Posted on June 1st, 2021
Below is a complete transcript of this video.
What’s up fellow entrepreneurs. It’s John Fagerholm again, and today I want to talk about making decisions based on principle or what’s in the best interest of your business. So as always, I’m an attorney, but I’m not your attorney. So please seek competent legal advice for your specific problems or legal questions.
Now, unfortunately, in the world of California, labor laws, some business owners are forced to make a decision that may go against their principles, but is the best decision for their bottom line. So some lawsuits are legitimate, of course, and the business owner has made some mistakes that requires a remedy. Usually that remedy is some dollar amount.
However, sometimes labor claims are brought by employees that simply have no merit and the business owner could likely prevail at trial. But the question is, is it worth it? So I’ve had many clients that have decided principle is more important than money and if fought false labor claims all the way through trial successfully, but the dirty little secret with labor claims is that success comes at a very hefty price and had an extreme risk so that the typical labor claim all the way through trial costs, roughly 150 to 200 K just for your defense.
So that’s only the beginning for, for the business owner. If the plaintiff even wins on one cause of action, besides the judgment awarded by a jury, the employer has to also pay the legal fees to the opposing counsel.
That means even if the award is $1, the employer will be stuck with a bill, roughly three to 400 K with the two legal fees on both sides. So if the employer wins, they have only spent the legal fees on their own attorney, not a great reward for winning. And it certainly isn’t fair, but in labor law, it’s not enough to be right.
You have to be right. And right by that, I mean, you have to be right in your position. I didn’t do anything wrong. Right. And you also have to be right in the outcome. Most employers elect to settle even fake claims much earlier in the process for a fraction of the costs.
If it costs you a half a million to win a case that you could have settled for 50 K two years earlier even if you’re right in your position, you may not be right in the outcome. So lots of clients choose the principled approach, which I think is admirable. But I also understand when an otherwise principled client can’t afford to take the risk of a system that’s stacked against them in that way.
All right. So what are the takeaways for this video? Number one is that you can be sued for fake claims as easily as you can be sued for real claims. Number two, besides your own legal fees. If you lose any claim, you will be assessed the legal fees of the plaintiff and three. Even though completely unfair.
Sometimes it makes more sense to settle claims than fight them.
So that’s all for this video and as always be productive.
