In this episode, hosts Brad and Michael welcome guest Brian Lauten, a triple board-certified business and commercial trial attorney and founding partner of Brian Lauten P.C., to unpack the realities of commercial litigation. Brian shares the often-overlooked consequences of filing a lawsuit, from hidden costs to litigation fatigue and unexpected counterclaims. Tune in to learn why the best litigation strategy may be never needing one, and the proactive legal steps you can take to avoid the courtroom.
Listen to the full episode using the player below, or by visiting one of the links below. Contact ByrdAdatto if you have any questions or would like to learn more.
Transcript
*The below transcript has been edited for readability.
Intro: [00:00:00] Welcome to Legal 123s with ByrdAdatto. Legal issues simplified through real client stories and real-world experiences, creating simplicity in 3, 2, 1.
Brad: Welcome back to another episode of the Legal 123s with ByrdAdatto. I’m your host, Brad Adatto, my co-host, Michael Byrd.
Michael: As a business and health care law firm, we meet a lot of interesting people and learn their amazing stories. This season’s theme, Brad, is Unintended Consequences. We sometimes find ourselves in a situation that can be traced back to a seemingly inconsequential or unrelated decision.
Brad: Yeah. And I’m excited about bringing you on today’s guest. We’ve had a pleasure working with him, maybe even hunting with them over the years. And today’s guest, he gets to discuss everyone’s favorite topic, Michael – lawsuits.
Michael: Yeah. Well, I’m sure there’s going to be a lot that are curious about lawsuits, but I don’t know. You always over promise on the beginning. [00:01:00] Well, before we get Brian on, do you have anything you want to visit with me about?
Brad: I do. I read an article recently in the US news about an endurance swimmer, Louis Pugh. He swam around Martha’s Vineyard to raise awareness about sharks and conserving them. And he did this all because it’s about to become the 50th anniversary of the movie, Jaws.
Michael: I didn’t know it’s been 50 years already. You’re getting old, man. Okay, but I did see something on the news. I wasn’t sure what the deal was with that.
Brad: Yeah. I mean, good for him, Michael, but I don’t think you understand the trauma. I mean, Martha’s Vineyard, Jaws; do you know what I went through as a child because of that movie?
Michael: Let me guess. Every time you were in the pool someone would start humming the Jaws theme song or something to that type.
Brad: They didn’t even have to do that, Michael. In my mind, I had full blown… I could be paddling around the shallow end of the pool, and I’d still hear that. [00:02:00] And I really basically have not been in a pool without some type of peace since 1975. And this guy Pugh, he’s swimming with the actual sharks and listening. I mean, he must have not heard the song. Like I would’ve heard the song the entire time I was swimming. That theme song chased me. I mean, it basically lives rent free in my head.
Michael: You and every other Gen Xer out there. What about the swim? Is that going to change anything? What’s the purpose of this?
Brad: Apparently, according to this article, over 274,000 sharks are killed every year. And this guy was trying to bring awareness to it. And I was just thinking about like, look, we just have to worry about this one shark that kills people off Martha’s Vineyard. Or well, and depending on which movie you’re watching, or off Orlando, or in The Bahamas for some reason. But besides that one great white shark, I guess all the other sharks are safe according to this guy.
Michael: Yeah. I did not know that there was a shark awareness situation.
Brad: You don’t have any plans for doing a shark awareness?
Michael: Yeah. [00:03:00] No, I did not know to have shark awareness, but I guess I’ll have to figure that out.
Brad: Yeah. Maybe instead of swimming with sharks, he could have gotten a kazoo and just wandered around the beach and doing the theme song to Jaws until they, someone like gave him money for the conservatory. That’s some way he could do it. You think that would be different than swimming with sharks?
Michael: Yeah. It sounds like a very brat idea. Well, I think we can pass on that one.
Brad: What about if he dressed up as a lifeguard and someone else dressed up as a shark and they jumped in the water and started singing the theme song to Baby Shark?
Michael: Yeah. Yeah. You can reach out and kind of put your ideas out there see how that works.
Brad: See how that works. Better than swimming with sharks, in my opinion, at least.
