Litigation Advice from a Non-Litigator – Part I

As noted earlier in this website, I don’t go to Court: any Court, no matter what. Many clients, having experienced indifference from litigators, have literally begged me to go to Small Claims Court for or with them. I used to go to Court as a law student and then as an articling student in Calgary. These experiences intensified my resolve ever since to avoid litigation except as a spectator. However, I’m very often consulted by ongoing business clients for advice on disputes, and I believe that I have a pretty good record in cases where my advice is followed to conclusion. I would like to offer my main tips for being successful as a plaintiff (the party starting the action with a claim against the other party or parties) in litigation.


Grant’s Litigation Tips for Plaintiffs:

1.    Determine if you have a dispute (and not just a misunderstanding or miscommunication), andjump on it right away, using the tips below. New Ontario legislation has greatly shortened the limitation period of most actions to two years. Besides, your chances of resolving a dispute are highest in the first 90 days. Always.

2.     Keep talking to the other party as long as you can to resolve the dispute; keep things civil, take the high road; try to understand the other party’s perspective; don’t polarize the dispute with extreme claims and allegations.

3.     Make notes, gather up all your materials at the outset of trouble. Check and re-check your facts; separate suspicions from what you can prove in Court. Confirm calls with emails or letters.

4.     At the outset, try to objectively determine what your claim is really worth in cold, hard cash. Then, try to objectively determine what their counterclaim might be worth if successful against you. Consider what evidence you have, and what evidence they have. Write down your figures somewhere for later reference.

Note here: the other party might have screwed you, but all that matters is whether or not you haveprovable damages in dollar terms. If you want a Court to give you a Declaration or an Injunction, be ready to plunk down a $25,000 retainer with your litigator.

5.     Consider, and research if possible, the likelihood that you will be able to recover any damages against the defendent. The Court won’t give you a certified cheque if you win a judgment – that’s just the start of the civil justice system. Does the defendant have any assets that you can get your hands on? Is your claim against an insolvent corporation? Do you have any personal or other guarantees (or indemnity, or joint liability, etc.) of a party that has assets? Recoverability of damages could be more practically important than the quality of your legal claim. If recoverability is low, then you can save your trouble and money by not suing.

6.     Consult a business lawyer who has had some litigation experience for strategic advice, assuming this is a business dispute (contract breach, debt collection, employee termination, non-compete issue). The main questions for the lawyer:

  • Do the facts, if provable, give you a “cause of action”

  • What is the “measure of damages” legally?

  • What are the options for pursuing this action?

  • What are the upfront costs vs. the ongoing costs, and the duration of the litigation process?

If you’re not prepared to spend $500 or so to have the business lawyer review some documents and meet with you, then you obviously don’t feel your action is worth pursuing at all.

7.     With the strategic advice in hand, ask yourself the question: do I have the emotional energy to litigate? It’s a nasty business, litigation. Lots of BS, lies, pettiness, delays, more BS, ridiculous procedures, rules and orders, stupid judges who have never practiced business law (very few biz lawyers become judges), and more delays. And, the relentless costs that must be satisfied as you proceed unless it is one of the very few contingent fee actions. Litigation is a terrible distraction for most business owners, except those that are obsessed with their action (dangerous) or are wannabe lawyers (I know one successful owner who loves making his case and going to Small Claims Court for collections – that’s fine by me, and is entertainment and hubris for him).

On the other hand, I know of business people that have had valid claims, but litigation wasn’t an option because they would make a horrible witness for their own claim – they could pursue something up to the courthouse stairs, but if they got into the witness box, they’d be vilified, disbelieved or too emotional (think of Conrad Black taking the stand on a invalid parking ticket). Litigation is a high-stakes game played well by few, but it is always the last resort.

8.     If the probable recovery of damages is in the order of $50,000 or less, re-think if you want to litigate. You will find it disproportionately expensive, and have trouble getting the attention of a competent litigator. Perhaps, you can threaten litigation and make a deal instead, keeping the legal costs in mind.

9.     If you go ahead with litigation, re-visit that piece of paper with your numbers on it. Do this regularly. My litigation colleagues know how to litigate. Some don’t think about settlement as long as the client is all fired up over the claim and still willingly paying retainers. You should always be considering settlement options – be creative, consult your business lawyer on it once in awhile.

10.    Time is money means, among other things, that cash now is worth more than cash later, and a lot more than cash much later. Litigation takes forever, and then one more month. Taking half of a debt might sound harsh if the debtor has no defence, but the question is, how long will it take and cost to get 100%? What is the debtor’s counterclaim is successful at trial?

11.     The Courts don’t dispense justice and truth when it comes to civil actions. The party with thebest lawyer, most resources and perseverance will win, eventually. Don’t put too much faith in this very flawed dispute resolution system.

12.     I have no evidence that mediation or arbitration is any better than litigation in Court. Both are still very expensive, and maybe slightly faster. Such methods work best in areas where all parties to the dispute genuinely want to resolve the dispute – this is rarely the case in Court proceedings, the cost and delay of which are often the remedy or defence itself. Thus, I might be able to force compliance under a contract, or the payment of damages or satisfaction of a debt if I start litigation, as the potential costs to the defendant increase astronomically as you get into examinations, motions and then trial. That is, if the defendant is able to pay.

13.    Even if you’re totally successful in your court action, you will not recover and be paid 100% of your costs. Not 90% or 75% either. Litigators are very coy on this factor, so be careful in your cost recovery assumptions. I usually tell plaintiffs that you might get a Court order for the payment of something more than 50% of your actual out of pocket expenses, if you can get it from the defendant. You must recover your costs as part of the judgment – and good luck to you with that.

14.   In most cases, it’s worth pushing your claim along aggressively; force the defendant to go to a lawyer, pay some money, file a defence, take time away from his/her/its main business or employment, get their attention. If you want the litigator to move things along, you must make this absolutely clear to the litigator, or they’ll just mosey along as per normal, allowing delays by the other side, delaying themselves. It will cost you more to push an action quickly.

15.    If your claim involves any business aspects other than the non-payment of a simple debt, make sure the litigator truly understands the case! My view is that most litigators don’t understand very much at all about business or business law. They don’t even understand the difference between a trade name and a corporate name, profit vs. revenue. Ask your business lawyer to brief the litigator if you can. I warn you: litigators think they can learn what they need at the last minute and at a superficial level, and they’re wrong. Your case can quickly fall off the rails if the litigator misses or misinterprets a business issue.

16.   You can save a great deal of legal costs if you do your homework without the lawyer having to follow-up two and three times, or do it themselves. Assemble your evidence in an organized, chronological fashion and create a chronological narrative of factual events.

17.    Conversely, don’t:

  • Delay dealing with the subject matter of the dispute

  • Sue on principle or for revenge

  • Underestimate the other side

  • Spend your damages before you receive it in certified funds

  • Withhold any facts or documents from your lawyer; it will only hurt you later

  • Obtain and act on free advice from several unqualified parties

  • Expect your lawyer, or the Court system to right the wrong done to you

Next Blurb, defending a claim smartly.