When I was in law school, a professor on the first day of class…
talked about the evolution of thinking as a law student. As a first-year law student, you ask the question, can I sue? The answer is you can always sue. It may not be a good idea, but you can always sue. As a second-year law student, you ask can I win? The answer is, in some cases, that yes you could possibly win. As a third-year law student (your final year), the question is can I collect? This, in all reality, is the most important question to ask and to have an answer for. You can’t always answer this question with absolute certainty.
As an attorney, there are two crucial questions that I am asked when I speak with potential new clients. The first question is how much will this cost me and the second is how much is my case worth. The first question can usually be answered easily since most cases are taken on a contingency basis so there is a small upfront retainer and then the rest of the attorneys’ fees and costs come out of the recovery (i.e. a contingency fee) so if the case makes sense there are nominal upfront cost to bring a case, The bigger question is what is my case realistically worth? A second and just equal part of this answer is will a judgment be collectible because most people ant their damages paid for.
Collectability of any recovery should be paramount to any litigant. While there are times that there are bigger considerations than a financial recovery, in most cases, the ability of the defendant to pay any judgment or settlement must be considered before bringing a lawsuit. It is never possible to guarantee that a settlement or judgment gets paid, there are several things to consider when considering whether to either bring a lawsuit or accept a settlement offer.
Key Client Questions: Cost & Case Value
When a potential new client asks me about what their case is worth, the first thing to look at is how much the actual out-of-pocket damages are. What will it take to make the person whole and what are they looking to accomplish. In auto fraud cases, we generally either look at what it will take to repair the vehicle, what is the diminution in value, and/or what will it take to undo the sale. Often the person will want to get out of the car and buy a new car. If the facts warrant seeking this outcome, then we look at the purchase price, the amount of the payments that have been made, and the downpayment made at the time of the sale. While there is no guarantee that all that will be recovered, it is the basis for determining the value of the case. If diminution of value is what is being sought, as in cases of undisclosed accidents or branded title cases (when the prior damage to the vehicle is not severe or the buyer simply wants to keep the car and receive the excess they paid for a damaged vehicle), then we need to find out what the value of the car is. This can be done by seeking the opinion of an expert or finding out what the trade-in value of the vehicle is. If the car needs to be repaired, then having an independent third-party mechanic provide a written estimate of the cost of repairs is the first step.
Assessing Out‑of‑Pocket Damages in Auto Fraud Cases
Are the out-of-pocket damages the only possible damages that can be recovered? No, under the Texas Deceptive Trade Practices Act (“DTPA”), it is possible to recover emotional distress damages to the extent they exist and treble damages if the defendant’s conduct is found to be willful and intentional. These are much harder to be awarded and are rarely agreed to in any settlement and are not usually something that are considered when looking at a dealership fraud case. This can frustrate many potential clients as they truly believe that the dealership’s actions were willful and intentional. This is rightfully so as the dealership usually knows the true condition of the car they sold and failed to disclose it to the buyer at the time of sale. So why don’t we consider them at the initial consultation? These have to be awarded by the judge, jury, or arbitrator and can be difficult to get but more importantly, when they are awarded, they substantially increase the award. This is not a bad thing in theory but then the issue of collectability becomes front and center. In cases where very large monetary damages are awarded, it is not uncommon for the defendant not to have the ability to pay the award, this is very common in cases involving non-nameplate dealerships, buy-here, pay-here dealerships, or mechanics who do bad repairs. During these times, we must appoint receivers to find assets and force payments. Sadly, all too often the business simply doesn’t have the ability or assets to satisfy the judgment, goes out of business, or files for bankruptcy protection meaning that judgment may get paid at all. This result clearly doesn’t benefit anybody. While it is not always avoidable, this must be factored into the decision-making process.
When making the decision to file a lawsuit, it is important to understand not only the merits of the case but also the potential collectability of a judgment. Thinking about the best case scenario is always fun but being realistic in an auto dealership fraud case can often lead to a nice recovery.
