Once a claim goes legal, there are many factors that come into play and directly impact a creditor’s ability to get paid. As a credit professional, you must be aware of these factors to determine their impact on settlement negotiations and how far you decide to push the debtor. As a creditors’ rights attorney, we must be available to quickly identify how these factors impact litigation and provide our clients with intelligent insight as to how litigation is likely to play out in light of these factors.
The rules of evidence are such a factor. All of a sudden the forwarded email from a cousin’s mother’s friend who used to work for the debtor may not make it to the trier-of-fact, let alone have the impact the creditor thought it would.
In the typical creditor-debtor dispute, evidence usually translates to written documents (contracts, invoices, statements, correspondence etc.) setting forth the basis for the parties’ relationship. As a result of being a simple man, I like to keep in mind three simple concepts when determining whether I can get documents into evidence. Those concepts are:
1. Relevance – Why does this matter?
2. Authentication – Is this real?
3. Hearsay – Is this reliable?
The first concept is pretty self explanatory and is often easily understood because it involves logic that makes sense to a layperson. For example, my client’s contract with the debtor is relevant to the issue of whether or not money is owed to my client. Whereas, my client’s lease with their landlord has no bearing on the issue.
It is with issues of authentication and hearsay, that clients and attorneys spend an inordinate amount of time explaining to each other and arguing with debtor’s counsel. I could write pages upon pages trying to explain these concepts, so I will leave you with three helpful tips. The last being the most useful. Pay attention to rules on self-authenticating documents to hopefully ease the burden on yourself. Hearsay is an out of court statement offered for its truth, it remains hearsay even if the declarant is now on the stand during trial. Lastly, evidence law is determined by the trial judge that you are currently practicing before.
I would like to wrap up by sharing a recent experience that illustrates why it is important to keep evidence concepts in mind throughout the legal process.
I recently had a case where debtor’s counsel filed preliminary objections in response to my client’s complaint. Simultaneously, debtor’s counsel served discovery requests. More specifically, debtor’s counsel served a request for production of documents seeking the original credit application that was alleged in the complaint. Debtor’s counsel filed preliminary objections asking the court to dismiss the complaint because we failed to attach the original credit application to our complaint. The basis for these objections being that the failure to attach the original credit application was a violation of the Best Evidence Doctrine. Well, we didn’t have the original credit application. We told debtor’s counsel we didn’t have it in our responses to discovery. However, in deciding the preliminary objections, the judge correctly overruled the debtor. As simple as it sounds, debtor’s counsel forgot one importance aspect of the Best Evidence Doctrine. It doesn’t come into play until a party is trying to put evidence into the record at trial.
As for how that case turned out at trial … it will probably settle soon.