Michael: All right, I think that’s enough Shark talk. Let’s get started and bringing on our friend Brian. So join us today is our friend Brian Lauten. Little bit of his stats. He is the founding partner of his firm, Brian Lauten P.C., [00:04:00]. Brian is JDMBA, triple board certified, which is way more impressive than anything that you have, Brad. It’s a board certified and business and commercial trial lawyer. It’s an elite distinction held by less than 1% of all the lawyers since 2003 – I can’t believe we’re… it’s been that long you’ve been a super lawyer. Since 2015, recognized by D Magazine best lawyers.
Brian: I’ve got more gray hair than you do, Michael.
Michael: But we know I’m older, unfortunately. And then best Lawyers in America Distinction. Brian is past recipient of the John Howie Award from the Dallas Trial Lawyers Association. Fun fact, I was a law clerk for John Howie in law school. Brian’s former chair of both the Dallas Bar Association’s trial skills and business litigation section. Cum laude from SMU School of Law, Spring Hill College. [00:05:00] And I think that we certified you as a Bonafede badass. Thanks for being here today.
Brian: Well, I appreciate y’all having me.
Brad: Yeah. So, Brian, first major question. You grew up in the South like me. Were you ever terrified in the open water or in a pool because of the movie, Jaws?
Brian: I really wasn’t, honestly, and I grew up on the water because I had never seen sharks in the Mobile bay, although I’m sure they’re there but not the kind of sharks that you saw in that kind of movie, like tiger sharks that are like a foot or two. And they’re way deeper than any part of where I grew up and would be swimming.
Brad: No shark fears.
Michael: That’s good. You’re not weak like Brad.
Brian: No, I’m not. Well, no. I’m sure I am, but not on that.
Michael: Alright, well let’s jump in. So for the audience, talk a little bit about your background and what drove you into becoming a trial attorney.
Brian: Okay. So I grew up in Mobile, Alabama, pretty small town. [00:06:00] My dad was a heart doctor. He was an English and philosophy double major, but took the pre-med course and he ultimately ended up starting his own medical practice. And he didn’t know anything about business. And so, he told me, he said, “Look you need to pick the best major that if you ever went another day after college that would get you the best job.” And he had done this research and he said, the two best are accounting and computer information systems, or engineering, which I was never going to do engineering and I was never going to do computers. So I majored in accounting at Spring Hill College, the Jesuit school that I went to, they had a five year accounting MBA program.
I worked for a year in auditing and had to take a ton of business law and the accounting MBA program, I mean, a ton. It’s an entire section of the CPA exam, which I never took. But anyway, I never thought about [00:07:00] being a trial attorney or a trial lawyer at all. The main reason I went to law school, this is the honest-to-God truth, is that at the regional CPA firm where I worked, I was going to have to do tax. And I didn’t get the nuts and bolts in tax to feel like I could be a good accountant. So I liked the business law stuff and that’s how I kind of matriculated into law school. And then I decided there this is where I think would be fun for me. I kind of backed into going to law school. But it turned out pretty well. But that’s the true story.
Brad: It’s kind of funny because of the three of us, both of y’all kind of backed into law school and I was the only one that wanted to do it since sixth grade.
Michael: And I was very similar to you because I was business school undergrad. I took those accounting courses and I knew like once I got through my 12 hours, like there was no huge – I was not going to be very good if I went into that. And the same for finance, which was my major. I was like, it’s super helpful to have that background [00:08:00] now in law. But if that were my primary thing, I don’t think…
Brian: No doubt. I mean, I’ll tell you, the upper division accounting classes I took in college and MBA school were harder than any classes I ever took in law school.
Brad: Yeah. Well, all right, so we’ve established your cred that you have all these nice accolades, but why don’t you tell the audience members who are not familiar with you, just in general, but your firm. Talk about Brian Lauten P.C.
Brian: So we’ve got four lawyers, we’re a commercial boutique. All we do are business and commercial lawsuits. Try hard to get them resolved, but we work them up to be tried. And that’s just a good way to maximize value one way or the other. So, our clients are private equity guys, commercial real estate guys. A lot of doctors, thank y’all for that. But they’re business people who are wildly sophisticated and there’s almost always some [00:09:00] underlying contract they’re fighting over. And if they can’t get it resolved in a boardroom and have to try to resolve it in a courtroom, that’s kind of where we come in. You know, after the transaction is closed and it kind of goes south, whatever transaction that may be. So that’s pretty much what we do.
