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Incentives and strategies in small / medium civil litigation cases

This article was written by Michael Dew, a Vancouver lawyer who practices civil litigation. Click here for contact information and further details about Michael’s practice. This article provides only information, not legal advice. If you require legal advice you should consult a lawyer. 

Research articles : 
Civil litigation is the process of resolving civil disputes. In British Columbia such disputes are heard by the Small Claims Court (claims less than $25,000) and the British Columbia Supreme Court. The civil litigation process can be frustrating for plaintiffs who feel they do not get the remedy they deserve, and for defendants who feel they are the targets of frivolous claims. This brief summary of the incentives at play, and strategies often used in, civil litigation is primarily intended for those not familiar with the civil litigation process, and is written in the hope that parties who better understand the background forces at play in the litigation process will be better prepared to work within the system, and perhaps become less frustrated with it. 
It is important to understand that the incentives, and therefore the “best” litigation strategies, are very different for plaintiffs and defendants involved in civil litigation. Further, the strategies adopted by each of the plaintiff and defendant often depend on the strengths or weakness of their case, for example a defendant with a very strong defence may adopt a different strategy than a defendant with a weak defence.
Before discussing some of the incentives and strategies that often apply during a law suit, the following disclaimers are provided:
  1. The list of incentives and strategies described is not complete.
  2. Not all of the incentives and strategies described apply in every case, and even when they do apply they apply to varying degrees depending on the case.  
  3. The facts of each individual case heavily influence strategy.
  4. There are ethical issues at play when considering litigation strategy and while there are a myriad of scenarios that can be debated from an ethical point of view this discussion will not comment what type of conduct is ethical but will simply describe some of the incentives at play, and strategies actually commonly used, in civil litigation.  
This discussion is intended primarily for disputes involving $100,000 or less i.e. disputes for which the magnitude of legal fees is a significant factor. 
Considerations for plaintiffs
The strategy adopted by a plaintiff often depends on the strength of the plaintiff’s case. A plaintiff with a strong claim has an incentive to quickly and thoroughly present the evidence in support of its claim to the defendant in an attempt to convince the defendant to pay a reasonable settlement. If the defendant refuses to pay a reasonable settlement the plaintiff could then take that information it has organized and present it to a judge and ask for judgment against the defendant.
A plaintiff with a strong case has an incentive to move the case to resolution quickly because the longer a case drags on for the more each party will incur in legal fees. Other benefits of getting a case resolved quickly are that the stress of litigation ends sooner, and in the case of a plaintiff who will receive a judgment, although merely obtaining a judgment does not guarantee payment from the defendant, the sooner a judgment is obtained the sooner the opportunity to enforce the judgment to obtain payment will be available.
However, even where the plaintiff has a strong case the claim may not be advanced promptly for a variety of reasons: the plaintiff’s lawyer could be too busy, the plaintiff may be experiencing a life or business crises unrelated to the litigation, etc.
If the plaintiff has a weak claim, perhaps an entirely frivolous claim which is being advanced in the hope of extracting a nuisance settlement from the defendant, then the plaintiff would not be in a position to quickly present convincing evidence to the defendant in support of a settlement offer, and the plaintiff would not likely be in a rush to go before a judge who might dismiss the claim. Therefore, plaintiffs with weak claims sometimes employ a strategy of dragging the case out for as long as possible, or force additional procedural steps such as unnecessary court applications, in the hope that the defendant will tire of paying legal fees to defend the weak claim and just agree to a settlement.
How the plaintiff is paying its lawyer (if it has one) is also relevant to strategy. If the plaintiff is paying the lawyer on an hourly rate basis the plaintiff will have increased incentive to settle the case quickly to avoid escalating legal costs, and may be afraid of the risk of losing at trial after paying a lot in legal fees and so may be eager to settle. However, if the plaintiff has hired a lawyer on a percentage fee basis then the fear of high legal fees for proceeding to trial would not be a factor, although the plaintiff’s lawyer may be afraid of a loss at trial which would mean not being paid anything at all and so the lawyer may (perhaps improperly) urge the plaintiff to accept a settlement.
Advancing a case in the role of plaintiff is generally more difficult than defending a case as a defendant i.e. the plaintiff has to know the steps to take and has to proactively assemble the claim and make sure nothing is overlooked, but a defendant can, to some extent (this certainly depends on the case), be more passive and just react to what the plaintiff presents and try and undermine the case presented by the plaintiff. For this reason, it is more common for defendants to be self-represented than for plaintiffs to be self-represented. However, in a situation where the plaintiff is self-represented and the defendant is using a lawyer and incurring legal fees there can be a significant financial burden on the defendant, especially if the plaintiff forces unnecessary and time consuming procedural steps. This disparity in the cost of litigating the case (even if the self-represented plaintiff is doing it badly) may incline a defendant who wants to avoid escalating legal costs to make some type of settlement offer.
