The cost of a lawsuit can vary depending on a number of factors, including the jurisdiction, the type of case, and the complexity of the issues involved. Some common costs associated with a lawsuit include:
- Filing fees: These are fees that must be paid to the court or tribunal when the lawsuit is filed. The amount of the filing fee can vary depending on the type of case and the jurisdiction.
- Service fees: These are fees that must be paid to have the complaint or other legal documents served on the defendant(s) or other parties involved in the case. The amount of the service fee can vary depending on the method of service used.
- Attorney fees: These are fees that must be paid to a lawyer for their services in representing the plaintiff in the lawsuit. The amount of attorney fees can vary depending on the complexity of the case, the experience of the lawyer, and other factors.
- Expert witness fees: These are fees that may be paid to experts who provide testimony or other assistance in support of the plaintiff’s case. The amount of the expert witness fees can vary depending on the expertise of the witness and the nature of their involvement in the case
- Court reporter and transcript fees: If there is a deposition, court reporter fees are paid to the court reporter who is hired to attend and transcribe the statements during the deposition. Transcript fees are paid to the court reporter to prepare the transcript for court and provide a copy to the party.
- Costs associated with the trial: If the case goes to trial, there may be additional costs associated with preparing for and attending the trial, such as the cost of travel, lodging, and other expenses.
Overall, the cost of a lawsuit can vary significantly, and it is difficult to provide an estimated cost without considering the specific circumstances of the case. It is recommended to consult with a lawyer for guidance on the potential costs involved in a lawsuit.
In this video, you will get answers to these questions:
- Why is a lawsuit so expensive?
- Why does a lawsuit take so long?
- What steps are involved in a lawsuit?
- Can you pay contingency fees instead of hourly fees?
- How much are hourly attorney fees?
- Why are attorney rates so expensive?
- Can you represent yourself in a lawsuit?
- If you represent yourself, are there still fees?
- Are there alternatives to a lawsuit?
How much does a lawsuit cost? You will get the answer to that question today, as well as other questions like, why is a lawsuit so expensive? Why does a lawsuit take so long? What steps are involved in a lawsuit? Can you pay contingency fees instead of hourly fees? How much are hourly attorney’s fees? Why are attorney rates so expensive? Can you represent yourself in a lawsuit? If you represent yourself, are there still legal fees? And are there alternatives to a lawsuit?
I am Aaron Hall, an attorney representing business owners and entrepreneurial companies. If you are a business owner, I create these videos for you to help you identify issues to discuss with your business attorney, identify ways that you can avoid legal problems, and just generally help you grow a great company. Did you get my free resource yet? If you did not, you can go get it. It is free and it is called, “Seven Common Legal Mistakes Made By New Businesses.” You can get it at aaronhall.com/free. If you don’t have it yet, you can download it, and get it for free. And I will send you some other exclusive educational content like this.
How much does a lawsuit cost?
Obviously, it depends on the type of lawsuit. Some lawsuits cost millions, some can cost thousands of dollars if you are paying an attorney, and it is a small claims court or conciliation type court. So, it depends on the length, it depends on the complexity, it depends on which court you are in, and depends on how much your attorney costs. We will dive into some of those topics here.
Why is a lawsuit so expensive?
The reason is, you are generally paying for the attorney’s time multiplied by the number of hours that the attorney needs to spend on the case. So, for example, maybe the attorney’s rate is $700 per hour, and then you are paying for a hundred hours, so you can do the math there, or maybe it is 200 hours—that is why how much time the attorney spends on the case really matters to you. Also, the attorney’s rate really matters.
Why does a lawsuit take so long?
It is because of the phases or steps that are in a lawsuit. The lawsuit has a number of steps that each party needs to go through in order to prepare for trial. These steps ensure that it is a fair trial. Both parties have equal access to information, and both parties have had time to prepare their case so that at trial the issues are fairly presented, or at least the parties have an opportunity to fairly present them. And then the judge can make a final binding decision unless, of course, it is appealed.
What are the steps in a lawsuit?
