Rethinking the Virginia Way: Why is Litigation So Expensive?
DISCLAIMER: NOT LEGAL ADVICE. FOR INFORMATION ONLY. DO NOT RELY ON ANY ADVICE YOU RECEIVE ON THIS FORUM. Legal advice comes after a complete review of the facts and relevant documents. An attorney-client relationship, with all the privileges associated with it, can only be formed through a written engagement letter which cannot occur in this forum. Mr. Howell is licensed to practice in the Commonwealth of Virginia only and his thoughts are rooted in Virginia Law or general legal principles, not any other specific state’s laws. You should speak with an attorney licensed in your state, to whom you have provided all facts before you take steps that may impact your legal rights.
Why is litigation so expensive?
Over the years, many people have asked us: why is litigation so expensive? As someone who has seen the effects of this as both an attorney and an observer of my family’s many businesses, I feel this topic is one our profession does not address enough, especially to the general public.
Many years before I became an attorney and founded my practice, I learned a hard lesson about the high cost of litigation. Nearly every summer of my life prior to leaving to attend the University of Virginia I worked for and around my family’s small businesses. My grandmother ran an industrial laundry, my father ran a construction company, and my uncle ran a lumber yard. Those businesses certainly had their share of legal challenges over the years. Whether it was a customer with superior resources seeking to avoid paying outstanding invoices or baseless claims by former customers and employees seeking an illegitimate windfall, the process felt unfair and the losses were often substantial. What my father reminded me all those years ago was that it was not abnormal. It was not until I founded my practice to help family businesses and individuals through this process that I learned why this was the norm.
If you are an individual or a business encountering the civil legal system for the first time, you will likely do your best to do your homework and find a good, experienced lawyer who you are confident will fight for your cause. You will sign an engagement agreement which, if you have chosen a good firm, clearly lays out the objectives of the representation and the hourly rates for services to be provided. If you are really fortunate, you will have an attorney who considers it a duty to educate you -using examples from his or her experiences with cases similar to yours- as to just how expensive litigation truly is. The best firms who care the most about their clients make a special effort to have this conversation early in the relationship so that clients can make educated decisions about how to proceed.
Unfortunately, for many clients, especially those who choose larger firms, their experience will be very different. As we often tell our clients, you never want to be your attorney’s smallest client. If you are one of these clients, your attorney may fixate on how it is impossible to give even a general figure as to what your costs will be to litigate your case. Instead, they may regale you with grandiose representations as to how the potential legal consequences of your situation, positive or negative, require you to litigate, whatever the cost. This should be a massive red flag. At best, they are so concerned about over-promising and under-performing that they do not want to give you any figure at all. At worst, they fear you will not hire them at all if you knew how expensive your case really would be to litigate. If you have encountered one of these firms, you will likely be stunned when you receive your first invoice at just how expensive litigation can be, and by the time you understand it you may not have an easy way out.
But what makes litigation so expensive? Are lawyers really the greedy billable hour monsters they are often portrayed as in the all-too-common lawyer jokes, or are there some aspects of the adversarial process of litigation that legitimately make maintaining a lawsuit such a daunting financial prospect? To use a tried but true lawyer-ism, the answer is, “it depends”. Through this
post, we hope to spread awareness of some of the practical reasons -some legitimate and some less so- for the high cost of litigating in our court system:
1. The Lawyers’ Billable Hour
This one will not come as a surprise to anyone, but lawyers themselves are expensive. According to the Virginia State Bar’s rules of professional conduct, an attorney’s fee must be reasonable relative to the services rendered. However, many first-time litigants may be surprised to know that in Hampton Roads, reasonable attorney’s fees for civil litigators commonly range from $200.00 - $400.00 per hour, sometimes higher for specialized or highly experienced attorneys. Why so high? Two reasons:
First, there is a general shortage of attorneys relative to legal need. Virginia has only 29,000 licensed attorneys to service the legal needs of more than 8.5 million Virginians. Each of these attorneys went to no less than seven years of school, and recent graduates have an average of $150,000.00 in student loan debt to show for it. If they work for a larger firm, most are expected to bill more than 2000 hours a year to keep their jobs. This may be why Virginia lawyers typically fall short of the already low suggestion that they perform 40 hours of pro bono (or free) legal services to the public per year; hardly enough to maintain even one civil suit free of charge. It also creates an unfortunate incentive for many attorneys, especially at bigger firms, to bill more hours for cases to ensure they meet the high costs for entry and the high expectations placed upon them for revenue generation.
Second, even among 29,000 licensed attorneys, litigators are rare and experienced litigators are even more rare. According to the American Bar Association, less than 2% of civil suits filed nationally actually proceed to trial. While this figure is much higher in our experience in the Hampton Roads area -especially in state courts- the point remains valid: it is difficult to become an experienced trial lawyer due if nothing else to the relative lack of opportunities to do so. For all these reasons, for better or worse, experienced trial lawyers are a dying breed. Per the well-known economic rule of supply and demand, any time something is both rare and a necessity for consumers, the cost for that thing skyrockets.
