| Lawsuit battles hinge on
power plays |
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| So your company has just been sued? What can you do to
protect yourself and to keep it from happening again? |
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| Litigation is costly for all parties but sometimes
unavoidable. Living in a democracy means any citizen or entity can sue any
other party. the keys to a successful lawsuit are understanding the process,
the power, and the best alternatives for your firm. |
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| Know the Process |
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| The process of litigation begins long before the actual suit
is filed, starting with a breakdown in communication between two parties. The
most reliable way to anticipate a lawsuit is to count the number of letters you
need to write on a given matter. The more letters that go back and forth to try
to resolve some conflict, the more likely it will end up with a statement of
claim. |
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| The best time to stop a lawsuit is at this stage. If you
cannot resolve a business matter, you might suggest an arbitrator assist both
parties to come to a resolution. This is your least expensive and least
time-consuming alternative. |
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| If arbitration is not acceptable, one side will issue a
statement of claim, which essentially says, "I am suing you because..." |
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| When a statement of claim is served, you will need a lawyer
to respond and to explain your legal options. This might include such details
as what court you will be in, how long the process might take and, most
important, estimated costs. |
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| Through your lawyer, you will respond to the original claim
and he or she will contact the other party's counsel to establish time
frames. |
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| During the process, it is common to have delays and posturing
on both sides. The time you are served to the time you get to trial (or
arbitration) will take two to four years. Legal fees will be a minimum of
$10,000 and often higher. |
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| All jurisdictions have a faster, cheaper process for smaller
claims - generally under a limit of $6,000. Ontario has a quicker method for
certain claims under $25,000. |
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| Understand power |
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| The key to winning a lawsuit is to understand that it's about
negotiation and power. Negotiation occurs within a set of rules and regulations
as defined by the courts, but there is also the issue of who has real power at
any time. |
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| Even if you are perfectly justified in your case, court
actions are not always won by the side that's right. And even if you win, the
total amount awarded could be much less than your overall losses, including
legal costs. |
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| You may be entirely right but forced to concede to a
settlement from the other side because you can not effort the court costs. Or
you might spend time and money going to court only to get a ruling against you
- perhaps evidence was missing or not admissible, or an error was made during
the trial. |
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| If all this seems rather negative, remember that going to
court, even for the winner, is not designed to be a pleasant experience. |
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| When the matter seems likely to end up in court, think
outside your normal frames of reference to find ways to break the roadblock.
Remember that this is a negotiation - find the winning strategy to get a
settlement. |
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| For example, if you are not dealing with the owners of the
company that is wrongfully suing you, find out whether they know what is really
going on. If they do not, discover ways to tell them how poorly their officers
are treating you. Don't forget spouses, the clergy and the media as sources of
influents. |
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| Can you involve someone who is strategically important to the
other side to help you win? Will a supplier work with you to exert pressure,
for example? Can you buy the company that is suing you or put it out of
business? The key is to get rid of the lawsuit and move on. |
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| It's also important to find a good lawyer, which is
difficult. Most of them are trained to understand the law, but few are trained
to win. To find the winners, ask business associates, trade associations and
suppliers about the lawyers they use and whether they tend to come out on top.
Listen carefully to the description of the lawyer: If you hear the line, "he
was brilliant but we had a bad judge," find someone else. |
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| Each industry has a few great lawyers who win regularly for
their clients. These are the people you want to use. In fact, it's a good idea
to have all the good lawyers on your payroll for at least some legal matters.
If they are working for you, they cannot work for your antagonist. |
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| It's good strategy to get two legal opinions before
proceeding to court. Lawyers typically agree with each other on about 80 per
cent of matters. Pay attention to the 20 per cent where they differ - this is
where you'll find your winning strategy. |
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| Best Alternatives |
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| Sometimes the best option is to pay what is being demanded
and not tie up your company's resources trying to defend an action. Even if you
win, you will lose time and effort. An entrepreneur's best assets are time and
a mind free of stress. By spending your days trying to capture that big sale
instead of sitting in court, you will normally be better off. |
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| The justice system is not always about justice but about who
is stronger and can last the longest. Your strength as an entrepreneur is in
building and running a business. If you must go to court, pick your fights
carefully, have a great lawyer and a winning strategy. |
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| Don't be motivated by anger, just make the right business
decision. Your should apply the same rule as in buying a piece of machinery:
Don't invest in something (even a lawsuit) that doesn't make you money. |
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| Published June 2, 1997 |
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