Importance of Litigation Avoidance and Proactive Practices

According to an article by BusinessWeek, the top challenge for small business owners in 2010 is avoiding employment lawsuits, which are skyrocketing. Employment litigation has increased dramatically over the last ten years. According to the Statistical Abstract of the United States, 2010, there were 13,036 employment cases commenced and 15,452 cases pending in the U.S. District Courts in 2008. There were thousands more commenced and pending in state courts throughout the United States. The increase in employment litigation is no longer confined to Fortune 500 corporations, and has trickled down to smaller businesses. No company is immune, regardless of size.

By most estimates, the median settlement payout in an employment practice liability lawsuit is nearly $90,000, and that doesn't include attorney's fees. Recent reports estimate that the average cost of defending an employment discrimination case from beginning to end is approximately $250,000. But the total cost is not limited to financial costs; there are also substantial time costs incurred. Daniel Schwartz, a member at Pullman and Comley, LLP, has recently published some posts on this issue: "The True Cost of Employment Litigation" and "More on True Cost of Litigation". Mr. Schwartz states that "defending an employment matter in state or federal court has gotten very expensive."  He notes that the length of time spent on litigation - often several years - presents a "daunting challenge". Mr. Schwartz notes "[e]ven though the employee's damages may be relatively small, the nature of the matter as well as the court process, can make even a small matter get quite a bit larger."

There are some options to reduce the costs of employment litigation, such as arbitration, mediation, and settlement. "But none of these are real solutions", says Mr. Schwartz. "The fact is that even the strongest employment litigation defense still costs money to execute. So litigation avoidance should continue to be on the minds of HR and in-house counsel whenever an issue comes up." Gerald Maatman, Jr., Co-Chair of Seyfarth Shaw's Complex Discrimination Litigation Practice Group notes that "proactive planning and legal compliance programs... are critically important for businesses in 2010."

The Equal Employment Advisory and Litigation Support Division (EEA/LS) of Minimax Consulting is uniquely  positioned to assist in your litigation avoidance and proactive planning efforts. Many other firms and experts view proactive practices as a "by-product" of their litigation services. EEA/LS thinks that the best approach is to get ahead of potential problems before they get to litigation. EEA/LS experts have deep experience in the statistical analysis of employment decisions; more information about the EEA/LS division can be found here. If you would like to learn more about EEA/LS services and how we can assist in your litigation avoidance and proactive efforts, please contact us for a complimentary consultation.