The Honorable Thomas D. Roti has been a judge in Cook County, Illinois for thirteen years. He currently occupies one of the civil jury courtrooms in the Third Municipal District courthouse in Rolling Meadows, Illinois. Hanging on the wall behind the bench in his courtroom is a neatly framed print of a brick wall across which the subject of this blog is stenciled in block letters .
The print was fabricated by the wife of Judge Roti’s courtroom deputy, who has heard him utter the phrase repeatedly in admonishing the civil litigants who appear before him. Personally, I never heard him say it. I wish I had. It has personal significance for me.
In the mid-1990's I bought a small manufacturing company in Denver, Colorado. It had nothing to do with the practice of law, which was the reason I bought it. The sellers were elderly gentlemen, cashing out the business they had devoted their lives to create. Like many such deals, it was structured as a buy-out; where the sellers are paid a portion of the purchase price over time. Whenever an existing business is being bought, it is also customary for the sellers to give representations and warranties about the operation of the business (since the buyer frequently knows nothing about it), and this sale was no different. One of the things that the sellers represented was that the business was in compliance, and would remain in compliance with all pertinent governmental codes and requirements, to permit the business to operate as it had in the past.
Lo and behold, three years after I bought the business, a new fire inspector was hired by the City of Denver. This gentleman decided that his predecessor had improperly certified the company’s paint booth for many years when it actually did not comply with the City’s requirements for ventilation. It was going to require over $50,000.00 in repairs.
I was incensed! I didn’t plan on having to incur this expense. And since I had drafted the purchase contract, I thought it was pretty airtight: If there was a breach of one of the seller’s representations, I could stop paying on the seller’s buy-out notes and apply the payments to make the repairs, instead, which is exactly what I did.
Obviously, that didn’t go over well with the sellers. We sat down and discussed some potential resolutions, but I thought they wanted too much from me. It was a bad settlement. And I had a good lawsuit. So we lawyered up and went at it. Two years of pleadings, motions, depositions and court hearings later, we were in front of the judge and ready for trial. But the judge had a better idea. He ordered a settlement conference.
The process was mind-expanding for me. I have tried dozens, if not hundreds of cases, to juries and to judges, and represented clients in hundreds of other cases that didn’t get to trial. I think I’m a persuasive kind of guy. I think I draft a good contract, and the contract language means what the contract language means, so I should have no problems, right? Think again, said the judge. We were going to be appearing in front of a jury, and a jury can be influenced by all sorts of things. What was a Denver jury going to think about some fancy Chicago lawyer coming out to take advantage of a couple of Denver senior citizens? They didn’t expect to have to pay for the repairs any more than I did. The judge made me see how the facts could be presented in such a way as to make the sellers appear very sympathetic, and there was a real risk that I could lose this case, or that any award could actually be smaller than the proposed settlement.
We wound up settling the case on roughly the same terms we could have, with a little effort, if we had focused on settlement early on, except that I spent a fortune on lawyers and litigation costs in the meantime; and I say this as someone who micro-managed the case and did much of the legal work himself. It was still a bad settlement. But to my surprise, the sellers said the same thing. They were as mad about the outcome as I was.
This experience taught me two things: First, in many cases (if not most cases), settlement needs to be approached early and aggressively. Sure, you may need to do some simple discovery to be sure you have your facts straight, but once the likely evidence comes into view, it is not likely to get any better with time. Instead, both sides tend to become galvanized in their attitudes, and the opportunity for settlement slips away. Spending lots of money on lots of pretrial activity is rarely a wise investment.
Second, as a corollary to Judge Roti’s premise, consider this: “The Best Settlements Are Those Where Both Sides Think They Got Totally Screwed.” Be realistic about your situation. Be cognizant of the potential risks, as well as the potential awards. And understand that litigation is expensive and time-consuming. Even if your lawyer is on some sort of contingent fee arrangement, you may still have to pay for costs, and you will always have to commit more time to the process than you anticipated. If you think the terms of the settlement are bad, and the other side thinks so, too, it’s probably a pretty good deal.