Tuesday, August 30, 2011
Phyrric victories
What a Phyrric victory! City spends $407,000 investigating whether an ethics complaint against a school board member whose son took a $400 high school course for free. Ultimate result: ethics violation established by a 3-2 vote. School board member pays the $400. Another public sector excess, yes, but this type of decsion-making afflicts the private sector too. Far too often we hear of enormous expenditures made by employers defending employment law cases. I know one example where a defendant spent into 7 figures on defense of an individual discrimination claim before the plaintiff won less than six figures, and had been willing to settle for about what the jury awarded. I often tell my defense clients liability is not the real issue in employment law cases, most of them can be won in Louisiana and Mississippi. Its the cost of defending the claim in court that is the economic adverse effect. Is there a duty to seek early settlement, in even limited liability cases. Yes. A lot of times that suits the client's interests. But who determines the client's interests? Its one thing if the decider is the owner. But in most other situations a real issue occurs when the "decider" for settlement is not the owner, but the "decider" accused of the wrongdoing. Should shareholders and boards demand an impartial assessment? Perhaps they should, particularly where the cost of defense of a five figure claim is north of seven figures.