Litigation risks – what can go wrong?

For those experienced in civil and intellectual property litigation the phrase “it’s a war and not a battle” certainly holds true.  In this case study we refer to the other side in a litigious matter as the “OS or Other Side”.  Our Client may be the party that commenced the proceedings or the one defending them – however there is always an OS.

The continuum of predictability

Any civil litigation is influenced by the following:

• Known Knowns – the things we know at this point in time; and
• Known Unknowns – the things that we know are we don’t know;
• Unknown Unknowns – the things we don’t know that we don’t know.

This can be depicted as:

The aim is to minimise the effect of the Unknown Unknowns and maximise the chance of the Known Knowns not changing.

Some common Known Unknowns

Response from the Other Side – Known Unknown

This is a Known Unknown as we know there is will be a response, we just cannot predict what it will be.  The plaintiff or applicants (these terms and used interchangeably) case may seems very good and as a result a tone and posture is adopted to reflect the legal position.  A seemingly solid case is met with ‘belligerence, total defiance and obfuscation’.  Practically the reply from the Other Side can vary from “sorry about this what can we do to fix it” to “make me” and everywhere in between.

In this case we know there will be a response, but just don’t know what it will be.

Legal fees – Known Unknowns

Because we cannot predict or anticipate the Response of the Other Side and the Unknown Unknowns any estimate of legal fees is just that, an estimate based on current knowledge at the time the estimate is made.

Resources of the Other Side – Known Unknowns

One of the factors that is related to the response from the Other Side is the financial responses that they have to defend (or prosecute) the matter.  It is a Known Unknown because we know they will have resources ranging from nil to an infinite amount depending on the organisation and the publicly available information about them.  For example a listed public company will publish a lot more information about its financial capacity than an unlisted one.

Known Knowns

Chronology of events are the Known Knowns complete and accurate?

In preparing a chronology of events when prosecuting or defending legal proceedings, extreme care needs to be taken to identify and catalogue all documentary evidence for later use. 

Our Clients resources to prosecute or defend legal proceedings

This is a Known Known because we can find this out, however things change with the result having an impact on the overall strategy to be pursued.

Things to be aware of about Barristers

The relationship between Lawyer and Barrister is a special one.  Like the relationship between Client and Lawyer the Client generally provides us with instructions.  Generally, Barristers are extremely conservative and want to ensure that any advice they give is not speculative or dependent on any unknowns.  Because of this advice from Barristers can be extremely conservative.

The lawyers are responsible for the Barristers fees

It may not be readily apparent, however the client engages the Lawyer, the lawyer engages the Barrister.  The Barrister sends their invoices to the Lawyer.  If the client does not pay then the Lawyer has to pay the Barristers invoice.  For this reason, its usual that we ask clients to deposit money into our statutory Trust account in anticipation of our legal fees and those of any Barrister we engage.

Availability and attitude of Barristers and expert witnesses

Coordinating the parties to litigation to get the best result can be difficult and time consuming activity.  Dealing with what we refer as ‘blackout dates’ needs to be carefully managed to ensure that the case momentum continues.

Don’t send us information or documents that you think are relevant, send us everything and your lawyer will decide.

Lawyers need precise detail

Tell us what is said exactly in an email or letter or document – not what you think* it says or the purported meaning and effect of what is written.  Often in everyday language we draw conclusions of what we think** is said or meant in documents or emails by paraphrasing them rather than stating the exact words said or used.  That’s normally fine, as we are all humans and cannot be expected to regurgitate everything aspect of our daily lives word-for-word.

However, form a litigation standpoint, it is dangerous to give instructions based on conclusions you have drawn or meaning you have given to a document or email, which does not state what you conclude.  If you, instead, provide us the document that you are referring to, it minimises time (and consequently costs) in applying the law to the fact in issue (instead of spending time and costs in deciphering what was said). Being precise reduces litigation risk greatly as well as getting a wrong advice or be “let down the garden path” by your lawyer – as he or she will only give you their advice based on the precision of details you give them.  Imprecise or assumed instructions can only yield imprecise advice – which you don’t want when there is thousands if not hundreds of thousands of dollars at stake.

 – This is not a risk.

Litigation is like a modified game of poker

It’s common for the parties in civil proceedings to “bluff” or “overstate” their position without actually proving anything.  The party with the better case may also not be prepared for the potentially significant expense in civil litigation and consider backing down because of spiralling costs.

Follow the money

If the parties to civil proceeding don’t have any assets, then you need to think very carefully about proceeding against them.  Similarly, if you are responding to legal proceeding you need to consider the extent to which any personal assets could be liable.

What your lawyer can’t do for you

The conduct of lawyers in Australia is governed by the Australian Solicitors conduct Rules.  These rules are largely a codification of the common law.  That said those below are some of the rules that parties to civil litigation need to be aware of:

Lawyers cannot be the client’s mouthpiece

Whilst lawyers have to do as they are instructed we have to exercise our own forensic judgement in determining what we consider to be in our clients best interests.  We cannot simply send correspondence to the OS if we don’t think it in the client‘s best interests.

The no contract rule

Once the OS has advised us that they have appointed a lawyer, we cannot contact their client after this point in time.  Rule 33 of the Australian Solicitors Conduct Rules.

Unfounded allegations against another solicitor

Rule 32 of the Australian Solicitors Conduct Rules prohibits a solicitor from making unfounded allegations against another solicitor.

Rule 34 – Dealing with other persons.

34.1.1 – cannot make any statements that grossly exceeds the legitimate assertion of the rights or entitlement of the solicitors

• the resources of each of the parties (think David v Goliath or Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 8) [2008] FCA 470);
• the causes of action and the relative strengths and weaknesses of the arguments in relation to them;
• the credibility of the witnesses;
• identification and selection of suitable counsel;
• the relative dogma of the lawyers for the ‘other side’;
• the availability and suitability of appropriate independent experts;
• the quality, quantity and accessibility of the documentary evidence available to support the allegations; and
• the availability of key personnel to devote time and resources to things such as discovery.

In short developing and implementing a suitable litigation strategy is essential part of the conduct of any litigious matter that must deal with the Unknown Unknowns.  This coupled with the effective and efficient management of documentary evidence is essential for a winning case.

In the case of strategy its one area where in my view and MBA really benefits our clients.  It is also important to know that Malcolm Burrows also lectured part time in the QUT Graduate School of Business in the subject “strategic use of information technology” which was formative in his thought processes.

Further information

If you are interested in talking to a lawyer who truly adopts a strategic approach to civil and intellectual property litigation, please call me for an obligation free and confidential discussion.

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.