Tuesday, September 19, 2017

What it’s like to be sued by your employee

When you litigate, you’re losing.

This is an odd statement for a litigator to make. But it’s true.

When you litigate, the only people that “win” are the lawyers. It’s for this reason that I believe that every claim or potential claim should settle. The two key considerations are when and for how much.

Understanding this fundamental truth, the only way to survive as an employer is to draw a reasonable line in the settlement sand and stick to it. If you are dead in the water, then you are better off settling early and not spending hundreds of thousands of dollars paying your lawyers to fight a lost cause. At the other extreme, though, if the employee’s case is meritless (or frivolous, depending on your viewpoint), then why do want to spend a dime towards settlement? Settling those cases will only paint your business as an easy mark, spurring copycat claims by other employees. For this latter category of claims, this only settlement is a voluntary dismissal, or, at most, a nuisance value.

Yet, it many cases, one party, or the other, or both, are not reasonable, or not willing to meet the other’s demand or somewhere in the middle and resolve a claim pre-suit. At that point, you are in the litigation game.

If you’ve never been sued as an employer, congratulations. You are likely just lucky, and not just good at employer-ing. You will be sued, eventually, and when you are, there are certain things you should expect.

Here’s eight of them.

1. It will cost, a lot. An employer should expect to spend between $50,000 and $250,000 dollars defending a lawsuit brought by an ex-employee. 

2. It will be time consuming. Lawsuits eat a lot of time. You will spend time gathering documents, meeting with your attorney to provide facts and background information, answering discovery requests, attending pretrials and settlement conferences, and making employees available for depositions (including the extensive pre-deposition preparation). In addition to the fees you pay your attorney, there is significant additional cost in the lost productivity hours that goes into litigation.

3. It will last longer than you think it should. Litigation is a marathon, not a sprint, and the finish line is often a moving target. Deadlines are usually far in the future, and often extended through no fault of your own. And, the longer it takes, the more expensive it usually is.

4. Your employees will not be perfect witnesses. No witness is perfect. In fact, most are far from it. All will make mistakes. Some will be small and insignificant (a date here or there), some larger (a key fact forgotten under the scrutiny of a deposition), and some will be devastating (In an age case I once had a CEO admit age discrimination on the witness stand; case closed). You can prepare and over-prepare your witnesses (see numbers 1 and 2 above), but you cannot prepare for how someone will hold up under the pressure of a deposition or trial, and the pressure filled scrutiny and cross examination that come with them.

5. You are not as good of record keeper as you think you are. “I know I took notes during that meeting.” “Where did that email go?” “That document must have been mis-filed; I know it’s here somewhere.” You didn’t. You probably deleted it. If it’s lost or mis-filed, good luck finding it.

6. You may fight more than one battle. Does your business have Employment Practice Liability Insurance? Great, the lawsuit just filed against you may be covered. “May?! What the hell am I paying for?!” Did you put the insurance company on notice as soon as you learned of the claim or potential claim? No? Then it might not be covered. It’s a wage-and-hour or labor claim? Read your policy exclusions, because it might not be covered. You have a high deductible? You might have coverage, but you’ll pay a significant amount out-of-pocket until you meet said deductible. You want to choose your own attorney? Read your policy, because you might be limited in selecting from a panel of pre-selected lawyers you’ve never heard of or met. As a result, you may end up fighting two fights, one against the plaintiff and one against your insurance carrier.

7. Decisions will not all go your way. You will win some motions, and you will lose some motions. Some will matter more than others. You need to understand that if your side was always right, there’d be nothing to litigate. Don’t get mad at me. Don’t get mad at the judge. Litigation is a process, and losing some issues is part of that process. 

8. Every case has risk. Every client always asks, “How strong is our case? What are our odds?” Look, I’m not a bookie, I’m an attorney. On your best day, with your strongest case, I only give you a 2 out of three chance of winning. We cannot control the judge or the jury, and they ultimately decide that case, sometimes on issues that have nothing to do with the facts or the law. If you can’t stomach risk, settle.

What pain points did I miss? Let me know in the comments below.