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By: Michael Bahler and Mike Stefanelli
Deciding whether to commence a federal lawsuit requires the attorney to evaluate the potential client, analyze the applicable legal and procedural landscape, and examine the possibility of resolving the dispute without litigation. Failing to consider these issues before bringing suit can expose the attorney to financial and reputational risk and result in prompt dismissal of the case.
When presented with a potential new matter, immediately:
Conduct a Conflicts Check
Before meeting or discussing a new matter with a potential client, obtain a list of all parties who are involved or have an interest in the dispute, including corporate entities and counsel representing any of the parties. Determine whether any adverse party currently is or has in the past been represented by your firm on any matter.
Many law firms have records departments that will perform the conflicts search upon receiving the relevant party names and other information. If you do not have this option, look to your firm’s database of past and present clients to check for conflicts.1
Local professional conduct rules dictate when you are ethically barred from taking a case and whether or how to waive a conflict (such as by obtaining informed consent).
Also consider business concerns that may weigh against accepting the matter, such as if your firm regularly represents the potential client’s business competitors, or if the potential client is deeply involved in an industry that is at odds with that or your firm’s institutional clients.
Consider the Potential Client
Once you clear conflicts, research the potential client before discussing the dispute further or accepting representation. Search the internet and public court dockets and ask colleagues or friends for information in an effort to uncover any red flags, focusing on the potential client’s:
Consider the following information (if applicable):
Research the factual, procedural, and legal underpinnings of the case to decide whether to commence an action in federal court.
Ask your client for all information relating to the dispute, including:
Once you’ve obtained the necessary information from the client, conduct research to determine:
Researching the elements of the potential claims help identify the facts needed to prove your case and whether the relief sought is available. Consider whether:
Ripeness and Standing
Consider whether the claims are ripe for adjudication and whether the client has standing to bring them. Ripe claims present actual cases or controversies and are not simply hypothetical or potential disputes. Standing is established by showing that:
Statutes of Limitations and Repose
Research whether the potential claims are barred by any applicable:
Affirmative Defenses and Counterclaims
Consider potential affirmative defenses or counterclaims. Affirmative defenses raise new facts different from those in plaintiff’s claims for relief and provide a complete defense, even if the allegations in the complaint are true. Common affirmative defenses include:
The defendant generally must assert any counterclaims against the plaintiff that arise from the same facts as the claims in the complaint. Additionally, the defendant may choose to assert unrelated counterclaims against the plaintiff.5 Develop a list of possible counterclaims and inform the client that even if it decides later on to terminate the case voluntarily, it still must defend any pending counterclaims.
Factor in the expense of responding to affirmative defenses and counterclaims when assessing the costs of the lawsuit.
Exhausting Administrative Remedies
Some statutes require that the plaintiff exhaust available administrative remedies before filing a lawsuit. For example, Title VII requires that an employee submit a discrimination or retaliation charge to the Equal Employment Opportunity Commission or equivalent state agency before filing a federal lawsuit.6 Failure to follow a statutory rule on exhaustion of remedies will result in dismissal of the claim.7
Contractual Dispute Resolution Provisions
Review all applicable contracts for clauses governing mandatory arbitration or mediation, forum selection, and choice of law. These clauses reflect the parties’ agreement on how and where disputes should be resolved and what law should apply.
Make sure that the damages award or equitable relief available for a successful judgment justifies the expenses of bringing the suit. Look at:
Consider preparing a litigation budget and timeline and review it with the client. This document should include an estimate of the costs associated with each phase of litigation as well as the time frame in which you expect each will occur. The budget should clearly state that it is merely an estimate of the attorney’s fees and costs associated with litigation.
You might find it helpful to use a chart or table like the example above to explain the relevant litigation stages and their estimated costs and time frame.
Even if the client has viable legal claims, consider alternatives to litigation (such as pre-suit settlement or alternative dispute resolution), which generally provide for a quicker and cheaper resolution.
Parties with an ongoing business relationship may prefer to resolve their disputes through informal discussions to help maintain a productive working relationship. In other cases, your client (or adversary) may lack a tolerance for litigation and be more willing to discuss settlement. While settlement discussions themselves may be time consuming and unpredictable, a successful resolution can save months or years of litigation expenses.
Informal settlement discussions between the parties are often the most effective option. However, avoid this if your client might inadvertently reveal information that would jeopardize your bargaining position or waive the attorney-client privilege or work-product protection.
Alternative Dispute Resolution
Adversaries do not need a contractual agreement to arbitrate or mediate. If your client is anxious to resolve the dispute quickly and the court docket is congested, arbitration or mediation may provide an expedited path to resolution.
Some clients, however, may prefer litigation if public court filings may negatively impact the defendant and its business.
If you pursue litigation, consider:
Subject Matter Jurisdiction
Federal courts have subject matter jurisdiction over cases based on:
Federal vs. State
You may prefer to file in state court even if subject matter jurisdiction exists in federal court. While cases are generally decided more quickly in federal court, given the less-crowded docket and available resources, some state courts are known for issuing larger jury verdicts.
