Well, then we’ll just sue them!

Vinnie

I guess you could save a little money on counsel, if you really want to.

When working with international (especially German) clients, we sometimes get to the point where the client says “well, then we’ll just sue them.” Unfortunately, while filing a lawsuit is easy, winning anything more than a Pyrrhic victory is often hard.

There are a number of reasons for that, some of which international clients are also familiar with. In most countries, I suspect, litigation takes longer than the parties (particularly the plaintiff) might like, and involves more effort than seems necessary. Similarly, the parties are sinking cash into what already seems to be a lost cost, although in many countries they can get back what they’ve put into the litigation if they win (more on that later). Finally, collecting in any country can be a challenge, and can involve making difficult decisions about when to pursue collection and when not to.

In the United States, however, there are some additional things to consider before bringing a lawsuit. After all, bringing the lawsuit itself is markedly easier than it might be elsewhere, but successfully prosecuting one can be a lot harder. Some of those issues include:

  • As noted above, the loser doesn’t pay the fees of the winner. That means that, in calculating the damages you expect to collect, you have to deduct the expense of filing, carrying out, and collecting on the lawsuit from any award. Sure, you have all read about our seemingly generous regime of “pain and suffering” and other punitive damages, but in the average commercial dispute you can expect to knock off anywhere from thousands to hundreds of thousands of dollars from any actual damages you are awarded, and you’re not likely to get any of those extra damages to make up for it.
  • Adding to both that cost and the impact on your business is the US system of “discovery,” which allows both parties to demand documents, depose witnesses, and otherwise intrude on the daily business life of the other party. Given that flying just one executive to the United States for one day of depositions can costs thousands of dollars and three work days, that’s a cost foreign companies have to think a little more carefully about than their domestic US counterparts. And remember, that money is not coming back even if you win.
  • All of the above means that a party who can afford to win the “war of attrition” can make it difficult to collect on even larger amounts due by driving up litigation costs to the point that a smaller vendor can’t maintain the litigation long enough to collect. I suspect that’s true in most countries, but again, the prospect of never recovering those expenditures makes things more problematic.
  • And then there’s collection – an award in one jurisdiction can be hard to collect on in another, and none of that matters if the party you’ve won against has nothing to collect on. It’s important to do some research up front before filing that lawsuit, since a judgement for $250,0000 which cost you $15,000 to get is really just a loss of $15,000 if you can’t collect in the end.
  • Finally, it’s not all about money. The interruption to your business and stress caused by depositions and document collection and review can be significant, and even more so for non-US employees who aren’t used to that sort of thing. Equally importantly for the foreign employer, in some cases US discovery laws may be inconsistent with your own laws, requiring a difficult choice between compliance with US law or accepting a negative result in the US in order to comply with foreign law.

There are definitely times when a lawsuit is the right way to go, but suing “on principle” in the US rarely makes sense. A lawsuit is like any other business decision, so before filing make sure the return is going to be worth the investment.

At the rate we’re going, we’ll soon be traveling with books and cassettes

IMG 1917

Let’s not go here again

As I watched the luggage carousel spin slowly around I was pretty well aware what I would see there – nothing, or at least nothing which belonged to me. We had barely made our connection in Frankfurt, after circling for hours, and the only thing which made it through to Philadelphia was a cat. I don’t even like cats.

No problem, right? We could just run out and buy luggage on the airline’s dime.

Or not. Airline liability for lost or damaged baggage on international flight is regulated by a treaty called the Warsaw Convention, which limits airline liability for checked baggage significantly. According to Delta’s website, that’s $9.07 per pound up to a maximum of $640. Normally the answer is simple – if it’s valuable, don’t check it. The proposed ban on laptops and tablets for flights to the US from Europe, however, adds a new wrinkle to that otherwise simple advice, since most business travelers don’t really have an alternative to traveling with a laptop. Most road warriors won’t be terribly happy about seven to nine hours of lost work time, to say nothing of that low-res airline entertainment. They’ll be even less happy if they can’t retrieve the laptop at the end of that long flight.

The bigger issue, of course, is security. A lost laptop means lost data, and lost data can result in all sorts of headaches depending on what’s actually on the laptop. While encryption can limit the damage, that still won’t compensate for the loss of productivity for business travelers who depend on their laptops for their daily work.

While business travel won’t stop, the laptop ban combined with other issues which make international travel more onerous may well hit the bottom line of airlines with international routes. It will also increase the interest in everything from insurance for lost luggage to rentals of laptops and similar equipment overseas (which brings with it additional security concerns). Some frequent travelers may even consider storing electronics at offices or apartments overseas, to ensure that they are able to get back to work quickly upon arrival.

In the grand scheme, however, Skype begins to look pretty attractive when the alternative is eight hours of airline entertainment or watching TV on a cell phone followed by a full cavity search on arrival.

Of course, you could always fly via Canada.