‘I demand trial by combat’ joked my client.
‘It ain’t happening Lord Tyrion’ I responded. ‘We are in Brisbane and not the seven kingdoms.’
For those of you who are not familiar with Game of Thrones (and if not you may wish to stop reading now) often the various legal disputes that arise between the TV shows colourful protagonists are resolved through ‘trial by combat’, a one-on-one fight to the death, frequently with grisly outcomes for both participants.
By contrast, for those of you who are not familiar with the Australian judicial system (and again if not you may wish to stop reading now) often the various legal disputes that arise between members of the local business community, are resolved through something not so far removed from one-on-one combat, frequently with equally grisly outcomes for both participants.
Okay, so I might have exaggerated a little about the process of litigation and the risks involved, however, there are certain similarities between the trial by combat and trial at court. It is not without good reason that trainee solicitors are advised at law school that one of their first obligations to their clients is to keep them out of court.
While commercial litigation does not of course involve a fight to the death between the two parties (or worse still their lawyers as their champions), the overall cost and damage to a business that may arise during protracted court proceedings can sometimes also be ‘fatally wounding’ to the business or its brand.
It will come as no surprise to you that trial by combat is not currently a permitted form of alternative dispute resolution within the Australian legal system. To the best of my knowledge and legal training, medieval duelling of this nature no longer exists in any modern legal system (although I am aware of a recent unsuccessful petition in New York State for this remedy which may even have gone to appeal). In the absence of such extreme measures, businesses are forced to resolve their commercial disputes by redress in the courts. Moreover, while the resolution of disputes through the courts has been a tried and tested mechanism since as long ago as Tygarian rule, it should always be a strategy of last resort.
Litigation can be time-consuming, expensive and can prove to be a distraction from business priorities. It diverts precious resources away from actual business needs and causes business capital to be tied up in legal fees. Conflict resolution through the courts is known to be expensive and while not fatally expensive in a Westerosian sense, costly nonetheless.
Litigation is known to generate unnecessary stress for those involved, unsettling employees, shareholders and potential investors alike. Even if a party appears to be in the right, the fact that it is at ‘war’ can result in higher staff turnover, fractious AGMs and make it unattractive to potential buyers. If a company is engaged in a court dispute during the process of its sale, this will have an impact on its value.
A loss of morale can extend beyond the business to its client base. Much like trial by combat, litigation is an outdoor sport and consequently, any blood spilled, will be spilled in public. Even if a party succeeds with its action in law and so wins its case, it does not necessarily follow that winning will absolve it from any criticism which may flow from the proceedings or what comes out during evidence.
It is possible to win a case simply because legal argument supports that outcome despite the successful party appearing to be morally in the wrong. Decisions are made on legal merit which is sometimes at odds with popular opinion.
For those who have not yet watched series 4 of Game of Thrones, think of the Rocky movies and the fights in which he wins. Applying movie land wisdom, it is possible to win the fight but also be beaten to a pulp in the process. Not a great outcome I am sure you will agree. Now ignore the paragraph below.
For those of you on series 5 or beyond, think of the current cognitive functioning of Sir Gregor. It is not what it was is it? Yes he won but….
It is also important to recognise that unlike when dealing with the Lannisters, a favourable judgement for a monetary amount will not necessarily result in that party being paid. The cost of litigation can cause the insolvency of a party and while successful judgements are good, expensive unenforceable judgements are not. Incurring significant legal costs to claim a hollow victory is almost certain to invite a shareholders rebellion greater than that of Robert to depose a CEO from their own iron throne and leave them as popular as Stannis.
For these reasons, as Ned Stark discovered, is often better to spend as little time at court as possible. When the commercial dispute arises, attempting to resolve the issues swiftly through the various alternative dispute mechanisms available (such as mediation, arbitration and conciliation) can be of greater benefit to a business than embarking upon the litigation process. These alternative methods can be cost-effective and often achieve resolutions that extend beyond those which can be offered by any court.
When commercial disputes do arise, I urge parties to look as alternative methods of resolving such disputes before immediately reaching for their swords. Litigation can be viewed as a great game but as many parties to litigation will tell you ‘the great game is terrifying.’