Repetition Pays Off with Stays and Appeal Bonds

A few years ago, I received a call from an appellant who was appealing a roughly $1 million judgment. The appellant wanted to get an appeal bond to stay enforcement of the judgment while they appealed, and they got little to no information from their attorney other than they needed to “go get a bond.” During my phone call with the client, I went over the various options, and their preference was to collateralize the bond with real estate, which a couple of sureties in the market will consider. I suggested they provide information on the properties as soon as possible so we could review them, because the deadline to file the appeal bond was in 30 days.

The appellant sent the information to me the next day, and we reviewed everything with the surety. Due to certain characteristics of the real estate, the surety could not accept the properties, and I let the appellant know that they would have to use cash or a letter of credit to secure the bond. The appellant had the cash available to secure the bond, but they were hesitant, and they went on a search to figure out other options.

We followed up a couple times with no response, and a few weeks later after the deadline for posting the bond had passed, I got a call from the appellant in a panic, because their bank account had been seized. At that point, there was unfortunately nothing that could be done, because the cash was gone and could no longer be used to collateralize the bond.

For most clients, it is the first and only time they will need an appeal bond. The shock of having a judgment against them, and in some cases, possibly having to provide collateral to a surety company and pay a premium to get an appeal bond, can be difficult to absorb. The emotion combined with the lack of familiarity can cause people to focus on the wrong things rather than the most important factor, which is getting the bond in place by the deadline to stay enforcement of the judgment. In other words, they have trouble seeing the forest for the trees.

Trial and appellate counsel are on the front line and are usually the first with the opportunity to educate the clients about appeal bonds. We usually find that when an attorney has laid the groundwork on things like the timing of when the bond will need to be filed by, the bond amount required, a very basic idea of the process, and the possibility that collateral may be required, the client is in a much better position to work through the process with a surety agent to obtain the bond.

It turns out the reason for this is rooted in how human beings psychologically process new information they learn. When we hear things multiple times, it has been shown that we more easily accept it as truth, and it is easier for our brains to absorb the new information. This can obviously have negative consequences in certain situations, but when it comes to the appeal bond process, it is extremely helpful in helping clients focus on the most important areas.

There were certainly many factors at play in the example I cited, but I couldn’t help but wonder if the client had gotten a little more guidance from their attorney whether the client might have approached the situation differently. We’ll never know, but I can say for certain that those attorneys that spend the time learning the fundamentals about the appeal bond process are providing great value to their clients during what is undoubtedly a very undesirable situation.