Ok, so an attorney charges a very large amount per hour, but what determines how many hours they must bill? It will also surprise no one that we attorneys have litigated this issue all the way to the Supreme Court, resulting in a comprehensive list of factors to answer that very question. Like the fee itself, the hours spent on a case must be reasonable. In determining whether an attorney’s fee is reasonable, some of the factors which the United States Supreme Court considers are the time and labor required for the case, the skill of the attorney, the customary fee (addressed above), time limitations imposed by the client, the attorney’s experience, and the results obtained.
From these factors, you will note that some of them are applicable to the attorney himself, while others -like the amount of time and labor required- are mostly outside the lawyer’s control. The most frustrating of these for cost-sensitive, results oriented attorneys are Virginia’s unique procedural challenges as well as the strategies of many of our less cost conscious opponents.
2. Procedural Challenges and Opponents’ Strategies
What many attorneys fail to make clear to their clients is that the amount of time an attorney puts into a case has as much to do with his own experience and skill as it does with the procedures under which he must operate and the efforts of the opposing attorney. These two aspects of litigation go hand in hand due to their propensity for abuse by opponents and they are the main reasons why lawyers often cannot charge a flat rate or provide hard estimates for their services. For clients, this aspect of our adversarial system is the most frustrating and difficult to understand. To put it simply, defense counsel who knows his case is weak or who doubts the resolve of the plaintiff will often do everything in his power to create delay and increase the costs of his opponent. This is most typically accomplished through the filing of motions, discovery requests, or other pre-trial actions disputing the validity of the plaintiff’s case or demanding the production of hundreds of pages of documents.
The process of civil litigation is no better suited to defendants. For instance, due to a longstanding policy of the Virginia Supreme Court, cases are very rarely resolved through pre-trial motions attacking the validity of the action. Thus, many lawsuits which should have never seen the light of day must be settled or tried despite their relative lack of legal merit. This, more than anything else, increases the costs of litigation for civil defendants.
The only protection against these realities for the civil litigant are the professional rules binding attorneys not to pursue actions calculated to cause unnecessary delay, needlessly increase the costs of litigation, or which lack sound basis in law and fact. However, sanctions for violating these rules are rare and, candidly, many lawyers have gotten very good at concocting just enough basis in law and fact to accomplish just the sort of delay and increased costs prohibited by the rules without suffering sanction.
3. Third-Party Costs:
In addition to the already high costs of attorneys, themselves, there are also third-party costs the client often must bear to give their case the best possible chance for victory.
For instance, conducting a hearing or deposition requires the services of a skilled court reporter. Anyone who has ever seen a good court reporter work should have no doubt that they are well trained and highly skilled professionals providing a critical service. As a consequence of this, they rarely work directly for law firms. Instead, they charge several hundred dollars for their appearance and often several thousand to provide accurate transcripts of proceedings. A good trial lawyer can utilize a transcript to prove inconsistencies between a witness’s sworn statements between depositions, hearings, and trial. In some cases, they can also be used to prove a litigant has dispositive information in their possession which they have not turned over, or even to narrow issues for trial. For all these reasons, a client who directs their attorney to litigate without the use of transcripts to try and cut down on costs does so at their own peril.
Finally, some cases will often require the testimony of an expert witness to prove or disprove critical facts for your case. For instance, our firm has often retained the services of engineers, financial professionals, and product manufacturing experts to establish things like the standard of care for an industry and the cause of certain defects or damages suffered by our clients. In many cases, using experts is not optional. Virginia’s rules of evidence are clear when expert testimony is required and when it is not, and experienced trial attorneys must strictly observe these rules to give your case the best chance for victory. However, like court reporters, these experts typically bill hourly for their services. At that hourly rate, they must review the facts of your case, prepare a report, stand for deposition, and review evidence and testimony ahead of trial; all at the cost of the litigant they support. Taking a case to trial without a qualified expert can sometimes be fatal to a cause of action, but the costs of these experts can also accumulate at a rate of several hundreds of dollars an hour to several tens of thousands of dollars over the course of litigation.
To sum up this post, in our experience attorneys’ fees, themselves, are not the sole reason for the high cost of litigation. Every litigant in our system has a constitutional right to due process to ensure their case is given a fair hearing; and this is one of the most celebrated benefits of our system. However, the dark side of this right is that it is often illegitimately abused by litigants with deeper-pockets to force settlement of meritorious claims due to cost concerns. Add to that the fact that many critical aspects of your case will be performed by third-party professionals who often bill as much as attorneys, and it is easy to see that litigation can quickly become an expensive enterprise. To navigate the process effectively and make good decisions as to when you should and should not initiate a civil suit, you need an experienced and candid attorney on your team who has been through the process and can assess your costs and benefits accurately. If your attorney is not talking with you about his legal strategy, not just in terms of potential benefits but also as to costs and risks, it may be time to seek someone who will.
