AM I THROWING GOOD MONEY AFTER BAD?

BY JACOB R. POWELL

(Please understand that the answers to these questions are general in nature and may not cover every individual situation.)

Every lawsuit has costs associated with it. In most cases, there may be no way for a creditor to completely determine whether they are “throwing good money after bad money” in attempting to collect. In any event, understanding the costs that are incurred at each stage of litigation may help a creditor and debtor make intelligent decisions about how much time and money they wish to spend at each stage of litigation, and will help them have meaningful settlement discussions.

Attorney Costs

Attorneys are typically the most expensive part of a case. Most of the time, the law is complex enough that it cannot be successfully navigated without an attorney. If a default judgment can be obtained, attorney costs may be less than one or two thousand dollars, depending on how complext the complaint was, which is one reason why many creditors file a lawsuit hoping that the defendant will fail to answer and default. In a contested lawsuit, however, typically attorney fees will usually end up being on the order of thousands of dollars (some exceptions for exceedingly simple cases), while other costs will usually be on the order of hundreds or less. What seems simple to you may not be simple for the attorney that has to get the job done. A good attorney will give meaningful advice to the client on what costs might be incurred depending on which legal options they choose to pursue, although attorneys can rarely be completely accurate in estimating the total cost up front.

Court Filing Fees

The court charges filing fees at the beginning of the lawsuit and, after judgment, when each writ of garnishment or execution is obtained. In Utah as of 2010, the costs in state court are as follows:

Opening the case: typically from $75 to $360 depending on the case.
Each writ of garnishment: typically $35 (plus other non-court costs; see below).
Each Writ of execution: typically $35 (plus other non-court costs; see below).

Service Costs

Whenever any paper needs to be served, the sheriff or constable or a private investigator is typically used to serve the paper. Service always comes with a cost. In Utah as of 2010, the cost of service typically ranges from $30 to $70 for each document served, depending on how far the person must travel to effect service.

Garnishment

In addition to the garnishment filing fee and service fee, the creditor pays a garnishee fee. In Utah as of 2010, the costs are $10 for a one-time garnishment or $25 for a continuing (120 day) garnishment.

Execution

Execution can cost more than a garnishment. The typical costs involved include, in addition to the court filing fee and service cost:

Newspaper cost: The notice of sale must be published in the newspaper, which can cost a few hundred dollars.
Moving company cost: If there is large property that needs to be moved, the creditor typically must pay a moving company to assist the sheriff in moving it.
Storage facility cost: If property needs to be stored for sale, the creditor typically must pay a storage facility to store it.

Discovery Costs

Document subpoenas and especially depositions are typically the more costly types of discovery.

Regular subpoenas: with every subpoena, in order to make it valid, a witness fee must be served on the person being subpoenaed. In Utah as of 2010, the initial witness fee is $18.50 plus mileage if the witness must travel.
Document subpoenas: in addition to the costs of serving the subpoena, the person or organization being subpoenaed may charge search fees or preparation fees for the documents.
Depositions: in addition to the costs of subpoenaing the person being deposed, anyone taking a deposition must pay the costs of the court reporter taking the deposition. In Utah in 2010, this may range from $100 to over $1,000 depending on the length of the deposition.

Postage, Copies, and Courier services

Postage and copies are required at nearly every step of the lawsuit. Normally, these are a fairly minimal cost compared to the other larger costs, but they can be significant. In case papers need to be delivered quickly, sometimes courier services and expedited parcel services are used, which are often more expensive.