In an increasingly complex business landscape, finding your competitive edge often means knowing when and how to fight, and when not to. The most successful organisations don't just react to disputes, they deploy litigation as a powerful business tool.
This guide is designed to assist. Drawing on our extensive experience in dispute resolution, we provide practical guidance for organisations and individuals facing potential litigation; from evaluating whether court proceedings are truly the right solution, to managing costs effectively, maintaining strategic control, and protecting your reputation.
Litigation as a strategic business decision
When faced with a problem, it can be tempting for organisations or individuals to rush into litigation without properly taking stock and assessing whether formal court processes will provide the best solution.
When speed matters
Of course, sometimes immediate action and rapid decision-making is vital to secure assets, freeze money, or obtain injunctive relief to protect your reputation. Otherwise, and as with any other strategic decision, taking time to properly weigh the implications of any dispute strategy and setting out clear objectives upfront is the best route to success. Ask yourself, what is my ultimate business objective, and will litigation achieve it?
The power of contract management
For example, the central importance of technology across business operations means that tech disputes are increasingly common, but also increasingly complex. Long-term, collaborative agreements mean parties are often reluctant to commence litigation unless there is no alternative, and robust contract management can be effective in avoiding and resolving issues. Meanwhile, effective change control and approval processes, and the meticulous documentation of variations and scope changes can provide vital flexibility.
Choosing the right dispute resolution tool
If a dispute is unavoidable, litigation can be an incredibly effective tool where a binary outcome is required, and the courts have demonstrated the agility of the English common law in creatively applying traditional legal concepts to the most cutting-edge innovations. However, where a more nuanced result is preferable or where the parties are hoping to preserve relationships for the future, alternative dispute mechanisms like mediation can deliver more flexible solutions.
Investing in litigation
Even if litigation appears the only choice, it remains vital to properly assess and understand the likely financial costs and the significant time investment that will be required throughout the process (potentially by both employees and management). A decision to litigate requires commitment right through to the end of the process.
Reputation matters
There are often reputational risks in not taking action. However, parties should understand that in most cases, litigation will be open to public scrutiny and, in today's connected world, plays out in the court of public opinion as much as it does before a judge. That means it is more critical than ever for businesses and individuals to understand and assess the reputational risks of litigation alongside the legal risks.
A media strategy from the start
From the outset, parties should consider their media strategy and the likely public perception of the case, mapping affected stakeholders, from employees to customers, investors to regulators and, of course, the media and the judge.
Plan for the worst
Reputational harms can arise without warning and so preparing crisis communication plans before they are needed is vital. Planning for worst-case scenarios, whether that be a leaked document or adverse judicial comments, and maintaining agility to respond to reputational developments, can mean the difference between a pyrrhic victory and a truly successful outcome.
The true cost of litigation: transparency from day one
One of the most common complaints about litigation is unexpected costs spiralling out of control. While litigation is, by its nature, difficult to predict, clients can access various tools to deal with this risk.
Communication is key
The key to controlling legal spend is communication with your advisors. At the outset of any instruction, ensure you receive a detailed and fully transparent costs estimate. The estimate should clearly explain the assumptions on which it is based; set out alternative ranges based on different scenarios; and build in contingencies to deal with unexpected developments. As well as legal fees, it is important to understand additional expenses that are likely to be incurred, whether that be court fees the costs of a PR agent, or the risk of having to pay the opponent's costs if the case is unsuccessful.
Stay in touch
It is just as important to ensure that the estimate remains a living, breathing document, kept updated across the life of the litigation. Establishing regular cost review checkpoints throughout the case can also be effective in ensuring that any overspends are signposted and resolved as quickly as possible.
Flexible fee models
While the hourly rate remains the dominant charging model in litigation, many firms, are increasingly open to exploring more flexible charging models. These range from fixed or capped fees which limit fees charged (often by reference to a particular stage of the dispute) through to success fee models where fees are based on the outcome of the case. These models, alongside efficiencies driven by technology, align legal fees with business objectives, reduce balance sheet exposure and provide clients with greater predictability in their legal spend.
Maintaining strategic control
Litigation can quickly take on a life of its own without proper strategic oversight. Just as it is important to assess the risks of litigation at the outset, it is vital to develop and maintain a comprehensive litigation strategy to be followed throughout the process. The strategy must be agile enough to adapt as circumstances change, but clear and robust enough to ensure that every tactical decision aligns with your overarching business objectives. Enshrining your strategy in writing ensures that the approach of decision makers remains aligned, even where there are personnel changes.
Project management for litigation
An effective strategy should identify key milestones and decision gates in the process, which may or may not align with the usual phases of litigation. Ensuring that you understand the pressure points in your case, whether that be the close of the disclosure process, or exchange of witness statements, will help you to control the narrative, enabling you to enter into settlement negotiations at the most effective time, engage with alternative dispute resolution processes, and understand when the time is right to press on.
Successful litigation strategy requires both technical excellence and strategic vision. Whether you are evaluating a potential dispute, or already in the midst of proceedings, our Dispute Resolution team can help you navigate the complexities and achieve your business objectives. Watch our film to hear directly from three of our litigation experts, or contact us to discuss your specific circumstances.