party just won’t be reasonable. If that is the case, the cost of going through a lawsuit may be far less than what you would stand to lose by just giving up. If you are in a property line dispute on an investment property and giving up would mean losing a 150’ long strip of property that is 5’ wide, that 750 square feet of land may justify expending a fair amount of time and money on a lawsuit to seek a resolution of the issue in your favor.
When advising clients on whether to file suit or not, I try to redirect all analysis to whether or not litigation makes business sense. If a client is going to file suit based primarily on pride or emotion, I will often advise against doing so, unless filing suit is also advisable from a financial and logical perspective.
If you go through the whole analysis and still find yourself having to file suit, all is not lost. Many issues that you as a business owner or investor will encounter are issues ‘arising out of contract,’ meaning that they are issues that involve a business or legal agreement between parties. Fortunately, within the Arizona Revised Statutes, specifically section 341.01, the prevailing party in a dispute arising out of contract is entitled to an award of their attorneys’ fees. That means that, if you win your lawsuit, you can also request that the judge includes in the judgment that you have the right to pursue the losing party(ies) for the amount you spent in attorneys’ fees in litigating the matter. As long as your attorney charged you a ‘reasonable’ fee, the judge will almost always award you the entirety of what you spent. While there is no guarantee that you’ll be able to collect that award from the losing party, there are a lot of avenues available to get your money back from them, especially if you’re willing to be patient.
I consider litigation an inconvenient necessity. If you can avoid it by reaching a reasonable voluntary resolution, I recommend that. However, if you find yourself in a situation where litigation is the only outcome, having a diligent, capable, and efficient attorney leading the charge will give you the best chance at success.
Phocus Law has a team of experienced, powerful, and cost-effective litigators. If you’re considering filing a lawsuit and would like to discuss that prospect, please don’t hesitate to reach out to me. I can be reached by email at Mick@PhocusCompanies.com or by phone at 602-457-2191.
This article originally appeared in the AZREIA October 2022 Newsletter. It can be found in its original form here.