How Much Does It Cost to Defend an Employment Lawsuit?

California businesses frequently asked question is: How Much Does It Cost to Defend an Employment Lawsuit? California is very protective of employees and thus employees’ lawsuits are abundant. Defending an employment lawsuit is very costly in California. Employment lawsuits are extremely fact intensive, and likely involve attorneys examining the entire tenure of multiple employees. Defending an employment lawsuit through discovery, including and a motion for summary judgement or motion for summary adjudication can cost employers over $150,000. If you lose the summary judgement, expect to spend and additional $150,000 ($300,000 or more) to take the case through trial.

Lawyers who charge less per hour, e.g., $300, is not cheaper. Frequently lawyers who charge less per hour are less experience and make up for lost revenue by taking longer to perform tasks than experience lawyers; thus, an employer ends up paying more. A company that has been sued should not let a lawyer learn on the job. A lawyer’s experience is critical. For example, our attorney, Douglas Wade, has defended employers for the last twenty-five years; his knowledge in defending employers is broad and does not require the legal research that many lawyers charge their clients. The best practice is perhaps resolving the lawsuit as earliest as possible and minimize legal fees to defend. The employee’s attorney fees which the employer is responsible for, should the employee prevails.

Most employers will wisely decide to keep an employee instead of risking a legal bill of up to $300,000. Also, if you have a history of settling employment claims, you risk looking like an easy target for future claims.

Smart employers consider offering a severance upon separation in exchange for a waiver releasing any claims and legal recourse. This should be considered with each employee separation and offered to all employees who are fired unless they are fired of intentional and egregious misconduct. Offering a severance in exchange for a release of claims, you are limiting the exposure to wrongful termination lawsuits.

Employee’s Legal Fees

Many employees hire their lawyers on a contingency basis, which means they will not be out of pocket and will not have to pay their attorneys unless their lawyer wins the case. Suing a former employer is, therefore,  a no-risk proposition for employees.

However, if their attorney wins the case, you will be on the hook for your employee’s legal fees. Instead of just paying a settlement, , you may have to pay additional legal fees of perhaps $250,000 for the privilege of being sued.

Your employee’s legal fees are broken down into two categories: attorney fees and costs.

Attorney fees are the cost of counsel or the work an attorney does on behalf of their client. This can range from $400 to as much as  $750 per hour, depending on the attorney. Litigation can drag on for months, creating a very steep bill.

Costs are the additional expenses that occur during a legal case: filing fees, postage and shipping, copying fees, deposition and court hearing transcripts, as well as expert witness fees. These expenses easily and quickly add up if the case drags on for a long time.

How To Protect Your Business From Employee Lawsuits?

California is one of the best states in the country for protecting employee rights. This is a fantastic thing, but it also means that opportunistic employees and their lawyers will seek to exploit your company for an “easy” payday.

Have protections in place to protect your business from opportunistic lawsuits. Unfortunately, the more successful your business is, the more lawsuits you will attract.

Even if you have done nothing wrong and there is a mountain of proof of your innocence, it is often in your best interests to settle rather than running up legal fees. If you settle and pay $10,000, this is a much better result than paying up to $100,000 if you lose. You will be paying for the settlement, your legal fees, and your employee’s legal fees.

Have strict company policies in check to minimize legitimate discrimination cases. It is also important to have a strict company policy in place for terminating employees and to consider the benefit of offering a generous severance package in exchange for releasing your company from legal claims.

One of the most important ways to safeguard your business from employment lawsuits is to hire a skilled employment lawyer. They will help you set up employee handbooks, policies, and documents to ensure your company is less likely to violate employment law, and therefore, less likely to be sued. In employment law cases, excellent documentation is your best (and sometimes only) defense. Your attorney will also advise you in situations which may turn into a lawsuit or if an employee is threatening a lawsuit. We know federal and California employment law inside and out and will help you to safeguard your business against legal attacks. We have a great track-record of reducing the risk of lawsuits for companies. If you do fall victim to a lawsuit, though, we will not hesitate to aggressively litigate and win your case.