Have you ever wondered why a lawsuit that has turned uneconomic — i.e., the cumulative historical cost dwarfs any reasonable estimate of the possible gain — keeps motoring along?  Seventh Circuit Judge Richard Posner offered an answer in an opinion yesterday.  He said:

For 22 years these parties and their predecessors have been litigating, in numerous lawsuits in different courts, a dispute over a piece of property in Nashville.  We were told at argument without contradiction that the parties have expended $3 million in legal fees, a figure that exceeds any reasonable estimate of the amount in controversy.  Yet such behavior does not need be irrational or a product of spite or even of bad legal advice.  A rational litigant, having expended $X in unsuccessfuly efforts to prevail, yet having additional litigation options that he can pursue, will compare the cost of those options to the expected benefit, disregarding the $X he has spent already.  That is a sunk cost — a cost he cannot recover by anything he does and therefore a cost that will not influence his behavior (if he is rational).

Orlando Residence, Ltd. v. GP Credit Co., LLC, No. 07-4050, slip op. at 2 (7th Cir. Jan. 22, 2009).

Note the emphasis on rational.  A purely logical person would ignore his, her, or its "sunk costs" in deciding whether to expend more resources.  Shelling out an additional $100,000 to get $200,000, say, makes sense to this Spockian litigant.  Never mind that he, she, or it has already ponied up $300,000 in the so-far elusive quest for monetary justice.

Judge Posner adds the proviso that good sense to a litigant doesn't necessarily compute for the rest of us.  "Still, from an overall social standpoint, the money spent on this litigation — which we cannot quite end today, much as we would like to — is excessive."  Id.  Comfortingly, he adds, "[b]ut our decision will bring the end within sight."  Id.

  Our feed wishes you a Happy Friday and one terrific weekend.