The Pitfalls of Litigation in Business

Posted By Software on Friday, 15 July 2016 | 19:21

The Pitfalls of Litigation in Business

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 The Pitfalls of Litigation in Business

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Read this article to discover the issues on business litigation in the small business arena. This article also makes the proposition that in general, small businesses are better off pursuing alternatives to litigation in resolving business disputes.


 


Businesses and their owners commonly end up in litigation as a result of hardened positions in a business dispute. All too often the parties will take a view that their position is 100% correct and the other side has no merit whatsoever in their argument. This situation has a reasonable chance of ending with the attorneys and also a good chance of becoming a case of protracted litigation. Although the merits of each case will obviously vary, we find several common aspects to this situation; the chances of the costs of litigation being substantially higher that any difference among the positions is quite likely; the chances of the parties postures hardening through the course of the litigation are quite high as well. Although attorneys are usually vigorous in defending their clients positions, and attorneys will also suggest settlement as a good option, the adversarial nature of the proceedings is not conducive to settlement. Although settlement is in the back of every litigant's mind, the idea is to try it at some point "down the line". As we know down the line means that a good deal of money and resources are expended by the time the parties find themselves "down the line". Therefore the incentive to settle diminishes during the process and only spikes once the parties realize their folly and understand that they are on a runaway train called "protracted litigation".


 


Lets try to analyze the process: a typical dispute arises from a business transaction in various forms that gets off on the wrong foot, often times because of the vagaries of the transaction; deals done in haste without clearly spelling the details of it are prime candidates to end up in litigation. As well, deals made between friends very often end up with the friendship dissolved and complex litigation ensues.


 


Once the conflict arises, there is usually an exchange of bluster between the parties. No longer after that the parties have hired attorneys and a volley of legal threats are exchanged. At this stage the legal industry gets involved and any real possibility of reaching a negotiated settlement diminishes drastically. The next stage is when one or both parties serve lawsuits to their counterparts. We now enter the discovery process and it is at this stage that expenses begin to mount. Usually there are depositions to be taken, declarations or simply the production of endless reams of documents. All of this has to be copied at absurd charges so you begin to get my drift. At this stage usually there is an attempt to settle, however tempers are running high because depositions as invasive and as exhausting as they are usually leave you in no mood to contemplate settlements. The next stage is the preparation for trial with the attorneys spending your hard earned money at full throttle. After that it is trial time, a long affair, usually between a week and two with costs running unabated. After a ambiguous end comes post trial presentations and motions. You finally have a judgment that satisfies nobody if you are lucky enough to understand it. You thought its over? Think again; an appeal is in the wings with the process and expense beginning all over again. At this stage you begin your metaphysical questions like "What is life all about". The battle is much more impersonal; the parties are barely involved, it is all the attorneys; a common denominator the costs, remain the same.


 


I promise that I have not given you a nightmarish scenario; what I have described is what I went through for the last four years of my life. The process was a financial catastrophe and although I was vindicated there was no silver lining at the end of it; no feel good, no sense of justice, simply an inescapable feeling of waste, waste of time, money, resources etc. Many people including judges, attorneys, paralegals, court reporters and others performing work with no benefit to others. Many trees being cut, lots of oil been spent with no visible benefit to the community and the world at large.


 


I have understood that the legal industry arena is not for small businesses or entrepreneurs. I believe that the mechanisms in place to arrive at an early termination of the proceedings are extremely inefective. Compulsory mediation ordered by the court is by in large useless. An attorney is appointed by the court to try to compel the parties to settle during a half a day of cajoling, intimidating and threatening. The parties go through the motions but there is no real incentive to settle. Settlement talks between the parties, although not discouraged by the attorneys are usually full of bluster and lets face it; the legal industry does not benefit from early settlements. Finally, the lack of knowledge of the participants about the true nature of the process makes them easy targets for the system; once they are in, the roadblocks to exit are numerous.


 


I believe very few of these disputes should enter the legalsystem, and even fewer could offer a better outcome than an early and timely resolution. I believe a possible solution lies outside of the legal industry. An individual that has no vested interests in prolonging the process, and in fact has a compensation structure that would benefit if the parties are able to resolve their issues without litigation should interject him or herself and cajole the parties to end their dispute and avoid the legal process. Obviously this individual would need to possess the qualifications required, however I stress again the importance of a party outside the scope of the Legal Industry.


 



Blog, Updated at: 19:21

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