Michael: And so I’m thinking too particularly about the doctors or the smaller, the less sophisticated. So what I find with the doctors, of course, they’re way smarter than we are. But they don’t have a lot of business background when they get into their practice. And then we find that when they have conflict that inevitably is going to happen with any business owner; they have probably less understanding of what it means going into a lawsuit. Talk a little bit about kind of when you have clients that come to you, either because they got sued or even more thinking about filing a lawsuit. [00:10:00] Like, what are some of the experiences you’ve had that maybe even unintended consequences of them thinking they were going to have one path or thing happen with filing a lawsuit versus reality?
Brian: Yeah, that’s a great question. And I’ll tell you, and I tell the young lawyers in our office we’ve hired over the years, that the most important question that anybody that does what we do, the most important question to ask the client, whether it’s a doctor or anyone else, is what do you want? Because more often than not, they don’t know. And if you don’t know what they want, you don’t know how to get to that goal or how long it’s going to take or what that’s going to cost, or how long that might last. And sometimes it’s real simple. I mean, if it’s like a car wreck and you get sued, well, I want to be out of this case as quickly as possible and I want to be released. But when you’re talking about commercial trials, [00:11:00] I mean, it could be using litigation to leverage some buyout. It could mean saving a business relationship. It could be, hey, I want as much money as possible. It could be all different kinds of things.
So, that’s the most important question, is finding out what they want because oftentimes they don’t know. And two, what they want isn’t something a judge or jury can give them. So, we have to really be creative to think, is this a good investment of your time? And the other thing that doctors do, as y’all know, they don’t like to be bothered during the daytime when they’re seeing patients. They want a quick after hours call. And I don’t think people understand how much the client has to participate in the litigation.
You know, doctors who are super busy, they don’t want to say, go fetch, you go ruin their life. Go lawyer and send me a bill. They have to answer interrogatories. They have to sit for depositions, they have to get documents, [00:12:00] they have to put litigation holds on electronic information, they have to participate in strategy meetings. It’s like being on a train. You know, we’re riding to the same destination. It’s not, hey, go run interference for me. So I think that – the business disruption and understanding what you want, whether it can even be achieved that has to really be diagnosed on the front end.
Michael: I had it real quick. Talk about kind of to the unsophisticated end, what a lawsuit looks like, what is, at a very general level, the roadmap? You decide to file a lawsuit and what happens from that point to this day of trial, which is what they probably all are picturing when they do? It’s just at a high level, what are the processes?
Brian: So I’ll tell you this and to kind of make an analogy; if you call and ask your [00:13:00] radiologist and said, “Hey, do I have a broken arm?” Well, he’d want to say, can I see the x-ray first? Well, and what we do, the x-ray is the contract. You know, people will call me and they’ll say, “Hey, I’ve gotten screwed in this business deal. I owed a lot of money. This is what I put in.” And my first question is like, I can’t give you any advice until I see your agreement. And nine out of 10 times, no one’s ever read the agreement at all. And I say that because the Texas Supreme Court, they enforce agreements to the T in our state. We are the most pro-business state.
So the first question is, does it have a forum selection clause? Maybe it’s Dallas County, but if you’re part of some big hospital group, it may be in Chicago, Illinois where litigation could be, or California. Two, is there an arbitration clause where you can’t go to court at all and you’re going to spend $10,000 on a filing fee and have to pay an arbitrator? Are there shortening of limitations in an agreement? Are there limitations on remedies on [00:14:00] what the client can even get? All these landmines are in deal documents, and no one is ever going to call me up on the phone, whether they’re a doctor or a private equity guy and say, “Hey, tell me how this agreement’s going to be interpreted.” They haven’t even looked at it, right? They’ve either been screwed on a business deal or they think they’re being screwed, or they can’t get questions and answers and it’s a lot more. The roadmap is what does the agreement say? And sometimes what’s amazing is it’ll take a week for them to find it. Like they put it away, but that’s where it all starts. There’s always some kind of underlying deal document.
