Canada: Cost Control In Comercial Disputes – Are You Asking Your Self The Right Questions?

Last Updated: February 8 2008
Article by Gordon R. Johnson

Most Read Contributor in Canada, September 2016

Originally published Fall 2007

Commercial disputes are expensive. Some of the expense is beyond the control of the parties. Some is beyond the control of any single party. But, while some level of expense is inevitable in any commercial dispute, parties should attempt to minimize costs where they can. The following questions are a useful guide to controlling costs.

1. Are you beginning/continuing the dispute for the right reason?

At the beginning of a dispute it is common for emotions to play a major role. As months and years pass, and as expenses mount, objective business factors tend to play a larger role. Since that is usually the case, why not focus on the objective issues at the beginning? You should consider the differences between what you believe and what you can prove. Consider the other party's point of view and the strength of their position. Consider how the entire picture will look to a neutral third party (like a judge or arbitrator).

2. Have you picked the right lawyer?

In many cases parties begin their search for legal representation by asking "Where can I find a pitbull?" That approach often leads to disappointment. Assertiveness is helpful. Blind aggression is not.

Look for a lawyer who focuses on results. Look for a lawyer who will provide you objective advice throughout the process. Look for a lawyer who sees the big picture. And, when it comes to cost control, look for a lawyer who understands your business and will be able to deal with the relevant documents, concepts and jargon in an effective way.

3. Have you picked the best individual to supervise the litigation?

Throughout a dispute there will be various types of communications between your lawyer and at least one representative of your business. Someone must provide your lawyer with initial information about the claim. Someone must receive the preliminary legal assessment. Someone must approve the pleadings. Someone must assist the lawyer with the production of documents and preparing for examinations for discovery. Someone must assist in resolving any follow up discovery questions. Someone must provide instructions regarding procedural disputes. Someone must work with the lawyer to develop a settlement strategy and, as appropriate, to authorize a settlement.

You should expect that the interactions with your lawyer will involve various roles and require that your representative display various skills. Depending on the function being performed, your representative should have an understanding of the dispute, sufficient authority within your business to obtain information and documents without delay, some sophistication about the legal process, and be able to assess the desirability of settlement. Assigning the best person to instruct the lawyer can be critical in obtaining a good outcome, and in controlling costs.

4. Are you supporting your lawyer?

The preparation of a case for presentation to a court or arbitrator involves considerable "grunt work". Documents must be collected and organized. Information must be chased down from sometimes reluctant witnesses. Often steps must be taken which represent the priorities of the other party rather than of your business. Many businesses do not take the role of supporting their lawyer seriously enough.

It is important to educate your lawyer about the dispute and the types of relevant documents which exist. It will take your lawyer much longer than necessary, and cost more, if their education is "self-study".

One of the primary roles of a lawyer is to collect the necessary documents. Which documents must be collected will depend on the context, including whether the dispute is being resolved through arbitration or the courts. In general, it is the professional duty of the lawyer to assess what must be produced. You can assist your lawyer by explaining what is available and by producing documents in an organized manner with an explanation of their context.

The gathering of general information and answers to specific questions can be very time consuming. Sometimes the answers can be collected without significant effort by your lawyer. In situations where the lawyer must be directly involved, you can assist by ensuring that the relevant individuals respond with a proper level of priority.

5. Are you monitoring costs?

After your lawyer has been educated about the issues in dispute, it will be useful for you to ask them for at least a general estimate of the expected costs. Some costs are difficult to predict, for example because new issues arise or because the other party is unreasonable. However, general estimates of the cost of documentary discovery, examinations for discovery, other procedural steps and trial are possible and will be helpful. They will force everyone to face the likely costs at an early stage. They will force you and your lawyer to discuss options for minimizing costs. In addition, they will provide benchmarks against which you can compare monthly invoices.

You should ask for monthly invoices and you should compare them on an ongoing basis against the expected costs. The circumstances will dictate whether unexpected costs should lead to a change in strategy. But, by monitoring costs, you will have the information needed to make any necessary assessments.

6. Have you accurately explained your expectations to your lawyer?

Sometimes the outcome of a dispute will have a huge impact on the future of your business. In such a case, your lawyer should understand that, and should be prepared to hunt down every possible piece of evidence, fight for every procedural advantage and bring onside whatever resources are helpful.

Most commercial disputes will not determine the future of your business. In most cases it will be important to exercise judgment in determining how broadly to search for evidence and what procedural disputes are worth fighting. In addition, different circumstances might suggest different tactics in terms of how quickly a proceeding should be pushed ahead. You may believe that the other party will soon lose interest in the dispute and that it will fade away if left alone. You may believe that the other party will quickly surrender if pushed aggressively. You may believe that, regardless of what the other party intends, it is important to push the dispute ahead to a quick conclusion. Each of those beliefs should result in a different strategy.

Your ultimate objective may be a reasonable settlement at an early stage or, perhaps, after appropriate facts have been gathered in the discovery process. In contrast, you may be reluctant to settle on any but the most attractive terms. Again, each possibility suggests a different strategy.

There are huge cost benefits to you in deciding what you want at an early stage, and in having frank communications about that with your lawyer.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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