May 2013

        

Last week I had the opportunity to speak to the Dallas-Fort Worth Recruiters Network about non-compete agreements. One of the questions that came up was what type of fees should a litigant who is either trying to enforce or defend a non-compete anticipate? Though an exact dollar amount will vary based upon your lawyer’s hourly rate, fee agreement, etc., there is one truth. Injunctions are not cheap.

In a typical lawsuit, the plaintiff will draft their pleadings file with the court and serve the defendant with process. There is no rush, generally, and discovery and the motion practice that  follows will be spaced out over time meaning legal fees will be spaced out over time. This allows a client to budget and prepare for those fees. There is usually not the upfront sticker shock which is seen in a non-compete or temporary injunction case.

Why is this? Injunction cases usually starts out with a application for a temporary restraining order followed by the temporary injunction hearing. Preparing an application for temporary restraining order is not like your typical lawsuit. It is much more detailed and requires factual verifications that are provided by the client. This means the lawyer has to secure much of the evidence that is necessary to support the elements for injunctive relief. This could include documents, multiple affidavits, and other items that are not necessary for a standard lawsuit. As a result the upfront cost of preparing the original petition and application for injunctive relief is significant.

After the actual lawsuit and application are prepared, the lawyer will then have to go to the courthouse and attempt to obtain the temporary restraining order from the judge. More often than not,the plaintiff will seek some type of expedited discovery while the  temporary restraining order is in place. This could range from some simple written discovery such as document requests and interrogatories to depositions. In most cases, the defendant will request the same. This can be very expensive. Essentially, the parties are pressing discovery into a one or 2 week period before the temporary injunction occurs.

Finally, there is the actual temporary injunction hearing. It is a min-trial. It requires significant preparation including witness preparation and many of the same things you would see during a trial. In sum, over a few short weeks the parties will have expedited discovery and a trial through the temporary injunction hearing.   As a result, the first bill usually provides a little bit of sticker shock in terms of fees and costs.

The good news is  most of these types of cases, especially non-compete disputes, see a resolution either right after the temporary restraining order or sometime before the temporary injunction. Generally there is some indication from the judge as to what he or she thinks about the plaintiff’s case which will push one side or the other toward settlement. Also, the costs involved in the injunction proceeding push the parties toward settlement as well. The good news is there is early resolution of the case, the bad news is there are big costs upfront. This is something to keep in mind when considering an application for an injunction of some sort. The inherent nature of non-compete disputes makes extraordinary relief is necessary in order to protect the business at issue and the cost makes sense. We have previously discussed whether the attorney’s fees are recoverable in these types of disputes and the take away from that discussion is there is a big difference from being "entitled" to attorney’s fees versus actually obtaining them.