In the US: A Court Judgment Is Not Cash in the Bank
This article was originally published on Funder in September 2026.
In the US: A Court Judgment Is Not Cash in the Bank
In commercial litigation in the US, a strong lawsuit is also evaluated by the practical question of whether a legal victory can actually be turned into actual collection.
Years ago, in the office of a veteran attorney, I saw a framed judgment for millions of dollars. When I asked about it, he told me about years of hard work, extensive resources, and successful trial management. And then came the part that did not appear inside the frame: he was unable to collect even a single dollar.
When he initially received the case, he examined liability, damages, and trial strategy. The question of collection, however, was not examined in depth. The judgment remained hanging on the wall as a reminder of a victory that turned into a professional lesson.
A judgment is a legal right to take collection action. The practical value of this right depends on whether there is a source from which recovery can actually be made. For Israeli companies conducting legal proceedings in the United States, this distinction may determine whether a lawsuit yields a tangible business result or merely an expensive document. Right at the very beginning, one must ask: Can we win, and where is the money?
Early Collection Assessment
Managers and legal counsel typically focus on the core questions of the case: Who breached the agreement, what damages can be proven, and how a judge or jury is likely to view the evidence. These are necessary questions, but a legally strong lawsuit can turn out to be a weak business decision.
The company that signed the agreement may be assetless or lack meaningful operations. Income, intellectual property, or bank accounts may reside with an affiliated entity. Assets may be encumbered, held by a third party, or beyond the reach of the judgment.
Therefore, a serious case evaluation examines two tracks in parallel:
- The ability to prove liability and damages.
- The ability to turn a legal victory into actual collection.
To the extent possible, the review should encompass the defendant’s business operations, corporate structure, controlling shareholders, known assets, liens, guarantees, insurance, and prior asset transfers.
Before filing a lawsuit, there is almost never a complete picture; however, an orderly assessment can show whether the collection path is tangible, speculative, or groundless. The findings may influence the identity of the defendants, the venue of the lawsuit, requests for interim remedies, and the strategy for conducting negotiations.
Pre-Judgment Collection Strategy
Sometimes rapid action is required. If there are indications of asset transfers, relocation of operations, or that the defendant is becoming insolvent, appropriate interim measures must be considered. Courts do not grant such remedies merely out of fear of non-payment; a precise factual foundation is required.
In other cases, an early settlement may serve the client better than continued litigation. A defendant with limited liquidity but an active business may pay a substantial sum early on. After years of legal expenses, even a larger judgment might prove difficult to collect.
There are cases where the correct professional advice is not to file a lawsuit at all. When the cause of action is strong but the collection path is weak, the attorney must say so to the client. Such a conversation can save an expensive and empty victory.
Even after a judgment is obtained, collection can become a whole separate proceeding. There may be a need for discovery, bank orders, debtor examinations, attachments, and registering the judgment in other states. In appropriate cases, claims regarding fraudulent conveyance, piercing the corporate veil, or the liability of related parties will also arise.
The lesson begins as early as the contract stage. An Israeli company operating in the US must ensure that the entity signing the agreement is also the entity holding the relevant assets or business operations. Guarantees, collateral, insurance requirements, attorney fee clauses, information rights, jurisdiction clauses, and choice of law can all impact the practical value of a future legal right.
In commercial litigation, the number appearing on the judgment is only part of the result. Success is measured by what the client actually receives. Before filing a lawsuit, one must evaluate both the likelihood of winning and the likelihood of collection. Otherwise, the client may be left with an impressive judgment on paper, but no actual money coming in.
Michael Ehrenstein, Esq. is a founding partner at the U.S. law firm Ehrenstein | Sager, specializing in commercial law, complex litigation, and high-stakes international arbitration.
Legal Disclaimer: This article does not constitute legal or tax advice. Its purpose is to raise awareness regarding U.S. compliance issues. Israeli businesses should consult with qualified U.S. legal and tax professionals to receive advice tailored to their specific operations.
