Although Canada and the United States share many similarities, Canadian companies embroiled in litigation south of the border will soon notice significant differences between the Canadian and American judicial systems. Although litigation anywhere is often time-consuming and expensive under even the best of circumstances, becoming involved in a lawsuit in the U.S. presents unique problems. Understanding some of the important features of litigation in the U.S. can go a long way to developing a winning strategy in the event a Canadian company is forced to deal with a dispute in a U.S. court. These five practical tips may help along the way.
Know the Jurisdiction
There are two distinct court systems in the U.S.: the federal court system and the state court system. Although federal courts exist in every state throughout the country, all federal courts fall under the jurisdiction of the U.S. government, and they all follow a uniform set of procedural rules. Federal judges are appointed and are permitted to serve until they choose to retire.
Federal courts tend to be more formal than state courts, and because all federal courts are part of a broad, national system, the decisions made by federal judges tend to be more uniform and predictable than many state courts. In states where judges are elected, there may be more turnover, which can result in less uniform or predictable results. Therefore, because of the predictability afforded by federal courts, lawyers who represent defendants often feel more comfortable in a federal court than a state court.
Accordingly, when a dispute arises that could result in litigation in the U.S., Canadian companies should take into account the jurisdiction where the lawsuit is to be heard.
Obtain Help of Knowledgeable Local Counsel
Because each local jurisdiction in the U.S. can be unique, even from one county to the next, having the assistance of an attorney who normally practices in that jurisdiction can be invaluable. A local attorney who knows the tendencies of the judges and the pool of potential jurors in that location can provide insights that can make the difference between a favourable outcome and one that is not.
Understand The Costs Associated With Pre-Trial Discovery
The U.S. system relies heavily on broad pre-trial discovery. The purpose of pre-trial discovery is to provide both sides the opportunity to gather information from the opposing party (as well as from non-parties) that might be used to prove their case, to prove their opponent’s case, or to damage their opponent’s case.
The scope of information that is discoverable in the U.S. is extremely broad. Generally speaking, as long as the information sought could lead to the discovery of other relevant information, the information is probably discoverable. As a result, it is not unusual for a litigant to be required to produce tens of thousands of documents. The process of gathering and producing a large volume of documents can be time-consuming and extremely expensive, resulting in high legal costs and lost worker production.
Moreover, typically any person who has information pertaining to the dispute will be examined by the lawyers in a pre-trial deposition (discovery under oath). At a minimum, every witness who could be called to testify at trial almost certainly will be deposed before trial. Because depositions are time-consuming and expensive, even in a relatively simple case the costs of conducting pre-trial depositions could easily be $50,000–$100,000.
A typical tactic employed in U.S. litigation is to launch a discovery war that makes the costs of continuing to pay legal fees during the discovery phase so substantial that settling the dispute becomes more attractive. The key to avoiding falling prey to this tactic is to understand how important pre-trial discovery is to litigation strategy and making a plan early on that will control costs and minimize business disruption while meeting the legal demands of the discovery process.
Don’t Shy Away from a Jury Trial
One of the most common perceptions of the U.S. judicial system is of an angry jury awarding hundreds of millions of dollars in damages to a plaintiff to punish an impersonal corporate defendant. However, when deciding whether to settle a dispute or go to trial, the important thing to remember is that jurors typically try to reach the result they feel is the most fair under the circumstances. As a result, one of the keys to trying a case before a jury is to focus on presenting a reasonable, believable story that is supported by the facts and that is logically consistent and coherent.
Don’t Expect to Recover Your Lawyer’s Fees
In the Canadian system, the losing party in a lawsuit normally pays the legal fees incurred by the prevailing party. This cost-shifting approach is an important factor that litigants must take into account when developing their litigation strategy. In the U.S. system, attorney fees are recoverable only in limited circumstances. As a result, costly pre-trial wrangling is a common tactic used to exhaust the resources of an opponent and wear them down into accepting an advantageous settlement. As such, even a relatively simple dispute can cost hundreds of thousands of dollars in legal fees and expenses that generally will not be recoverable.
Litigation can be a frightening, aggravating and expensive process. Even more so, being forced to litigate in an unfamiliar and far-off venue can make the fear, aggravation and expense of litigation exponentially greater. Knowing what the road ahead has in store and making a competent plan at the earliest stage possible will go a long way in reducing the fear, aggravation and expense of litigation in the modern world.