Dispute resolution: training the litigant
by Bronwyn Lincoln
Many companies involved in major disputes, particularly where those disputes have been resolved through litigation or arbitration, look back on the process as expensive, time consuming and, above all, frustrating. The frustration often arises because when embarking on litigation or arbitration, the company managers and executives are moving into an area beyond their comfort zone and outside both their area of technical expertise and their personal experience.
The process which unfolds is therefore foreign and unexpected. Demands might be made of the party to the proceedings which appear to have little relevance to commercial objectives. The detail sought after by lawyers representing the company might appear unimportant and immaterial in the scheme of things. The timing of the demands made on the party interrupts business and suggests to the persons immediately involved that there is a lack of planning or lack of project management on behalf of the legal team representing their interests.
Many of the surprises in litigation and arbitration can be avoided if the party involved in the dispute understands the process (including the numerous 'twists' which litigation and arbitration can take) and appreciates those elements of the process which can be controlled by their lawyers and those elements which are almost entirely dependent on other parties to the proceedings or by the court or other judicial or determining authority.
This understanding can also lead to a reduction in legal fees: if the party on whom demands are made by lawyers to provide documentation or information understands why that information or why those documents are required from the beginning, it can respond more efficiently to the demands and save work being repeated by lawyers at significant hourly rates. In repetitive transactions, such as the supply of products to various purchasers, the way in which a company records those transactions and archives its documents and the manner in which that information might be used as a defence to a claim or to pursue outstanding monies, can save money down the track should a dispute arise.
When a company makes the decision to commence litigation or arbitration proceedings or at the time a company is given notice of a claim against it, the first step that company should take is to ensure that the dispute resolution procedure selected is fully understood by the persons who will be providing the instructions to the company's lawyers. This understanding needs to go beyond a peripheral knowledge and needs to be conveyed beyond the company executives. The training should extend to all those who are likely to be involved in some way in the proceedings either as support to the legal team, decision makers or witnesses. It should include an introduction to court or arbitration procedure, document discovery obligations, principles such as legal professional privilege and waiver of that privilege, and some very basic rules of evidence. The time taken in satisfying this first step will pay off tenfold should the dispute run its full course through either the courts or an arbitration hearing.
The second step requires a careful analysis of the claims in dispute between the parties to the proceedings. In many cases, what appears to be a simple claim may, in law, have multi-faceted consequences for a party. For example, a claim that a company has made a false or misleading statement within the meaning of the Trade Practices Act to a person or another company might, at first glance, mean that that person or company is making a claim for a certain sum of money. However, the remedies available to the court under the Trade Practices Act are far wider than damages. If a breach of the Trade Practices Act is proven, the party who is responsible for the breach may be permanently restrained from taking certain actions. The company against whom the claim has been made needs to understand this up front.
The third step is to seek advice as to the timing of the resolution of the dispute. Major litigation inevitably involves more than 'one's day in court'. By understanding the possible timing of steps in the litigation or arbitration proceedings and the resources required for each of those steps, a company can better project manage the dispute resolution process in-house. For example, it is possible that the greatest demands on the company litigant will be made at the time that the company is in its busiest period of the financial year. If the company's managers understand what the likely demands are, why the demands will be made and when those demands will need to be satisfied, they can plan ahead to deal with them.
The fourth step, and perhaps the most important overall, is for a company engaged in a dispute to ensure that it understands from the start its own commercial objectives and its realistic prospects of succeeding in the litigation or arbitration. This advice needs to be analysed by persons without any emotional involvement in the dispute and without reference to any person's 'principles'. Cases fought 'on principle' (other than those of the legal kind) are expensive and generally render disappointing results for at least the party seeking to uphold the principles. The advice needs to be based on legal entitlements (not 'wishes') and considered in the context both of the company's long and short term goals and the fact that in litigation and arbitration, there are no guarantees.
Although most company executives and managers will have limited exposure to major commercial litigation or arbitration proceedings during their careers, there are some people who will be involved in briefing lawyers and guiding proceedings on more than one occasion. It is important that those persons appreciate that practices and procedures change over time. The courts, in particular, update their procedures regularly to further streamline litigation practices.
Arbitration offers flexibility in procedure so that one arbitration can differ substantially from the next, particularly where one set of proceedings might be domestic and the other international. In every case of a dispute, the persons involved on behalf of a company should revisit the steps outlined above. Failure to do so, perhaps in the interests of cost or time-saving should be viewed as false economy and will inevitably lead to frustration with both the dispute resolution process and the outcome of the proceedings.