First, parties start a lawsuit by drafting a summons and complaint. They then serve and file that summons and complaint. They will file it in court, serve it, or deliver it to the other party. The summons basically just says, “You are summoned to appear in this case,” or “You are hereby required to respond to this case.” The complaint outlines the specific things the person did wrong, and typically the legal claims that present the case to the court. For example, it might say, “On this date, you did this, and then on this date, I did this. And on this date, you did this, and on this date, I did this.” And that is the facts section. And then the next part of the complaint is, “It was illegal because you violated this statute, and I have a claim here because you violated this statute,” or “You broke this law.” That is the legal claims section of a complaint. So, step one is the exchange of the complaint, and then the response from the other party saying, “I admit I did this, but I denied that I did this. And I am without sufficient information to admit or deny some of these other items here.” And the person who is responding to a lawsuit generally goes through, and just admits, denies, or says they are without sufficient information to admit or deny.
Once that pleading is done, you generally have the attorneys meet and talk about how they are going to exchange evidence, documents, and relevant information. They will also discuss how they are going to interview witnesses, and when that will be. Then, they actually do all of that stuff. They request information and provide it. They request admissions, and the other side admits or denies things. They have depositions where witnesses and parties are interviewed. Typically, once that is done, you have some motions. You might have it prior to that point or you might have it at that point. But motions are generally where the court is being asked something; motion just means ask. So, you are making a request or an ask of the court. For example, if the other side didn’t give you all the documents that they were supposed to, you might ask the court to compel them to produce those documents. Or if you need more time for some reason, or maybe there is not enough evidence to support a claim, one party might do a motion for summary judgment to say, “Look, judge, there is not enough evidence on something,” or “As a matter of law, this particular claim should just be dismissed.” You might have some other issues going on there, some other motions or requests to the court. And then finally, the parties are getting ready for trial. They submit information to each other, they receive information, they talk to the judge, and everything gets teed up. Well, each one of these phases that we have talked about–that is the pleadings, the discovery and exchange of information, the motions, and then preparing for trial–those phases each take a number of months typically. Now give or take, some a little longer than others, some shorter than others. But, that is why a case often takes a year, and sometimes a lot more if there is a lot of motion practice or other disputes that have to be resolved before the case can actually go to trial. So, I used to wonder why does it take so long. It is because of the court system’s commitment to fairness and justice, and the orderly process in which parties go through and prepare for trial. Keep in mind too, that lawyers are often handling many different cases at the same time, so it is not like they can just work 100% on a client’s case from start to finish. They are juggling many different deadlines and court hearings and obligations.
Can you pay contingency fees instead of hourly fees?
There are some types of cases where the lawyers will say, “I won’t get paid unless you win, in which case I will get a percentage of whatever you won.” That is called a contingency fee. The cases where lawyers will do that are very limited. In many cases, it is not even permitted by law. For example, in a divorce case, the lawyer can’t say, “If we get a successful divorce, then I get paid a certain amount.” If you think about it, it makes sense from a public policy perspective. We don’t want lawyers incentivized financially to separate marriages, so lawyers have to get paid either an hourly fee or a fixed fee for a divorce. So, contingency fees are available in limited cases. Those typically are personal injury cases, like a car accident, a birth defect case, or some sort of injury, like slip and fall, for example. Why? Because normally, it is very clear that there has been harm, and so there are going to be some sort of damages paid. Also, there is often an insurance company that does the paying, so the party suing knows there are some deep pockets on the other side. Usually, the issue is, how much liability did the defendant have and how much do they owe? So, a lot of those cases actually get solved without having to go to trial. And that is why the attorneys can take these cases because they take enough of them; they know we are likely to recover money. But in business litigation and litigation between neighbors and most other disputes, you are going to have to pay the attorney by the hour or a fixed fee. And that is because the attorney doesn’t know if you are actually going to win, and the attorney is not willing to take that risk. It is just not worth the risk for an attorney, and the attorney can’t make a sufficient living taking on those types of cases on a contingency basis.
How much are hourly attorney fees?
