I fully understand why small-businesses are reluctant to hire attorneys to represent them in disputes with customers. Attorneys are generally expensive and demanding regarding what and how proofs of a case are presented. They can ask a lot of seemingly intrusive questions in an effort to understand fully what really led to a dispute and how a claim might be pursued or defended. Frustrations emerge when your own counsel points out that you have not kept good records or have failed to make required disclosures that can adversely affect your chances of winning a case.
When a travel agency becomes involved in litigation, the questions presented are ultimately not much different from the many challenges and decisions that agent owner/managers must make every day. The main difference is that the decisions in litigation situations are framed and constrained by complications like the Rules of Evidence. Since the decision whether to hire counsel can be expensive, the choice should be made with some understanding of the risks involved in the decision.
A growing body of statistical evidence shows a direct correlation between litigation outcomes and the use of counsel to represent the party. One of the most recent is the Virginia Self-Represented Litigants Study, the results of which are summarized in Virginia Lawyer magazine published by the Virginia State Bar. The data technically applies only to the Virginia court system, but the results are consistent with other studies and almost certainly would apply universally. The conclusions are startling and should be considered by everyone who is or may be involved in litigation.
After removing cases of “default” (the defendant does not respond to the suit) or “not found” (the defendant could not be located), the Virginia study found that only two percent of cases involved counsel representing both parties. The study also found: “Not surprisingly, both plaintiffs and defendants have substantially higher success rates when represented than when they are unrepresented.”
Most travel agency litigation likely involves the agency in the role of defendant. The study found that plaintiffs got judgments in more than 60 percent of cases in which they had counsel and the defendant did not. The victory margin for plaintiffs fell to 15 percent of cases when the defendant had counsel and the plaintiff did not. Plaintiffs were victorious in about 55 percent of the cases in which both sides had counsel. Significantly, I think, when both parties chose to proceed without counsel, plaintiffs got a judgment in just over 20 percent of cases.
This means there is roughly a 5 percentage point swing in favor of the “use counsel” approach as a defendant. A rational approach is to decide what the value of that 5 percentage point chance is. If it’s very small (for example, the agency’s worst-case exposure is, say, $1,000), it may well be worth going it alone, provided, of course, that the case is a one-off (there are no other clients in the wings who might have similar complaints) and you are not concerned about the credit or publicity implications of having an adverse judgment entered against the agency. You also may need to account for the element of surprise – the other side initially acts without counsel but when the court date arrives, they show up with a lawyer at their side. As the amount in dispute or the other intangible consequences of losing a case grow, the analysis changes. That 5 percentage point swing in your chances of winning makes retention of counsel a more rational choice.
In thinking about this decision, you should be conscious at all times of the various ways our thinking is biased. “Loss aversion” is a powerful influencer of our decisions (people generally hate to lose more than they like to win), but there is also a tendency to overvalue the strength of our own position and to under-account for the opposition’s case. Reliance on an independent mind in such a situation can be critical. Your attorney will be less invested than you are in confirmation of your point of view and able to give you a more objective evaluation of your chances. Therefore, at a minimum, as the amount in dispute goes up, the wisdom of at least consulting counsel rises dramatically.