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LITIGATION AND RESOLUTION OF DISPUTES
When litigation is threatened or filed against your company, we suggest this guiding principle- continue managing your business and immediately call your trusted legal advisors. The fact is that businesses routinely emerge from serious legal disputes and, despite much rhetoric, few cases are game-changers. Experienced outside counsel will advise you to avoid emotional involvement, drama, and blame-shifting, and prevent distraction from soaking up undue time and attention. Just listen carefully to your litigation attorneys, because they’ve been through other disputes with clients, many times. Ask yourself whether you want to get back to managing your business free of these worries, as quickly as possible. Where your business expressly chooses to engage in protracted litigation, the business motivation should be extremely clear. Where legal bills pile up quickly without a good reason, as they say, the only winners are the lawyers.
In many situations, the threat of litigation presents immediate opportunity to engage with the aggrieved party. Choose the playing field, and resolve the dispute quickly and inexpensively by negotiating a settlement in private. Your outside counsel should seize the opportunity to gain information from negotiating with your adversary, and if you don’t, then good reasons should motivate that strategy. Disputes can be resolved early via mediation, arbitration, or a negotiated settlement. These private options tend to be far less expensive and faster than litigation in the federal or state courts. In some circumstances, private dispute resolution may be more predictable than litigation in the public courts and avoid unanticipated issues being raised by an appointed or elected judge with a different agenda that considers the perception of the public at large.
In order to be effective, your attorneys must be informed of all relevant facts, including all of the unfavorable facts, in a timely manner that allows counsel to formulate effective strategy accounting for the unfavorable facts. Failure to follow this rule can doom your efforts to defend litigation or bring claims against a third party. Executives may fail to bring all of the unfavorable facts to the attention of the litigation counsel until they are confronted by surprise and without notice in a disastrous deposition. Such cases often must be settled on expensive terms to avoid risks of even greater losses.
One of the first issues your litigation counsel should review is whether the subject of the litigation and claims are directed to an insured risk or whether an insurer is obliged to defend your company against the litigation at hand. Timely notice to insurers is essential, and failure to provide timely notice can negate or reduce coverages. Where the insurer is obligated to defend your company, the insurer often will elect to bring in and pay the litigation firm of their choosing, while in other situations your company may exercise the choice.
Where litigation is necessary, you should expect outside counsel to manage the litigation in entirety, and absorb the adversity and conflicts on behalf of your management team. In the face of expense, the uncertainties of jury decisions, and the anecdotal preference of many judges to urge disposition of cases without devoting days or weeks to a jury trial, allowing litigation to proceed to trial is relatively rare, and you should carefully question the wisdom and risks of settling ordinary disputes by resort to trial.
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