Lawsuit / Arbitration: How Do I Know If The Other Party Could Pay A Settlement?
September 19, 2010 7:08 PM   Subscribe

How can I figure out if I would be able to collect a judgment against someone if I won a lawsuit (or negotiated a settlement in arbitration)? What are my chances of receiving any actual money if I were to win?

This is a construction contract gone bad in the state of California. Several parties might be liable, including a small construction company and potentially also several individuals. The individuals also have their own companies or LLCs. The construction company does not seem to have much cash, but they are licensed, bonded, and insured with the Contractor's Licensing Board. The bond is much smaller than what I might be owed. I'm not seeking this settlement just for the sake of receiving money, but so that I can afford costly repairs that this situation has made necessary.

How can I figure out my chances of actually collecting any money if I received a judgment via court / mediation / arbitration? You can email me at YANML, your comments are not legal advice.
posted by anonymous to Law & Government (8 answers total)
I am an attorney, but I am not your attorney. This is not legal advice. You should consult a competent attorney in your jurisdiction.

This is a question for your attorney, especially because discovery rules vary from state to state. In general, though, you can find out what kinds of assets the defendants have during discovery. Your attorney may also want to do a search or investigation before filing the complaint.
posted by jedicus at 7:40 PM on September 19, 2010

This is not a simple question. Sorry, but you need an attorney.
posted by Sticherbeast at 8:29 PM on September 19, 2010

Yeah, this is a question for a lawyer.
posted by smorange at 9:16 PM on September 19, 2010

I am an attorney. I am not your attorney. You have presented very few facts of a larger fact pattern that only an attorney in your jurisdiction could answer after reviewing many more facts than you've revealed here. Any person who attempted to answer these questions with the very scant facts presented and with no competent research of the relevant law in your jurisdiction is doing you a huge disservice and should not be listened to at all.
posted by Ironmouth at 9:21 PM on September 19, 2010 [1 favorite]

I don't see this as a legal question. The OP is just asking how to can find out if a company can pay a judgment, assuming the suit is successful. Outside the legal process, you can certainly hire an asset search firm to see how much the company is worth and whether it's worth your time to pursue a judgment against that company. A law firm I used to work for farmed this kind of work out to Kroll. I see that they've been bought out, so I don't know how that affects their services.
posted by *s at 8:21 AM on September 20, 2010

Mod note: From the OP:
Thank you to all who have responded so far. To clarify, my question is not about the specific facts of my case or whether I would receive money in a judgment, assuming I won. My question is about any guidelines you can share about how this question is analyzed. For instance, about what "search or investigation" the attorney might do before filing the complaint.

I have already paid several thousand dollars for legal opinions about the overall situation. Incurring additional legal fees would not be appropriate at this time. To allocate money in that way (much less spend five to ten thousand dollars on discovery), I would need indications of a non-zero chance for a financial upside.

That's why I would appreciate any information you could share about how to evaluate what resources the other side might have, or how to learn how that question would be evaluated. I would then commit to a fuller investigation with an attorney before moving forward.

I will not mistake my reading of Contracts in a Nutshell, Nolo's Win Your Lawsuit, or your comments or book suggestions for competent legal assistance. But the responsibility for determining whether to allocate even another $750 on legal advice is my own, and currently I cannot justify even that expense.

If you are able to say anything beyond the fact that I won't have a full and accurate picture without an attorney's review, that would be very helpful. Thank you very much in advance.
posted by mathowie (staff) at 9:15 AM on September 20, 2010

about what "search or investigation" the attorney might do before filing the complaint

As *s said, the attorney may hire an outside firm to perform the search. Some simple examples: looking up public information on the value of an individual potential defendant's house. Or looking at records on file with the Secretary of State's office (e.g., recorded security interests in which the potential defendant is either the creditor or debtor). These kinds of things can sometimes give you a rough picture of the potential defendant's financial status.

But it'll cost money to do such a search. You attorney should be willing to give you a free estimate of how much it will cost, or at least give a rough range.
posted by jedicus at 9:34 AM on September 20, 2010

When I was in law school, I worked as a law clerk for a firm and answering this question was one of my jobs. Doing this work did indeed cost money. It isn't easy to do, and not all of the resources I used to answer the question were free. I believe that my time on a task like this was billed at $150 an hour.

I do understand that you would accept very generalized answers. Please understand that lawyers aren't trying to be dicks about refusing to help you. There are a couple of reasons, some explained above (e.g., it's a complicated question with a few moving parts)—but also, there are some phrasings that you cannot "YANML" your way out of. When you ask, "What are my chances of receiving any actual money if I were to win?", it's like you used magic words. No matter how many YANML's you add, no (smart) lawyer will touch that question with a ten-foot pole.

I'm sorry I cannot be helpful. Consulting competent counsel in your jurisdiction is the only way you will get useful information regarding your question. Good luck.
posted by red clover at 8:33 PM on September 20, 2010 [1 favorite]

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