Deciding Whether to Litigate: Practical Considerations in Today’s Legal Environment

Litigation is often viewed as the ultimate remedy for resolving unpaid obligations, but the decision to file suit should never be automatic. While obtaining a judgment can feel like the finish line, in reality, it’s only the first step in a successful recovery strategy.

The true goal of litigation is not the judgment itself, but the ability to locate and secure assets to satisfy that judgment. Should the funds prove hard to locate, the judgment is not much more than a piece of paper. Not only that, but in today’s legal environment, where many courts are returning to in-person testimony, proceeding to trial may be more costly than expected.

Instead, creditors must take a strategic, informed approach before initiating legal action. Below, we explore some of the practical considerations you should assess when deciding whether to litigate.

The New Economics of Creditor Litigation

Increasingly, courts are now returning to in-person hearings. This means creditors will likely need to provide a witness from their Accounting or Credit Control Department or someone who is familiar with the original transaction that took place with the debtor.

This shift back to in-person litigation adds time, cost, and logistical considerations, particularly as litigation typically takes place in a court close to the debtor company thanks to guidelines in the Fair Debt Collection Practices Act (FDCPA). Bearing in mind that some debtors will have relocated, often with the idea of leaving their debts behind them, this may involve traveling out of state, including hotel expenses to accommodate witnesses.

In addition, there has been a substantial rise in counterclaims and affirmative defenses asserted by defense counsel. Creditors now carry a significantly heavier evidentiary burden, often requiring rapid production of full account histories, electronic signatures, proof of delivery, and detailed communication records. The time and cost to assemble this documentation has escalated sharply, and we are seeing more plaintiffs elect to withdraw matters mid-process simply due to the operational strain of meeting these demands.

As a result, creditor-rights attorneys, who traditionally operate on a contingency basis, are more frequently requiring non-contingent suit fees on matters that present elevated documentation risk. These upfront costs, driven less by balance size and more by procedural complexity, must now be incorporated into any thoughtful analysis of whether litigation remains the most effective path to recovery.

Taking these factors into consideration, it’s wise to ensure that your decision to proceed is grounded in practical realities, not just legal entitlement. In fact, up-front evaluation is more important than ever.

Start With the Basics: Can the Debtor Be Found and Served?

One of the most critical, and often overlooked, questions is whether the debtor can be reliably located. This process, often known as skip tracing, is an essential step to ensure legal action can proceed effectively.

Before litigating, you, or your collections agency, should confirm:

• The existence of a good, serviceable address
• That the company is still operational
• That the business maintains a meaningful physical presence

If the debtor has skipped town, you can use public records, databases, and investigative techniques to find “skipped” individuals. This can help you to assess viability and serve papers while adhering to FDCPA laws. Check out our blog on No-Cost Skip Tracing Debt Collection Strategies for more ideas on how to track debtors down.

While it is sometimes possible to serve papers to a registered agent or pursue alternative service methods, difficulty locating a debtor often signals a larger issue: difficulty locating assets later.

Simply put, if a company is hard to find, its assets are often just as elusive. 

Evaluate Financial History Before Filing

Due to the considerations outlined above, litigation should never occur in a vacuum. A thorough pre-suit review of the debtor’s financial history can reveal whether pursuing a judgment is likely to lead to recovery.

Key considerations include:

• Existing unsatisfied judgments
• Recorded liens
• Outstanding state or federal tax obligations
• Patterns of non-payment or insolvency

If there are any legal claims against a debtor’s property used as collateral to ensure repayment, these liens will be detailed in public records, typically at the county or state level, to establish the creditor’s priority.

Similarly, although the debtor’s actual tax return information is confidential, when the IRS or a state tax agency files a legal claim against a debtor’s property for unpaid taxes, they will make that information public to alert other creditors.

Thus, if multiple creditors are already in line, a new judgment, no matter how valid, may offer little practical value.

Judgements: Not the End Goal, Recovery Is

Approaching corporate litigation with “eyes wide open” is essential. Sadly, a judgment does not guarantee payment and without identifiable assets, a creditor may be left holding a piece of paper with limited enforcement options.

Furthermore, if a debtor lacks physical assets in their own name, recovery often depends on locating liquid assets, which can be significantly harder to trace and secure. In practice, the more uncertain the debtor’s structure and operations, the higher the risk.

A Strategic Approach to Corporate Litigation

Successful legal recovery starts well before a complaint is filed. So, if your calls, emails or formal demands have been unsuccessful, it could be a good idea to hand the case over to a third-party collections agency. Brennan & Clark’s Contingency Collections service, for example, includes expert data mining capabilities to investigate and determine your right of recovery. That means we can investigate the debtor’s ability to pay, potentially saving you costs if the debt is unrecoverable.

Ultimately, of course, the decision to litigate is down to you, but it should be guided by:

• The debtor’s operational status
• The ability to locate and serve the debtor
• The likelihood that recoverable assets exist
• A realistic assessment of enforcement prospects post-judgment

To sum up, litigation remains a powerful tool for corporate debt recovery—but only when used strategically. By evaluating these factors up front, you can avoid unnecessary expense, leaving you free to focus your resources on cases where recovery is truly achievable.