Why litigation is a sign of a tough economy
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by Rebecca Tinham
When times are good, the business environment is more benign.
But once money becomes scarcer, suppliers become more aggressive in
demanding payment and clients find fault in goods and services
provided. Matters can soon end up in court.
Litigation is stressful and potentially very expensive. Early
mistakes can come back to haunt you.
If you suspect a problem is brewing, think hard about what you
put down in writing. Internal company emails are subject to
disclosure rules so are likely to end up in the other side's hands.
So, even if marked private and confidential, do not assume emails
will remain that way.
Once the sides start corresponding with each other, more and
more information is on record and it is easy to box yourself into a
corner by inadvertently saying the wrong thing. But if you take
advice early, your lawyer will guide you on what you should and
should not say, leaving you more room to manoeuvre if the dispute
escalates further.
Once the other side is aware you have instructed lawyers they
will do likewise and be on their guard. But you do not have to show
your hand. Your legal advisers can remain very much in the
background, albeit guiding you every step of the way. By the time
the other side brings in their own lawyers they may have
inadvertently done so much harm to their legal position that their
case is gravely weakened.
It is far better for your business, your finances and your
stress levels to try to settle early - so be honest with yourself
and your lawyer.
Once your lawyer has analysed your legal position, look
dispassionately at the strengths and weaknesses of your case.
Between you, think ahead and try to predict how a judge would view
the conflicting claims. Even if you think you have a cast-iron
case, you may still be better served by accepting a reasonable
out-of-court settlement. If your lawyer thinks you are in a weak
position, then you have to face facts. Again, try to settle early -
if nothing else it could save a small fortune in legal fees.
And on the subject of money, make sure your lawyer is candid
about what you will be charged. In such a fluid situation, it is
almost impossible to give a fixed cost but ballpark figures are
possible, as are regular updates and estimates of forthcoming
fees.
Finally, try to reduce the likelihood of litigation in the first
place by having clear terms and conditions with your suppliers or
customers that spell out what each expects of the other.
Wednesday, February 16 2011
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