Is employment litigation costly?

            “Research compiled by the Jury Verdict Research Series indicates that the average wrongful termination compensatory loss is $532,016; sexual harassment compensatory loss average $120,702 and work-related gender discrimination is averaging $501,622. These amounts do not include legal fees which historically have ranged from $200,000 to $1 million per claim. Plus the cost of managements time, which can be extensive!” Increasing Employment Practices Litigation Spurs New Insurance Product . A Texas study reports the average cost in legal fees and expenses of defending an employment lawsuit from inception through a jury verdict is about $140,000, not including payment of damages to the ex-employee. Texas: Cutting the cost of employment litigation, Society for Human Resource Management

            Another study shows that an employer sued for discrimination on average faces the following costs:

• Attorney fees if the case goes to trial $250,000
• Attorney fees if the case settles prior to trial $95,000
• Range of settlement costs or jury awards $150,000 to $250,000+
• Manager time expended in the claim process 40 hrs.
• Employee time expended in claim process 40 hrs.
• Employee time spent investigating the claim 60 hrs.
• Employee time spent preparing for trial 60 hrs.

            Costs in Massachusetts are surely on the high end of the spectrum. Although the hourly charges for Boston’s biggest firm lawyers are among the commonwealth’s most closely guarded secrets, but it is a fair guess that they can run from $800 to $1000 an hour. See Boston Business Journal, With Ropes, four firms in $1M club, Baltimore Business Journal, First in the nation $1000 per hour Civiletti in Baltimore. I estimate that one of the world’s biggest telecom companies paid over $400,000 in fees to one of Boston’s top employer’s law firm to settle with my client at a little less than $200,000 in a sex discrimination and retaliation case that would have settled for half that at the outset.

            Being tough can have a price. Some employers are responding by bringing litigation “in house,” Should You Bring Litigation In-House? , a risky business given the increasing complexity of employment law. Occasionally creative approaches to holding down defense costa are available. See ContiLaw proposes cost-effective employment litigation . But the bottom line is, well the bottom line is that litigating employment discrimination claims is costly, and an ounce of prevention is worth a pound of cure.