Businesses Must Be Proactive In Dealing With The California Court Funding Crisis

As has been widely reported in the media over the past several months, the California court system is facing a financial crisis of unprecedented scope.  As a result of the budget problems in the State of California, funding for the court system has been drastically cut.  Because of such cuts, most courts have had to take severe emergency measures to deal with the loss of funds.  For example, in San Diego County, a number of courtrooms have been closed, staffing has been dramatically cut, court reporters no longer will be provided by the court, and the hours of operation of the clerk’s office have been cut back.

The actions that the California courts must take to deal with the unprecedented funding cuts will send shock waves throughout the justice system.  Basic court services that we have a right to expect now will undoubtedly be delayed or even denied.  Courtrooms will become more and more crowded, judges will have to handle ever-increasing caseloads, and it surely will take weeks if not months longer to get even routine motions and applications heard and decided.  Cases will take months if not years longer to go to trial, and will cost more to try when trial finally comes.

The court funding crisis is not expected to go away soon.  If anything, we expect it to become worse in the coming years.  The business community needs to understand this fact of life and plan accordingly.  We recommend consideration of the following steps:

1.  Alternative dispute resolution:  This is perhaps the most effective weapon that a business has to avoid the problems that will result from the court funding crisis.  We strongly recommend that all businesses consider placing broadly-worded mandatory mediation and/or binding arbitration clauses in their contracts.  Such clauses give businesses complete control to determine who will resolve their disputes and great control over the procedures that will be followed.  Perhaps most importantly, mediation and/or arbitration almost always result in a much quicker and less expensive resolution of a dispute.

2.  Choice of Forum:  If court litigation cannot be avoided, careful research and analysis must be done to insure that a court is chosen that will result in the fastest and most cost-effective dispute resolution possible.  For example, for businesses with locations in more than one state (or even country), consideration should be given to including a forum selection clause in contracts that specifies litigation must take place in the most favorable forum.  Even where a forum selection clause may not be appropriate, a party to litigation usually has the choice of several venues in which to litigate whether it be several courts within a given state or a choice between federal and state court.  Consideration also should be given to whether there is an administrative remedy available.  In all cases, the decision where to litigate must be tactically, with the goal being to avoid overcrowded courts.

3.  Non-judicial remedies:  In the appropriate case, businesses also should consider whether any non-judicial remedies (for example, foreclosure of security, repossession of collateral, etc.) might be available that will allow the business to avoid the judicial system altogether.

4.  Retain an Experienced Attorney:  Above all else, it is absolutely critical that a business faced with a dispute resolution issue receive the advice of experienced counsel with substantial background in resolving disputes in multiple forums, including state court, federal court, administrative forums and arbitration proceedings.  Experienced counsel can present the various litigation alternatives in a way that allows the business to make the correct tactical decision, and then can steer his or her client through the court system in a way that creates the greatest likelihood of a favorable result in the most efficient and cost-effective manner.

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