Consumer Class Actions: 14.7 The Defendant’s Plea of Poverty
If the defendant is a small company, the defendant’s lawyer will often plead the company’s poverty in negotiations49 and threaten that bankruptcy will be filed if the settlement is not within the company’s ability to pay. In response to such a threat, demand that the defendant demonstrate that it cannot afford the settlement.50 To evaluate the defendant’s financial condition, ask for the company’s tax returns for the past several years and a current certified audit.