Not all disputes are nails, so they don’t all need to be hit with a hammer!

Written by Rebecca Halkett and Madelaine Donovan

There’s a saying that when the only tool you possess is a hammer, everything looks like a nail. In the context of commercial disputes if your lawyer’s response is to rely on the courts the only approach is to litigate. Rebecca Halkett and Madelaine Donovan explain why using the best tool for the job, not just your ‘hammer’ may deliver better results.

You probably haven’t been told that 98% of litigation in South Australia is resolved between the parties, rather than by a court.  So why do lawyers insist on treating disputes as if it is inevitable that you’ll end up in trial with a judge deciding the outcome?

Whether you’re making a claim, or defending one, you probably have been told that the process of resolving your claim will be stressful, expensive, time-consuming and disruptive to your business.  Part of that stress and expense comes from working in an unusual environment of preparing for court and convincing a judge of the merits of your case.

But what if your lawyer told you that your claim was merely another negotiation?  You’re fine with negotiation aren’t you?  After all, you’re in business and business is all about negotiation.

So, rather than asking yourself (and your lawyer) ‘how do I win at trial?’ you should ask ‘how do I achieve the best negotiated outcome?’

What the ‘best negotiated outcome’ is will depend on the circumstances.  It depends on your commercial assessment and the strength of your legal case.  We help you assess your best negotiated outcome by undertaking an early case assessment and giving you a definitive recommendation on the strength of your legal arguments and a strategy to achieve your commercial goals.  In setting that strategy and recommending a course of action we will consider with you some of the following factors:

  • Litigation is expensive and only gets more expensive the closer you get to trial. To obtain the best outcome you need to balance your interests of achieving the best settlement possible with minimising your legal costs.
  • Litigation is time consuming, uncertain and can be very public, potentially negatively impacting your business. The time cost of your staff being diverted from their day to day roles or the reputational impact of a public dispute can make seeking an early resolution more favourable.
  • When settling out of court, it is very unlikely that interest or costs will form part of the settlement sum. If you assume you’ll recover these costs as part of a court’s judgment you may incorrectly assess the recoveries available to you. When considering a negotiated settlement, take into account your sunk costs.

Recognising that your dispute will probably settle doesn’t mean that there isn’t real strategic value to threatening – or actually filing – legal proceedings. It can:

  • demonstrate that you are serious about your claim;
  • bring a reticent opponent to the table;
  • protect your rights to your claim;
  • be a required step to claiming insurance; or
  • be a tool of last resort when you don’t see any other viable resolution.

When trial and judgment are inevitable

Unfortunately, a very small minority of claims do proceed to trial and judgment by a court.  This can be the case when you face an opponent determined to have their day in court, have a position simply too far apart from your opponent’s to resolve, or when you or the other party require a judgment for some other reason (think insurance purposes, winding up etc.).

By going to trial, you lose control over the outcome. That is now the judge’s domain. Your chances of success do increase with careful and timely preparation; so even a strategy designed to facilitate an early resolution must keep in mind the possible effect of your actions at trial.

If trial is a real possibility for you, some other actions worth considering include:

  • filing with the Court an offer to settle, which can maximise the costs you can obtain from the other side after judgment if you win; and
  • proactively seeking a trial date, which can put pressure on your opponent to negotiate a settlement and reduce your costs by not allowing the litigation to languish for years.

Whether you choose to pursue negotiation or use the court system, making an early assessment of the commercial objective you are seeking and working with a lawyer that is prepared to use the right tool for the job by means of definitive and unambiguous recommendations, careful project management of your dispute and processes that don’t disrupt your business should reduce the time, cost, uncertainty and stress of lengthy litigation.

Finding a lawyer that can hit the nail on the head is great but turning the screw through a strong negotiated outcome may deliver better value at the end of the day.

Rebecca Halkett is a Director at Kain Lawyers with over 13 years of experience in dispute resolution and complex litigation. Rebecca utilises the Kain disputes methodology to provide a concise strategy and action plan for her clients, not simply summarising the law and letting them figure it out. 

Madelaine Donovan is an emerging disputes lawyer with a fearless nature. She is a staunch advocate for her clients both in and outside the courtroom and has experience in large, complex matters. Prior to joining Kain Lawyers Madelaine was Associate to Judge Kuenyehia, the President of the Appeals Chamber of the International Criminal Court.