Expert Tips For Businesses To Manage Litigation In NZ

Few businesses or employers relish the prospect of a court battle with another party, no matter who they are. Litigation is usually expensive and can be very time-consuming. Additionally, there is usually no guarantee of a positive outcome. However, sometimes circumstances leave you and your business with few other options. When your business needs to manage litigation, it is important to do so in the most effective and efficient way possible. This article will look at: 

• alternative dispute resolution;
• commercial and PR implications; and
• tips around having a post-litigation review.

Consider Your Dispute Resolution Options

Litigation in a court is typically expensive and lengthy. Therefore, it should be your business’ last resort when considering how a dispute should actually be handled and ultimately resolved. The first issue you should think about is whether alternative dispute resolution is a possibility for your business in the circumstances. 

Alternative dispute resolution refers to a range of means of resolving disputes or conflicts that do not involve going to court or entering into litigation. As a first step, negotiation with the other party is the best way to go about resolving the dispute. However, if a negotiation does not work at arriving at a workable compromise, it is common for parties to move on to another form of dispute resolution. However, you still do not need to necessarily go to court. 

Mediation

Before going to court, consider mediation. This is a dispute resolution process in which a neutral third party (a mediator) manages the negotiation between your business and the other party. It is a mediator’s role to assist parties in resolving their dispute. Further, it can be confidential and you retain some flexibility. In contrast, litigation usually involves disclosing more information publicly and losing flexibility. For instance, flexibility to agree on a final agreement that both parties are happy with. 

Commercial Implications of Litigation

When considering litigation and what strategy your business should take, it is important to not just think about the legal aspects. All litigation should involve a strategy orientated around commercial implications for your business. At a high level, this involves thinking about what:

• is at stake for your business; and
• outcome you are trying to achieve.

There are further commercial implications to consider as well, depending on the nature of the litigation. If the dispute is with a customer or supplier, it might affect how other customers and suppliers perceive your business. No matter the merits or details about the specific legislation. Further, the possibility exists that litigation might damage your business or cause it to suffer commercially, even if your business is actually ultimately successful in court. 

Remembering Your PR Exposure

Additionally, you should consider the fact that most litigation will put your business’ dispute in the public domain. This means that sensitive documents may be disclosed, and your employees’ statements or evidence may be put on the public record. Further, it could also be reported on by the media (particularly if your business is relatively well-known). Again, the risk here is that your business suffers from negative PR even if you are successful in court.

A Post Litigation Review

As your business grows, there may be more and more issues or disputes where litigation might ensue. Accordingly, it is usually a good idea to review what happened in each dispute or court case as soon as it is over. This ‘post-litigation review’ can help: 

• highlight possible improvements to the way the business drafts certain contracts;
• point out issues in policies; or 
• other legal or commercial concerns. 

Key Takeaways

Litigation is not an easy or simple prospect for most businesses. There are almost always trade-offs or possible implications from conducting litigation. Additionally, these may involve negative or risky commercial consequences, no matter the legal merits of your case. For instance, perceptions by customers or suppliers may change if you take a case against a customer or supplier. Further, there is also the possibility of negative PR. 

Partly to minimise the risk of these kinds of commercial implications, considering alternative dispute resolution options is almost always a good idea. Mediation or negotiation can help resolve issues before they get to court. If you want to know more about managing litigation or litigation risks, contact LegalVision’s dispute lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions