To:
From:
Date: 29 th May, 2016
Subject: Consequences of losing a law suit
Summary;
The purpose of this memo is to inform a client about the possible consequences of losing a lawsuit. It will address issues such as what will happen to her financial statements especially after the impairment of a patent by her company. The memo will address what will happen to the client’s mortgage if she loses the lawsuit. It will also describe whether the customer’s debt is forgiven if the mortgage is rewritten or if their mortgage is written when they file chapter 11.
Requirement for contingencies;
In case the client wins the lawsuit, and the mortgage is recast, she will require paying an emergency fee to her lawyer. On the other hand, if the impairment of the patient is settled with the company successful the client will also have to have a contingency fee to the lawyer. However, if the lawsuit is lost and the case is unsuccessful, the client will not require paying the lawyer an emergency fee but she will pay the attorney’s fee based on the hourly billing. Contingency fees allow the poor and those who cannot afford to pay an attorney access the court. It also acts as a motivation to many lawyers. It makes them persist and make sure they win the case so as to get the final rewards of their success. In the event of settlement in this case and the mortgage is rewritten or written after filling chapter 11, the lawyer is assured of charging a contingency fee, (Kritzer 2004)
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Effects on her financial statement in case of loss.
If the lawsuit is lost, the client will suffer great losses on her financial statement. Losing the mortgage will have the most significant negative impact on her financial state which will record degrade and a loss of a big amount of money. The money used to pay the lawyer’s fee will also reflect a loss on the client’s financial statement. The whole process of going to court and being sued by the company for the impairment patient will also have an adverse impact on the client’s financial statement. A lawsuit is always expensive especially if a customer loss. The loss of property and lack of a settlement will always reflect negatively on one’s financial statement, (David 2016).
What will happen if the mortgage is rewritten?
If the client is unable to pay her mortgage loan, she should remember that her debt cannot be fully forgiven. However, consulting a mortgage lender would help reconsider the terms and conditions of her loan payment. In such a case, the credit can be reduced by a small percentage considering the client's financial statement. She can also be given more time by modifying the current terms of the mortgage. Chapter 11, on the other hand, means seeking for protection by the client. She will claim bankruptcy which will explain why she has been unable to settle for a mortgage loan. Chapter 11 will protect the customer from her creditors who in this case is the mortgage lender. The reporting of the financial statement will be determined by the course of action chosen by the client. Filling chapter 11 will reflect bankruptcy on her financial statement. Rewriting the mortgage, on the other hand, will mean that she will have to pay the loan eventually, (Swanson &Marshall 2008).
Impairment of the patent.
If the client loses the lawsuit, the patent, therefore, will not have been settled. This impairment of the patient will cost the customer. This means that the loss will be reflected on her financial statement. The client will have to determine the value of the hedge in question and how the cash flow has been affected by its destruction. The client will also have to decide the loss caused by the impairment. The loss incurred is what will be charged to the customer. Having lost the lawsuit, impairment of the patient will also have an adverse impact on her financial statement. It will be reflected in the client’s tangible assets on her financial statement, (Richard 2011).
References:
Joseph Swanson and Peter Marshall, Holliman Lokey and Lyndon Morley, Kirkland & Ellis International LLP (2008). A Practitioner's Guide to Corporate Restructuring. City & Financial Publishing, 1st edition ISBN
Davies, Richard (Nov 29, 2011). "AMR Files for Bankruptcy: The Last Giant to fall" . ABC News . Retrieved 19 May 2016
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Herbert M. Kritzer, Risks, Reputations, and Rewards: Contingency Fee Legal Practice in the United States (Stanford: Stanford University Press, 2004), 258-259.