I have seen them as low as around $290 per hour, maybe even less occasionally. And then as high as about $2,000 per hour. That $2,000 rate is typically going to be a partner at a large law firm in a big city like New York. By the way, that attorney is going to be very experienced and have an incredible reputation. Typically, it is a very complex case. On the other end of the spectrum, the attorney at the bottom end of the rate is usually very inexperienced. They are maybe taking a small case, perhaps in a small town where rates are just generally lower. All right, what are the average rates? Well, I can speak to Minnesota. Generally in Minnesota, what I see is somewhere between $300 and $800 per hour. That is a fairly common spectrum. Almost all of the attorneys here in 2022 are somewhere between that range, and a very common range is somewhere between $400 and $600 per hour. The attorneys with significant experience or specialty or expertise are the ones who generally go above the $600 per hour, which might be for larger cases as well. And the attorneys with less experience or they might take smaller matters, are the attorneys who may charge on the lower end. But it is entirely a question of attorney discretion to set their own rates as long as the rates are not unreasonable. Meaning that they are just so outside of the norm that the government says you can’t charge that, that is excessive.
Why are attorney rates so expensive?
First off, attorneys have many years of unpaid schooling. So not only do they have no income during those schooling years, but they also have substantial tuition and debt which typically they are paying off for many years. So, in order to run a business that can cover its costs, a law firm needs to be able to pay attorneys enough to pay down their law school debt, as well as cover their living expenses. Second, a law firm is required to have ongoing training. And attorneys are required to have ongoing training, and whenever staff is hired, training is required. In order to do the great work that attorneys can do for clients, training on an ongoing basis is an essential element, which is not only time that is not paid, but it is also time that often requires payment for those training services.
Law firms have support staff and support staff require training, and they will do a lot of the behind-the-scenes type work. Many times they are not billing for those; all of that work is built into the attorney’s hourly rate. So, the firm has determined what the attorney needs to charge in order to cover all the other expenses of running the business, including support staff. Also, the attorney is required to have certain records and documentation even if the clients don’t care. By law, attorneys have to open a file and track all sorts of details about the case to avoid conflicts of interest in the future, to track for compliance with ethics rules, for compliance with tax authorities, and so by law, attorneys have to do this work. It is not billable to the client, and that means the billable work for the clients needs to account for that non-billable work. Attorneys also utilize software services, which are typically paid on a subscription basis. They need to have money to cover that, and then there are just all the other overhead costs of running a practice; maybe it is a lease, payment to a landlord, insurance, etc. All of those costs go into an attorney’s rate.
So, why are attorney rates so expensive?
Because you are not just paying for the attorney money that the attorney can then go pocket. From every hundred dollars that goes to an attorney, a vast majority of it goes to other expenses required to run the practice.
Can you represent yourself in a lawsuit?
Technically, you can, and many people try. But let’s face it, the court rules are complex, and you are required as a party not represented by an attorney to comply with the court rules. You can’t bypass court rules in a way that would be unfair to the other side. Court rules are extensive, they are lengthy. Many times, there are multiple volumes of court rules. You might have the rules of civil procedure, the rules of evidence, the rules of general practice, and the local rules, and then the judge herself may have practiced pointers and preferences. So, those are other rules that you are supposed to follow. So, can you represent yourself? Yes, but problem number one is that it is hard to comply with all the rules–it is hard to even know what they are unless you are living in them day-to-day as an attorney. Problem number two is that you are not objective. You do not have the ability to set aside the emotions and the bias that you have in order to present those in an objective manner, in a way that will resonate best with the judge. That is why there is a saying for attorneys, “The attorney who represents himself has a client for a fool.” What does that mean? It means that if you are trying to represent yourself even as an attorney, you are a fool because you are too close to the situation. You will get too emotional, you will get distracted by the little things that irritate you, instead of focusing on articulating legal arguments that are most persuasive to a judge.
Can you represent yourself?
