Thomas Stilp, JD, MBA/MM, LLM, MSC
The best defense is a good offense.
Someone has claims against you. But you have claims against them. In the “race to the courthouse,” it is common for one party to get a tactical advantage by filing a lawsuit first.
So, what do you do?
Do you still go ahead and file a lawsuit against them in a separate court? Or do you file a “Counterclaim” in the lawsuit already filed against you?
A little nomenclature will help. As its name implies, a “Counterclaim” (also known as a “Counter Claim” and “Counter Complaint”) is a lawsuit filed by a Defendant (the party being sued) against the Plaintiff (the party who first brought the lawsuit).
Generally, there are two types of Counterclaims: Permissive and Compulsory.
A Compulsory Counterclaims is filed by the Defendant and arises from the same transaction or occurrence as the Plaintiff’s claim. The claim is compulsory meaning the claim must be raised or it is waived.
On the other hand, a Permissive Counterclaim does not have to be raised, but can be, at the Defendant’s option. In Illinois state court, all Counterclaims are permissive. Not so in federal court. If you don’t file a Counterclaim, and you had a Compulsory Counterclaim, you lose it.
As a rule, filing a Counterclaim is a good idea (following the adage that the best defense is a good offense). Litigating all claims in one lawsuit is usually the most efficient option, particularly where the claims have at least some factual overlap. Additionally, this approach provides the factfinder with a fuller picture of the parties’ history.
With claims involving minimal factual overlap, however, the upside of litigating all claims in one lawsuit by filing a Counterclaim will be less. Separate lawsuits may be desirable to avoid complicating the first lawsuit with multiple, possibly unrelated, claims or to take advantage of a selecting a court that may be more favorable (sometimes called “forum shopping” and courts don’t like the practice, yet it happens). If your claim is for a small amount of damages, filing a separate action might get to a quicker resolution.
The decision to file, what to file, and when to file, including types of claims to file, are all strategic decisions that experienced counsel will know how to answer.
