Lawyers Can Assist In Early Commercial Dispute Resolution:
Business Owners don’t want their disputes to escalate, fester, spiral into litigation, cost them a packet in legal fees, damage important relationships and distract them from managing and growing their businesses.
Lawyers have a critical role to play in business disputes. They can assist in early dispute resolution, in the containment of costs, and in the preservation of important commercial relationships.
This is the third paper of a 3 part series and looks at how to get the best out of your lawyer when you have a dispute. Part I identified the chief causes of dispute escalation and how to remove them. The second paper looked at how business disputes happen and the causes of their escalation.
Solicitor Attorneys are usually the first lawyers to deal with a dispute that breaks out. Just as people visit their local GP when they have a medical issue, they visit their local solicitor when a legal issue or problem first arises. The local solicitor is the first port of call. How they handle a dispute from the very start will often determine the future course of that dispute.
The contrast can be huge. Depending on what the solicitor does a dispute may escalate and head into court and progress to full blown litigation, keep the client in litigation for a year or more and cost the client a bucket of money in legal fees and heaps of stress to boot; or the dispute could be over within 6 weeks, costing the client relatively little business distraction, minimum inconvenience and stress, and a fraction of the legal costs if the matter was litigated.
How do I know this? Because over the last 5 years or so I have been managing and resolving business/commercial disputes in less than 6 weeks and under $10,000. These are the same types of disputes that I used to see litigated in the court system over 12-24 months, costing each client over $80,000.
I am relying on empirical data from my own legal practice and my experience as a commercial disputes resolver.
To achieve early resolution of disputes lawyers need to beware of their DNA that guides their actions and advice when dealing with a dispute and put on their commercial dispute resolver’s hat.
I realise that solicitors, who have to deal with clients who are hot under the collar and come to their office seeking swift justice (meaning “take whatever legal steps you need to vindicate my position in the dispute”) face a real challenge to put up non-litigious options and not face the risk of losing the client.
It is easier to go with the flow and litigate first and raise ADR (Alternative Dispute Resolution) options later when the client is starting to experience litigation fatigue and doubts about whether or not he or she will win the case.
What this means is that lawyers have to master better communication skills to bring their clients around to a different way of thinking. They need to find ways of managing the human emotions and circumventing them to reach the point where the client is fully receptive to listening to and evaluating the options and choices – rather than just being fixated on going to court.
Informed consent is just as important here as between doctor and patient. A decision to litigate in the heat of the moment is not informed consent. It is not a decision made after calm and rational consideration of all possible options.
The key to success for most lawyers will most likely be –
- Working on changing their own mindset and freeing it from the restraints of legal DNA. Until they have shifted their own mindset, they will never be much good at changing a client’s mindset. If a lawyer speaks to a client about other non-litigious options to deal with the dispute in a half- hearted fashion, the client will notice it and find it most unpersuasive;
- Building up a personal skill set and repertoire in the use of ADR (alternative dispute resolution) methods, techniques and strategies that lead to early dispute resolution. As I have already pointed out, the ADR “toolkit” contains far more than just mediation.
- Become a skilful communicator with their clients so that a client can properly weigh up litigious options against non-litigious options. Then, if a decision is taken to litigate it will be a well-considered one and the lawyer will truly have discharged his or her duty of care.
- Developing a skill set that will assist the lawyer to communicate with anyone representing the other party or parties to the dispute in a way that doesn’t escalate the dispute and keeps the door open at all times to work co-operatively towards seeking early non-litigious solutions to the dispute. This embraces working together to identify the chief issues in the dispute, and then exploring options to resolve those issues. These communication skills will ensure that you avoid stepping on toes and alienating your counterpart.
A very large part of success, speaking with your client and speaking with your counterpart, will be your inter-personal communication skills.
The legal DNA to be aware of that can easily bedevil your efforts is that DNA that leads to a degree of myopia. Lawyers affected in this way tend to approach a dispute this traditional way –
- They elevate their client’s instructions as to the facts to being “the facts”.
- They then search for the law that best fits those facts.
- They then give legal advice to their client, based on those facts and the law as they believe it to be.
- Based on this they either tell their client that he/she has a good case or doesn’t.
- If they say the case has sufficient prospects of success, based on their legal analysis, they get instructions to send off the letter of demand with a fixed deadline for a response.
- The letter of demand alleges what the facts are and what legal remedies are sought on those facts.
- If the demand is not met by the due date they then seek instructions to prepare a case to file in court.
- They then prepare the case and file it.
This is not the approach that will lead to an increase in the early resolution of disputes and the reduction of claims filed in court.
A whole different approach is needed.
This different approach might be along these lines –
- Let’s first get down how you see this dispute. Let’s get down what we can that explains how, from your perspective, the dispute started, its history, its causes and your present thoughts and ideas about how it might be resolved without us needing to go to court.
- How do you think the other party views this dispute? If you put yourself in his or her shoes, what would the other party’s perspective likely be?
- What does the other party want to resolve this dispute?
- What’s wrong with that?
- What do you think you could offer the other party, to meet some of his or her needs, but without hurting you in any unfair way, or hurting your business?
- Let’s work to draw up a list of the main issues you believe stand between you and him.
- Let’s brainstorm each of these issues and see if we can find ways through or around them that might work for both of you – in a commercial sense.
- What can you give away that will not stop you from continuing to get ahead and achieve your commercial goals?
- What can you afford to give the other party that might sweeten the deal for him and allow this dispute to be resolved quickly?
- Let’s get clear on your commercial goals and interests as this will help us weigh up the options.
- What do you think the other party’s chief commercial interests are right now?
- Which ones of the options we are considering to resolve this dispute do you think would best serve the other party’s commercial interests?
- Okay, now let’s talk to the other party’s lawyer and put some things on the table for discussion. Let’s make it clear from the start that we are keen to work together with them to reach a negotiated outcome that makes good commercial sense and that both parties can live with. But at the same time let’s make it clear how we presently see your legal position and your potential legal rights.
That is quite a different approach isn’t it?
It is something worthwhile for you to think about when you make that visit to your local lawyer and before you instruct your lawyer to take the litigious path to resolve your grievance.
Those who lose in the game of litigation like to blame the lawyers. But once you have read and understood the message contained in this 3 part series you will have gained a new level of awareness that will ensure that any litigation in which you engage in the future will be the result of your informed choice and, hopefully, not engaged in unless, and until, you have fully checked out the alternatives.
Source: Christopher J Whitelaw, Barrister, Mediator and Commercial Dispute Resolver, Commercial Disputes Management Centre
If you want to go into this area more deeply I encourage you to visit the TasDisputesCentre website blog LINK TO https://tasdisputescentre.com.au/blog/ where there are more than 60 blog posts that cover every aspect of what is required to manage disputes well and achieve early dispute resolution.
Commercial Disputes Management Centre
Chris Whitelaw, Barrister, Mediator and Commercial Dispute Resolver, specialises in the use of early, dynamic, and versatile dispute and resolution methods and strategies. Chris specialises in helping businesses minimise the frequency of disputes, contain and de-escalate them quickly, manage them efficiently and strategically, in a way that avoids erosion of productive time, the incurring of substantial legal fees and the unnecessary loss and destruction of important commercial relationships. If you would like to gain further insight into ‘early ADR’ and its inherent benefits as opposed to the litigious mindset and litigation model for resolving disputes, please visit www.australiandisputeresolvers.com.au. This is a blog set up exclusively to explore and explain the considerable benefits of ADR.
Commercial Disputes Management Centre
2nd Floor, 102-104 Longueville Rd Lane Cove
PO Box 80 Lane Cove 1595
Ph: 1300 305 372