subject: Outmaneuver Frivolous Litigation [print this page] Lily, a graphics designer, was facing difficulties with late payments from one of her clients, Trapeze Hi-Tech. They loved her work; however, they were always late in paying her, attributing it to inconsistent cash flow, and then coming up with a string of excuses. Just as Lily was figuring out how to collect the debt, a knock on the door interrupted her train of thought. It was someone she never expected to see ' a process server delivering some official-looking court documents. As she puzzled over the documents, Lily saw, with growing alarm, that Trapeze Hi-Tech was suing her for breach of contract! How is Lily going to make this frivolous lawsuit disappear? There is no magic wand you can wave to stop people from naming you in a lawsuit for no solid reason. You cannot stop their stooping to a frivolous lawsuit, but you can fight back, and fight back with enough energy to force your opponent to reconsider going any further.
The first step is to understand how these kinds of claims can arise. They are often the knee-jerk response to avoid your claim for nonpayment. Deadbeat defendants frequently play several cards in their deck. They'll claim they were dissatisfied with your services or products. Plus, they may claim that the damages they suffered for your unsatisfactory work far outweighed whatever "paltry" sum you may be trying to collect. In addition, deadbeat defendants will delay - delay paying you, delay prosecuting the lawsuit -- as much as possible. Their strategy is often a war of attrition: can they drag out the lawsuit long enough to make the matter financially painful? Would paying them something - anything - even if undeserved, get rid of the dispute and thus be a more attractive option? That's what they bank on.
Consult an attorney immediately who will answer their lawsuit speedily with a list of possible defenses and counterclaims. Find out from your attorney if you can demand sanctions or costs against them and their attorney. Keep the offensive strategy going. Rather than waiting for a trial date, find out about convening summary or court proceedings. The strategy is keep the up the offense so that the other party recognizes that they have either to withdraw their complaint or agree to a "nuisance value settlement."
An intelligent way to handle the situation is to make it painful for the other side to sue you for trumped-up claims. The most important step you can take is to have written contracts with all new clients. Here are a few terms that you'll want to include:
- A clear plan of accountability. This includes detail about the services provided and tracks the services to expectations of payment. No payment, no services.
- "Boilerplate" concerning legal fees and costs. Legal fees are almost never awarded in contract disputes . . . unless your agreement provides for them. Provisions like those go a long way to encourage an amicable resolution of disputes without the need for litigation. It most almost certainly will dissuade someone with a knowingly frivolous claim.
- Arbitration provisions. Arbitration can be faster and less expensive than litigation. In most cases, you can set an arbitration date months, even years, before you might get a trial date in court. Because arbitrator's awards generally cannot be appealed or set aside, there's no "prolonging the agony" through an appeals process. Speedy resolution at lower cost, in front of an arbitrator who should be able to sniff out frivolousness quickly - all of these are the bane of those whose game is delay.
Protect yourself from being vulnerable to frivolous lawsuit with a written agreement. When you are the subject of a nuisance claim, act as quickly as possible to consult with and get the aid of an experienced attorney who will carry out a proactive strategy for speedy resolution of your problem!
