In the March 27, 2009 issue of the Portland Business Journal, four Portland lawyers were asked the following question:
How will the faltering economy and measures to address it affect litigation?
Michele Stone of Markowitz, Herbold, Glade & Mehlhaf, Judge Jerome LaBarre of the Multnomah County Circuit Court, Elizabeth Schleuning of Schwabe, Williamson & Wyatt, and John Schwimmer of Sussman Shank each answered the question. Michele Stone's response follows:
While a foreseeable consequence of a faltering economy is an uptick in litigation, the converse also can be true. Potential plaintiffs may decide to cut losses before incurring added costs of pursuing claims in court. Claims which may have had good or even great – but not surefire – chances for success may never be adjudicated.
And, though we’re seeing more cases where plaintiffs are seeking damages concerning market declines, the courts may not provide much relief. In the 2004 case Oregon Steel Mills v. Coopers & Lybrand, Coopers & Lybrand gave Oregon Steel Mills incorrect accounting advice, and correcting this error caused a two-month delay in the company’s public offering. The resulting decline in stock value caused $35 million in damages. However, finding that the “harm-producing force” was market conditions, and not professional negligence, the court concluded that the decline in value was not a “reasonably foreseeable consequence” and that the accounting firm could not be held liable.
Another factor that may deter potential plaintiffs from pursuing litigation is facing the undesirable task of attempting to collect on a judgment from a defendant who likely is feeling the effects of the faltering economy as well.
Related Practice Areas:
Business and Commercial Litigation
