The Cost of Litigating Competition Cases

One of the inescapable facts about non-compete and trade secrets cases is that the cost of legal services often far outweighs the monetary value of the case itself.

Courts note, rightly so, that a business may justifiably spend a great deal of money to protect trade secret information (of course, that information better be a capital asset of the firm). So a large expenditure of fees even without a significant monetary recovery may still be worth the effort.

Still, clients need to be aware of how much a lawsuit can cost. Three examples from the past year stick out. In Johnson v. Simonton Building Products, Inc., 2011 U.S. Dist. LEXIS 36056 (D. Kan. Mar. 31, 2011), the defendants spent $1.8 million on a trade secrets case and were unable to recover their fees. Conversely, in ICE Corp. v. Hamilton Sundstrand Corp., 2010 U.S. Dist. LEXIS 120500 (D. Kan. Nov. 12, 2010), the plaintiff spent $1.138 million - recovering most of this on a post-judgment fee petition. I point out these two cases because the prevailing market rates in Kansas are not terribly high - $300 or so an hour is market for experienced partners. The third case, from Chicago, is SKF USA, Inc. v. Bjerkness, 2011 U.S. Dist. LEXIS 110275 (N.D. Ill. Sept. 27, 2011), where Locke Lord's fees totaled $1.3 million.

As can be seen, fees on either the plaintiff or defense side easily can reach seven figures. From my own personal experience, I just finished litigating a case to a favorable defense judgment where our fees were about $115,000. However, the plaintiff put little effort into the case and could not to seek injunctive relief. Further, there were few discovery disputes and very little in the way of motion practice. It seems unlikely that I could ever litigate a competition case to final judgment for less than $100,000. In past cases, my defense fees have exceeded $400,000 for similar cases - an amount clients consider high, but courts likely would not bat an eyelash at.

Clients need to be aware that litigating competition cases can be extremely costly. Numerous variables arise, from unreasonable (or, frequently, uninformed) attorneys on the other side to unforeseen developments with a client's business during the litigation. The "X" factors normally involve discovery disputes, e-discovery, and involvement of third-parties (by way of subpoena or depositions). It is extremely difficult to budget for competition cases, and often times the best an attorney can do is budget for discrete events along the way.