If the plaintiff is obtaining free legal assistance, perhaps from a friend, different considerations arise. Defendants should be cautious to make assumptions about the fee arrangement between the plaintiff and any lawyer assisting the plaintiff.
Considerations for defendants
Defendants who have very strong defences may consider proactively applying to the court for a ruling that the plaintiff’s claim is bound to fail and should be dismissed on a summary basis. However, courts are generally reluctant to strike cases out on a summary basis and in most situations will allow the plaintiff the opportunity to prove its case at trial. Therefore, in most cases defendants must choose against paying a settlement, or enduring the stress, and cost, of the litigation process.
Defendants who have weak defences often adopt a strategy of delay and avoidance, and indeed this can sometimes be effective. As noted above, sometimes life events (illness, death, divorce, financial trouble causing inability to fund litigation, etc.) cause plaintiffs to not pursue litigation and so for defendants the “hide away and hope” strategy can often work well, including because (to the extent it succeeds) it minimizes legal fees.
Plaintiffs have the burden of proof at trial, meaning that they have to prove entitlement to a judgment. If the evidence is weak and the judge does not find that on a balance of probabilities (more than 50%) that the plaintiff is entitled to a judgment then the plaintiff will lose. In some cases a defendant does not need to present any evidence at all but can simply argue that the claims against it should fail based on the plaintiff having not provided sufficient evidence to make out a claim. The burden of proof being on the plaintiff, and the plaintiff’s fear that the defendant will present evidence that negates the plaintiff’s case, creates an incentive for the plaintiff to find out as much as possible about the defendant’s likely evidence and arguments.  Although there are obligations on defendants to disclose documents and information in the course of litigation, plaintiffs can often gain an advantage by defendants disclosing more than they are legally obligated to disclose. For example, a defendant who files in court a very detailed response pleading explaining the defendant’s version of historical events and arguments in defence is more likely to assist the plaintiff (by providing information that highlights key issues in dispute, identifies topics the plaintiff could seek evidence on, etc.) than a defendant who files a brief response pleading that essentially just denies all of the plaintiff’s allegations and says that it is up to the plaintiff to prove its case.  Therefore, it is a common strategy for defendants to briefly present their best points and then say as little as possible.
However, even if they intend to play their cards close to their chest defendants should still, as early and as thoroughly as possible, collect and assemble all of the documents (including photographs) and information they think they will need to defend the claim so that they are ready to use it when the time comes. Litigation can often drag on for years and the longer one waits before collecting relevant information the more difficult it is to collect and organize the information required to defend a claim.  
It is often effective for defendants to be self-represented i.e. the cost of legal fees is often a factor that motivates defendants to pay a nuisance settlement to get rid of a claim but a defendant who is willing to defend itself, perhaps obtaining select strategy advice from a lawyer in the background, can turn the litigation cost factor against the plaintiff  (assuming the plaintiff is using a lawyer) by sending a message that it is going to cost the plaintiff a lot more to litigate the case than it is going to cost the defendant. A defendant being self-represented also negates the common plaintiff argument of: “It is going to cost you a lot to pay your lawyer, so just pay me a settlement instead”.
Other factors
The amount in dispute in the case impacts how much of a factor legal fees are in determining whether the parties should settle i.e. paying $30,000 in legal fees on a million dollar dispute would not be significant, but would defeat the entire purpose of litigating a $25,000) claim in Small Claims Court. As noted above, this discussion is primarily intended for disputes involving $100,000 or less and so legal fees are assumed to be a significant factor.
There is a reasonably commonly held view amongst litigation lawyers that most cases do not have more than a 80%, or less than a 20%, chance of success. This is due to the fact that the litigation process is a very human (as opposed to scientific) process. It is a human judge, not a robot, who will be deciding your case – and humans make mistakes, often (which is why we have appeal courts, and even the provincial appeal courts get it wrong, which is why we have the Supreme Court of Canada). Indeed, different judges may come to different conclusions if they heard the same case, and who a judge will believe when presented with conflicting versions of events is sometimes very difficult to predict. Parties should not fall into the trap of assuming that others (i.e. a judge) will believe them simply because they consider themselves to be telling the truth. On factual matters, the “truth” in court is not what actually happened, it is what the judge says happened.
It is important to keep in mind that we do not have a “justice system” that always produces “justice”, but we have only a “legal system”. It is a collection of rules that we play by to resolve civil disputes, and we hope for a just result, but the system does not always work perfectly.
The litigation process can seem complicated, and is risky, but it is hoped that the above brief discussion will provide some insight into the way our legal system operates and the incentives and strategies sometimes involved.