Brad: I always like it when you ask for that and they say, well, I don’t know where it is, but I have an unsigned copy. Is that good enough? No, we actually need the executed version. And back to your cost piece and your time. We had a client that was very, very wealthy, and we had said, [00:15:00] well, if you sue this, even your best day in court, you’re not really getting anything. And he actually said, well, it’s the principle of the matter. I want to take them to court. And we don’t litigate. So about a year later, Michael and I were visiting with the same client and asking how things were going, and he said, I’m still in that lawsuit. And I go, “Oh, well, how’s that going?” He goes, “I can’t wait to get out of that lawsuit.” And he said, “I didn’t realize how much time I would have to give to this lawsuit.”
Brian: Oh, yeah. And I always laugh when someone comes and tells me, Hey, it’s about the principle. The first question I always ask is, when you say principle, or are you spelling that P-A-L or P-L-E? But no, you’re right. And I’ll tell you, I spend more time trying to talk people out of litigation because you can throw a lot of good money after bad. I mean, and that’s the last thing you want to do. And I’ll tell you as a lawyer, we don’t want to egg on our face. We don’t want to get paid a bunch of money, and then if the client is in a worse position financially than they were to start. [00:16:00]
Brad: Well, on that note, why don’t you take that question, like, when you are deciding that, give us some factors, like if you’re trying to – what are they going to get to, to fight versus not fight? Like what are the things you look for to kind of guide them through that principle?
Brian: Okay, so that’s a great question. So like I said, a lot depends on what the client wants. Very seldom in doctor cases does anything a jury would do or not do could help them resolve. And what I mean by that is this, juries and judges, well, juries in particular, they’re just asked a bunch of questions about liability and damages. You know, and when I say liability, whether did Jack breach a contract? Did Jack make a misrepresentation or a fraud? If so, what sum of money would compensate that person? The point being is that a jury can’t grant a business divorce. A jury can’t force a sale. [00:17:00] A jury can’t say, “Hey John, you should pay this doctor this amount of money for his equity.” So a lot of times the litigation cannot solve the actual underlying business problem.
However, frequently litigation’s needed to leverage that issue even though the litigation itself. But I’ll tell you, I like to know exactly what I’m fighting over at the beginning. And so a lot of times, if they’ve exhausted everything, and I’ve tried to tell them, well, what about X, Y, Z? Would that work? Would that work? When they feel like they have exhausted all options and they’re not getting anywhere and then, okay, we’re going to get this in a litigation; the first thing I like to do with them is to say, let’s see if we can go to an early mediation with the other side. Two things that are going to happen, number one, you’re going to find out, you’re going to get discovery cheaply information that you didn’t know about. And two, you’re going to find out how much we’re fighting over.
If we’re fighting over 4, 5, 600 grand, it’s not going to make sense to litigate. If we’re fighting over 20 or 30 million, at least you know that it’s worth the investment of time. But the biggest thing about what we do, commercial lawsuits, is that there’s never going to be insurance. Both sides are paying out pocket for lawyers. And somebody’s going to win and somebody’s going to lose. And with asset games, LLCs, trusts, it can be very difficult to collect on uninsured claims. And there’s always going to be a counterclaim. And this is what shocks, particularly doctors, they think, well, they’re the ones that breached the agreement and they’re shocked to find out when I tell them, you’re going to get sued back. And they’re like, for what? For whatever they can come up with.
They’ll say, you breached the agreement. Or they’ll say that what you did is the real cause of the loss, then all of a sudden you’re defending a counterclaim [00:19:00] and the contract’s going to have an attorney’s fees provision almost a hundred percent of the time that says the prevailing party gets their fees, so you’re being sued back. You’re at risk of their fees. And will that litigation outcome get you what you want? So there’s all these components and that’s why a big part of what we do is when we do get into litigation, is I always advise clients, I don’t care how bad you’ve gotten screwed over on a deal, do not ever breach the agreement. You comply. You can comply under protest, don’t give them an excuse to sue you back. But all of these things are things that have to be considered.