Yes. By the way, what about small claims court, sometimes called conciliation court? Most of the time, parties do represent themselves there. But if you are in state district court, federal district court, or some other venue or tribunal, it normally makes sense to hire an attorney who is experienced in that environment, understands its rules, and can articulate the best arguments for you rather than the issues that may irritate you most and bias you.
If you represent yourself, are there still legal fees?
Yes. There are still typically court filing fees. You may have a court reporter fee for each deposition that you decide to do. You would also have transcript fees for any court hearings that you needed a transcript for or for any depositions that you needed a transcript for. You might say, “Why would I need a transcript?” You need a transcript, so you can cite what somebody said when you put your arguments in writing, or when you admit evidence into the case. Courts need evidence in written form. And so, even when witnesses say something, what they say needs to get transcribed into writing, and it is the written documentation that then becomes evidence in the court. So, even if you do not have attorney’s fees, you typically will have significant other fees. How much? Well, filing fees might be $300 or $500. A court reporter fee typically is around $500 for half of a day. Transcript fees, depending on how long it is being transcribed, typically what I see, is a couple of thousand dollars for a couple of hours of transcription.
Are there alternatives to a lawsuit?
The main alternative to a lawsuit is negotiating some sort of settlement. Now, sometimes a lawsuit might move forward, and it may be in an alternative dispute resolution like arbitration, which essentially is a private judge making a decision in your case. But if you can’t negotiate a settlement, then usually the only other option is to proceed with the lawsuit. Now, there might be a little middle ground there. Sometimes, what parties do is they will hire a mediator who helps the parties try to negotiate a resolution that they both can agree to and live with. That would be called a mediated settlement agreement. But the parties have to agree to a mediator or the court needs to require that a mediator be used. You do not have a right to a mediation unless the other party has agreed to it or the court has ordered it.
As you can see, litigation is expensive. It is often very distracting for the individuals and companies that are in it. It is often very frustrating, and it can become very emotional. That is why I hate litigation. It is simply people paying money to fight each other. And to the extent it can be avoided, it is great when you do. So when I talk to my clients about the cost of a lawsuit, I often talk with them, not just about the financial cost of lawyer fees, filing fees, court reporter fees, and transcript fees, but I also talk with them about the distraction the lawsuit will be for their attention. I talk with them about the tension it is going to create. And that they will want to talk about the lawsuit with spouses, friends, and with other loved ones. Think about the bitterness and resentment and anger that it can create–the negative energy that it can create.
Often, successful business owners are better off paying a settlement than fighting for a year or two. Now, I will tell you what, a lot of times clients tell me, “I would rather pay you the attorney to win this case than let that money end up with the other side.” And I try to talk my client out of that approach and say, “I totally get it. I understand you’re angry, you’ve been violated. It feels so unjust to pay money to a party who is wrong. You’d rather pay an attorney to fight for you.” But when weighed against the money, time, distraction, and just negativity associated with litigation, often it is better to just pay some money and settle and be done with it.
That is a difficult decision to have, but it is a decision that I regularly analyze with my clients. Now, I will warn you, not every attorney does this. Let’s face it, attorneys are making money the more you fight. And unfortunately, there are a lot of unscrupulous attorneys whose self-interest and financial interest in making money drives them to push for more litigation. They fan the flame of your emotions, they take advantage of the fact that you are in a vulnerable spot, and they will continue to take more and more of your money because the more you fight in litigation, the more money they get paid. So, you have been warned that there are different types of attorneys out there.
I do these educational videos to help empower you so you have knowledge about the legal system, legal fees, and how to proceed with fights. If you haven’t yet downloaded the free resource that I have, “Seven Common Legal Mistakes Made by New Business Owners,” please go ahead and get that. It is at aaronhall.com/free. There is no obligation, I am not going to pester you with spam. What I will do though is, from time to time, provide you with other valuable educational content and resources that I believe will help you.
If you find this educational information helpful, you are welcome to subscribe to this channel, and if you find it unhelpful, feel free to thumbs down. Or if you would like more of this, you can thumbs up on this video. In the description box below, there is additional information that you might find helpful if you are trying to learn more about the topic we have discussed today.