I recently ran into an old client of mine with a sad story to tell.

Back in the day I was a practicing lawyer (although these days I am, happily, a recovering attorney) and was handling a small estate matter for this client. At that time he asked me if I would also be interested in representing him in a business dispute he had. I demurred because 1) I was getting out of law then, 2) didn’t like his chances in any litigation, and 3) I really hate lawsuits. So we said our goodbyes, he hired someone else, and I haven’t seen him in almost a decade.

He’s a lot poorer today.

It turns out that he did in fact sue the bum, just like he wanted to. But the bum also sued him back. And the bum hired a pit-bull lawyer and my old client ended up spending in excess of $50,000 in legal fees. In the end he settled for about $10,000.

No, he wouldn’t make the same decision today.

Look, of course there are times when you have to sue. When people breach contracts, infringe on your copyright, when they are negligent and so forth, it certainly makes sense to bring out the legal guns. You have to defend your rights.

But I will also say that more often than not, it is better to bite the bullet.

Don’t sue.

Clients would come into my office madder than heck with a legitimate beef and a valid cause of action and I would tell them that their odds of winning were still 50-50. Why? Because once you open the litigation door, you never know what will come through. A judge or jury may say yes, but they may say no. You just don’t know. The defendants may want to settle, or they may sue you back. You don’t know. You may win, or you may lose.

Of course some suits are better than others and have a better chance, but the point remains valid: lawsuits are expensive, cumbersome, expensive, protracted actions that often result in nebulous results. They are bad ways to resolve disputes. They cost too much and take too long.

And consider this too: you better be very interested in whatever it is that makes you want to sue, because you will be living with this incident for a very long time. You will need to recount it in depositions, in written discovery, and maybe even on the stand. If it is a painful event, re-living it again and again can be very difficult emotionally.

So, with all of those caveats, here’s how to know when it is time to hold ‘em, and when you should fold ‘em:

1. Analyze it right. Lawsuits are most successful when there are overwhelming facts on one side and the law is clear. Generally speaking, you need a duty on someone’s part, a breach of that duty, damages, and evidence of all of that. Miss any one piece and you will likely be out of luck. So the first thing to do is to share your story with some people with whom you respect and get their feedback. And then speak with a lawyer. If everyone agrees that you may have a case, then...  

2. Look to settle. Write a strongly worded letter yourself or, better, have your lawyer write one. Be willing to take less than you think you are owed. This is critical. Since a lawsuit is a pain in the rear, settling for less, while unattractive at first blush, will probably still put you ahead at the end of the day.

If that does not work, then...

3. Sue. Your choices are two-fold.

The limits in small claims courts vary by state. For instance, in California the limit is $7,500. In Maine, it’s $4,500. The great thing about small claims though is that no lawyers are allowed and the cases are resolved expeditiously, usually within three months or so. So I say, even if you are owed more than what your state’s limit is, if it’s in the ballpark, sue for the max, write-off the rest, and be happy if you win.

Your final choice of course is to hire a lawyer and sue in a more “superior” court. In that case, re-read this article.