Brad: And you said something I think is important because we’ve had this conversation before, but attorney’s fees, when you see in a document that says there’s a clause in there, prevailing party gets attorney’s fees. Talk to our audience as to what does that really mean? So like, I’ll say it from the client. Oh, so if I win, I get a hundred percent of your attorney’s fees?
Brian: [00:20:00] No, it’s ironic you’re asking me that because I’m always asked that question in the first meeting a lot of times, right? Like, Hey, if I win, are they going to have to pay our attorney’s fees? And this is my answer every time. This is what’s true. And by the way, regardless of whether attorney’s fees are set forth in an agreement, if you breach a contract in Texas, you can still recover attorney’s fees by statute, but I don’t want to digress on that. But here’s the deal. What I tell people is, yes, technically if you win and prevail on the merits on this contract claim, yes, you could technically be awarded your attorney’s fees. However, the odds of you actually collecting them are maybe less than 1%, largely for two reasons. Number one, if you go win a trial like that and you get attorney’s fees, attorney’s fees are one element of damages that doesn’t have to be bonded.
So someone can appeal away without having to post a bond on attorney’s fees. [00:21:00] So that’s a big issue. Number two is, to your question about a hundred percent, you’re right. You have to segregate attorney’s fees. So, for example, let’s suppose that you sued someone for breach of contract, but it also had a fraud claim. It also had a misrepresentation claim. Deceptive Trade Practices Act claim. And you go and win that case. Well, you can only recover usually on the percentage of time spent on the contract claim. So in other words, let’s suppose that your total attorney’s fees were a hundred dollars, but you brought four different claims. Well, you can’t recover attorney’s fees for fraud or tortious interference or misrepresentation. So 25% of the bill was on a contract claim, you can get 25 bucks, not the hundred.
Brad: And I think my former life when I did litigate a little bit, we had a case that the judge kept ruling against us. We took it to appeals twice. Both times it got overruled. So we were talking a long period of time. By statute we were owed attorney’s fees. [00:22:00] Our client wanted it, reapplied for it, and the judge who again, has ruling against this twice, been overturned twice, said, “I believe in this case, reasonable attorney fees is $5,000.” Now, our client was very happy at the end result of what we got them, but they spent a lot of money, a lot more than $5,000. But that’s what that judge deemed to be reasonable. Now, we could appeal it again, the client’s like, no, I’ve spent enough. I’m happy where we are. But that’s the part I always tell clients, like, just because you even win, it doesn’t even mean you would even get even a fraction of what you get. And to your point, they can still fight you on that too.
Brian: They should never think that they’re going to recover a dime of attorney’s fees from the other side. And to your point, and there’s a good reason for your story. And it’s usually not arbitrary. What a lot of people don’t understand is that generally, especially for doctors, they’re going to be suing or being sued by people locally, which means you’re going to be in state court rather than federal court. [00:23:00] Our state court judges in Dallas County, for example, we have 13 civil district judges. They’re all elected. And the lawyers who appear in front of them usually are their donors. And so, they don’t want to pop some lawyer who lost, who appears in their court all the time with three or $400,000 in attorney’s fees, it embarrasses them. And they don’t want to embarrass a friend if they lost. So, there’s also the motive of the judge not wanting to look like, hey, you not only lost your case, but I awarded so much in attorney’s fees, it’s kind of like dancing in the end zone, it’s embarrassment. So, they’re up for reelection, so there’s a reason why you see a big reluctance to hit people with attorney’s fees.
Michael: Well, we’ve got one more question before we got to wrap up, but we’ve heard the term litigation fatigue in the past. [00:24:00] Talk a little bit to our audience about what that means, like if they’re getting into the lawsuit, like how they can avoid or prepare for that.
Brian: Yeah. So it doesn’t take much to get dug in litigation. And I think that’s the biggest visceral reaction or expectation, particularly with doctors that they’re not aware of. So many people think, “Oh, you just send a letter from the lawyer, everything gets resolved, or you just file a lawsuit, then they’ll cave.” And it doesn’t work that way. And people are always surprised that we’re at the mercy of the court and a judge in Dallas County may have 2000 cases, so it could take a year and a half, two years to go to trial. And if you’re asking somebody, you’re suing somebody for money, they like to hold onto their money as long as they can. And so until a case actually goes to trial and they think it’s going [00:25:00] to actually be resolved, people like to hold on to their money.
