Question of the Week

We’re a hospital located in Pennsylvania and want to enter into a services agreement with a company in South Carolina.  The company has a good reputation, but has filed lawsuits against a few hospitals for breach of contract.  One of our concerns is that if the relationship doesn’t go well, it would be extremely expensive and disruptive to defend a lawsuit in South Carolina. What can we do?

You should make sure the agreement contains a “Choice of Law and Venue” provision that favors the hospital.  This provision states where a lawsuit is to be filed (venue), and which state’s law applies.  If the hospital drafts the agreement, it should give itself the home field advantage by stating that Pennsylvania law applies and any lawsuit is to be filed in courts having jurisdiction over the county in which the hospital is located.  If the company drafts the agreement, it will most likely give itself the advantage.  However, even if the company drafts the agreement, you can still try to negotiate with it so that the hospital has the advantage.  How the negotiations turn out is, of course, about leverage.

Home field advantage is huge too – the party that has it knows the state’s law, knows the judges, and knows the courtroom.  Also, the party with the advantage does not have to find local counsel to work with its in-house lawyers, or incur costs for itself and/or its lawyers by traveling to and from the location of the lawsuit (which can be an enormous cost and inconvenience in the case of extended litigation).

If you have a quick question about this, e-mail Nick Calabrese at