The specific federal court in which you file must have personal jurisdiction over the defendant. A defendant is always subject to personal jurisdiction in the federal courts located in the state where it resides, though special rules apply to entities. For example, a corporation generally may be sued both in the state where it is incorporated and where it maintains a principal place of business. A non-resident defendant may be subject to personal jurisdiction in a state if either:
Venue refers to the particular federal judicial district within the state where the case is filed (e.g., the Southern District of New York). Courts generally enforce forum selection clauses between the parties setting a particular venue for any litigation.13
If there is no contractually-designated venue, determine whether any applicable statutes govern venue for your claims. Absent special venue statutes or controlling forum selection clauses, you may choose to file in:
Determine the optimal forum for bringing your claims (if multiple are available), considering:
Although courts rarely disturb the plaintiff’s forum choice, they strongly discourage forum shopping for improper purposes and will scrutinize the choice if the lawsuit has no real connection to the selected venue.
Michael Bahler is a Content Manager for the Lexis Practice Advisor Litigation team. He began his career as a law clerk for the Honorable Julio M. Fuentes of the U.S. Court of Appeals for the Third Circuit before working as a litigation associate at Kaye Scholer LLP and a trial attorney for the U.S. Justice Department. Michael earned his JD magna cum laude from Boston College Law School and holds a BA from Northwestern University. Mike Stefanelli is a Content Manager for the Lexis Practice Advisor Litigation team. Before joining LexisNexis, Mike spent eight years in private litigation practice, including more than six years as an associate at Paul Hastings LLP and DLA Piper LLP. During his career, Mike litigated a wide variety of federal and state cases, including general commercial, employment, and bankruptcy litigation matters. Mike earned his JD, summa cum laude, from Brooklyn Law School, and his BA from Georgetown University. He is admitted to practice in New York and Illinois.
RESEARCH PATH: Civil Litigation > Pre-litigation > Practice Notes
For a draft complaint that may be used in federal court, see
> COMPLAINT (FEDERAL)
> Civil Litigation > Initial Pleadings and Documents > Commencing a Civil Action > Forms
For a discussion of how to draft and file a complaint in federal court, see
> COMMENCING A LAWSUIT: DRAFTING AND FILING THE COMPLAINT (FEDERAL) AND COMMENCING A LAWSUIT: SERVING PROCESS (FEDERAL)
> Civil Litigation > Initial Pleadings and Documents > Commencing a Civil Action > Practice Notes
For the steps to be taken for filing suit and effecting service of process in federal court, see
> COMMENCING A LAWSUIT CHECKLIST (FEDERAL) AND COMMENCING A LAWSUIT: SERVING PROCESS CHECKLIST (FEDERAL)
> Civil Litigation > Initial Pleadings and Documents > Commencing a Civil Action > Checklists
For practical guidance on answering a complaint, see
> ANSWERING THE COMPLAINT (FEDERAL)
> Civil Litigation > Initial Pleadings and Documents > Responding to a Civil Action > Practice Notes
For information on responding to a civil complaint in federal court, see
> RESPONDING TO THE COMPLAINT CHECKLIST (FEDERAL)
> Civil Litigation > Initial Pleadings and Documents > Responding to a Civil Action > Checklists
For information on jurisdiction in federal civil actions, see
> PERSONAL JURISDICTION (FEDERAL), DIVERSITY JURISDICTION: PLEADING AND CHALLENGING DIVERSITY JURISDICTION (FEDERAL), SUBJECT MATTER JURISDICTION: RAISING SUBJECT MATTER JURISDICTION ISSUES (FEDERAL) AND SUPPLEMENTAL JURISDICTION (FEDERAL
> Civil Litigation > Initial Pleadings and Documents > Assessing Jurisdiction and Venue > Practice Notes
1. See, e.g., N.Y. C.L.S. Rules Prof. Conduct R 1.7 (Conflict of Interest: Current Clients). 2. See 41 U.S.C.S. § 7103(a)(4)(A). 3. See, e.g., Conn. Gen. Stat. § 52-577a(a). 4. Fed. R. Civ. P. 8(c). 5. Fed. R. Civ. P. 8(a), (b). 6. See 42 U.S.C. § 2000e-5. 7. See, e.g., Woodford v. Ngo, 548 U.S. 81, 100–03 (2006). 8. 28 U.S.C.S. §1331. 9. 28 U.S.C.S. §1332. 10. See 28 U.S.C.S. § 1332(d). 11. See, e.g., Helicopteros Nacionales de Columbia v. S.A. Hall, 466 U.S. 408, 414-16 (1984). 12. See Fed. R. Civ. P. 19(a); see also 4-19 Moore’s Federal Practice - Civil § 19.02 (2015) (Compulsory Party Joinder Overrides Plaintiff Autonomy to Structure Litigation). 13. See, e.g., Yes To, Ltd. v. Hur, 779 F. Supp. 2d 1054, 1056 (N.D. Cal. 2011). 14. 28 U.S.C.S. § 1391(b).