So I think doctors in particular, most of them are type A and they’re fixers; they’re used to fixing something and getting out, fixing – and litigation is not a quick fix. And it’s a lot of participation, a lot of work. And the wheels of justice turn really slowly through no fault of the lawyers. And the only other thing I would add is that you may be set for trial 5, 6, or 7 times over a two, three year period. And it’s like the six times when you finally go to trial. And people never understand that. And I explained to them, it’s like, if you’ve got a little league baseball game on Saturday at nine, you put on your uniform and you’re ready to go play, but there’s 20 games scheduled on one field at the same time, 18 teams are going to go home. And that’s the way it is with trials. The oldest case is going to go first and a lot of them settle. [00:26:00] So you don’t even know if you’re going to be the oldest case. So, no, it’s a long drawn out process that should not be haphazardly entered into.
Brad: That’s amazing. I think one of our friends once said this, and I don’t want to quote incorrectly, but I think you were there when he said it, is that he tells his clients, like, if you’re going to litigation, basically the best way to prepare for that is get your car up to 65, 70 miles per hour, take the steering wheel and throw it out the window because now you know what litigation’s going to be like.
Brian: There’s just so many variables that you can’t control, especially with costs. You know, who’s the judge going to be? What venue is it in? Who’s the opposing lawyer? There are just all these variables that you really can’t control. And like I said, that’s why we spend so much time eyes wide open, is this really going to get you what you want? You know, is there a better alternative?
Michael: Yeah. It’s amazing. Well, we’ve hit our time markers. Thank you for joining us… [00:27:00]
Brian: Thank y’all for having me.
Michael: …On Legal 123s with ByrdAdatto. We’re grateful for you. We will go to break and we can do a quick wrap up after we get back from commercial.
Brian: Thank you. Enjoyed it. Thank y’all.
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Brad: Welcome back to Legal 123s with ByrdAdatto. I’m your host, Brad Adatto, co-host, Michael Byrd. Now Michael, for those that don’t know, this season’s theme is Unintended Consequences, and we just had really good guy join [00:28:00] us. And he dropped a lot of knowledge on litigation, but maybe a few takeaways, Michael.
Michael: The thing that jumped out most just emphatically how he said that courts in Texas will enforce a contract to a T. And that probably is a generally – at least you should expect that to be the case anywhere.
Brad: Beyond any state, basically.
Michael: Yeah. And so what I think so many mistakes are made with not really knowing what’s being signed. I mean, we’ve had episodes on signing blindly where you don’t have anyone review it at the beginning. But also, just some of the details, I mean, he was talking about venue and attorney’s fees and mediation clauses or arbitration clauses, they’re all going to be enforced and they all kind of set forth the rules by which any dispute would be fought. [00:29:00] And so, perhaps it’s difficult and maybe even not something you would want to negotiate going into it. You have to be aware of it to understand what does it look like if this doesn’t work and if you were to get in a fight and what’s your risk, and so that you can properly evaluate it.
Brad: Yeah. Great points. I mean, just understanding those sections can make or break where you’re filing the lawsuit or defending it. But Michael, believe it or not, that’s all the time we have today. So next Wednesday we’ll be back with series regular and our partner, Jay Reyero, who joins us, and we’ll discuss unintended consequences of adding a new service line to your practice. Thanks again for joining us today. And remember, if you like this episode, please subscribe, make sure to give us a five star rating and share with your friends.
Michael: You can also sign up for the ByrdAdatto newsletter by going to our website at byrdadatto.com.
Outro: ByrdAdatto is providing this podcast as a public service. This podcast is for educational purposes only. This podcast does [00:30:00] not constitute legal advice, nor does it establish an attorney-client relationship. Reference to any specific product or entity does not constitute an endorsement or recommendation by ByrdAdatto. The views expressed by guests are their own, and their appearance on the program does not imply an endorsement of them or any entity they represent. Please consult with an attorney on your legal issues.
