Saturday, April 23, 2011

Risk in Litigation

I have nothing substantive to add about the ups and downs of seven years of litigation in the Barbie vs. Bratz doll wars case. I'm not going to do an analysis of the legal issues in the case, even though they are somewhat interesting. All I want to do is remind people that this is the sort of thing that happens in litigation. Mattel won a $100 million judgment against its rival MGA a couple of years ago. That judgment was reversed last year, and in a new trial, MGA this week won an $89 million jury verdict against Mattel. In the same case.

Was it worth it? MGA may have won the case (of course it's not over yet), but it's brand may no longer be viable. Mattel shut down a competitor for a while, but may have to pay them more than the value to Mattel of doing that. The parties have already spent many millions of dollars litigating this case. If both sides had the option of doing the whole thing again, I have a feeling they both might decide to just not even bother to do it.

Parties to litigation, and their attorneys, should be reminded that results in any seriously contested case are a lot more difficult to predict than most of us care to admit. Here we had top notch trial attorneys on both sides. How well could they predict the outcome? Seemingly not very well. And how much can hiring the best trial attorney you can afford help in preventing loss, or insuring victory? The great trial lawyer Edward Bennett Williams guessed that hiring the best trial attorney in the world (him) might improve your odds in a case that could go either way, from 5 in 10 to 6 in 10. I think most experienced trial attorneys have enough humility to recognize that they cannot guarantee a victory in any case. Most have snatched victory from the jaws of defeat, and vice versa. Most have seen cases reversed on appeal, and most have seen trials come out differently, either for or against, than they expected. I have certainly seen all that, and in both directions. I used to think that the most valuable service I could perform for clients was to predict the results of taking a case to court. Now I lean more towards the view that the most valuable service I can perform as an attorney, is to remind clients of the costs and risks of continuing to litigate. In a case like the Barbie v. Bratz marathon, one hopes the parties would have the opportunity to understand that each of them might win $100 million or lose $100 million, and it is difficult to predict which outcome is more likely. Plus each side faced certainty of enormous legal bills, thousands of hours of distraction, and untold damage to each company's business. Parties need to compare those prospects to the deal that is on the table, and then make an informed decision about whether litigation presents a more attractive alternative.

I have nothing against trials. In fact, I love trials, and I'd like to do more of them. But people need to understand the risks and costs involved. I tell parties in mediations that I conduct, that if they still want to litigate after they have a full appreciation of the costs and risks, then God bless you. That is what the courthouse is for. Just don't walk into that casino unless you can afford to lose your stake and then some.

(also posted on my mediation blog)

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