Litigation can be a complex and costly process. For businesses considering legal action or preparing to defend against a claim, understanding the costs associated with each phase of litigation is critical for planning and decision-making. Below, we outline the phases of litigation, explain what each entails, and provide rough cost estimates for each stage. Keep in mind that actual costs vary depending on the complexity of the case, the jurisdiction, and the specific issues involved.
The cost estimates provided in this article are based on smaller cases involving disputes of less than $1 million. This article is specifically tailored to commercial disputes, of the kind we regularly handle for our clients. For larger, more complex cases, costs can be significantly higher, often reaching several hundred thousand dollars or more. Always consult with an attorney to assess potential costs specific to your situation. At Skepsis Legal Solutions, we help clients navigate each phase of litigation with transparency and strategic focus. If you’re considering litigation or need legal guidance, contact us to discuss how we can support you. We also are unique in that we help our clients save money and budget with our litigation subscription services, so you can know exactly what your litigation will cost at every step of the way. The estimate below assumes more traditional, hourly billing.
As you consider these estimated costs, keep in mind that investing a much, much smaller amount now in a good business contract now – such as with our flat fee general contractor and subcontract agreement services – you can save your business from ever having to pay any of these costs in the future.
1. Prelitigation
What It Is: Prelitigation involves efforts to resolve the dispute before filing a lawsuit. This can include negotiations, demand letters, and informal discussions aimed at achieving a settlement.
Estimated Costs:
- $2,000 to $10,000
- Costs depend on the time spent drafting demand letters, reviewing documents, and negotiating with the opposing party.
Why It Matters: Resolving issues at this stage can save significant time and money compared to full litigation. It’s often the most cost-effective phase if a resolution can be reached, other than having a top-notch contract on your side to begin with.
2. Pleadings
What It Is: This phase involves the formal initiation of the lawsuit. The plaintiff files a complaint outlining their claims, and the defendant responds with an answer or a motion to dismiss.
Estimated Costs:
- $5,000 to $20,000
- Costs depend on the complexity of the claims and the need for motions, such as motions to dismiss or amend pleadings.
Why It Matters: Strong pleadings set the stage for the case and frame the legal issues that will guide the litigation.
3. Written Discovery
What It Is: Written discovery involves exchanging documents and written questions between the parties. Common components include interrogatories, requests for production of documents, and requests for admissions.
Estimated Costs:
- $5,000 to $50,000
- Costs vary depending on the volume of documents, the number of questions, and any disputes requiring court intervention.
Why It Matters: This phase uncovers the facts of the case, ensuring each side has the evidence needed to build their arguments.
4. Motion Practice
What It Is: Motion practice includes filing legal motions to address specific issues, such as summary judgment motions or motions to compel discovery. These motions can narrow or resolve issues before trial.
Estimated Costs:
- $10,000 to $75,000
- Costs depend on the number of motions filed and the complexity of the issues.
Why It Matters: Effective motion practice can lead to dismissal of claims, resolution of disputes, or clarification of issues, potentially avoiding the need for trial.
5. Depositions
What It Is: Depositions involve taking sworn testimony from witnesses and parties outside of court. Attorneys ask questions, and the responses are recorded by a court reporter.
Estimated Costs:
- $5,000 to $60,000
- Costs include attorney preparation, deposition time, court reporter fees, and transcript costs.
Why It Matters: Depositions allow parties to assess witness credibility, gather critical information, and prepare for trial.
6. Trial Preparation
What It Is: Trial preparation involves organizing evidence, drafting arguments, preparing witnesses, and developing strategies for trial.
Estimated Costs:
- $40,000 to $100,000
- Costs vary depending on the complexity of the case and the number of witnesses or exhibits.
Why It Matters: Thorough trial preparation is essential for presenting a compelling case in court.
7. Trial
What It Is: The trial phase is the culmination of the litigation process, where evidence is presented, witnesses testify, and attorneys argue the case before a judge or jury.
Estimated Costs:
- $40,000 to $150,000 per week
- Costs include attorney fees, expert witness fees, and logistical expenses for presenting evidence.
Why It Matters: Trial is often the most expensive phase of litigation. A well-executed trial can lead to a favorable outcome, but it requires significant investment.
Conclusion
If you add these numbers up, you’ll see the low end estimate totals $107K, with the high end being nearly $500K. Most litigations are somewhere in the middle, but of course any particular litigation could be more or less.
That’s why, at Skepsis Legal, one of the first things we do in your initial consultation is help to make sure that any litigation is likely to provide a positive ROI for your business.
One of the most effective ways to avoid these substantial litigation costs is by investing in well-drafted contracts. A few thousand dollars spent on a strong contract now can save a company from these expenses dozens of times over by minimizing the risk of disputes. Even when litigation cannot be avoided, a solid contract can significantly shorten the litigation process and reduce associated costs by clearly defining terms, responsibilities, and dispute resolution mechanisms. Whether you are facing litigation or you’d like to avoid it with strong contracts, Skepsis Legal is eager schedule an initial consultation to identify your business risks and help you save tens or hundreds of thousands of dollars in the future.
