The impact of disputes and claims
Business disputes and claims against a business can:
- arise over a range of issues, predictable and unpredictable;
- happen when you least expect them;
- happen when you are not prepared for them to happen;
- involve any 1 or more of customers, suppliers, partners, employees and third parties;
- divert valuable resources from your core activities including those of your business or which are personal;
- do irreparable damage to the health of your business;
- disrupt your life;
- do irreparable damage to your personal health.
Initial assessment of dispute or claim
That is why at the outset of any dispute or claim, we:
- provide our clients with a prompt and thorough assessment of their position; and
- then work with our clients to agree a strategy to:
- identify and minimise risks; and
- explore ways in which to provide a solution that is as cost effective, timely and commercially acceptable as possible in the circumstances.
Despite that, there is only so much that can be done to avoid the expense of an unresolved dispute that is left to a court to decide the outcome.
If a dispute is going to end up in court, it is best to get a barrister involved at the outset. Most people think that barristers are very costly. Unfortunately, legal disputes are costly but a barrister can be relatively cost effective when they are good at what do. We have a network of great barristers who we work with and our view is that they are all incredibly good value for money.
Avoiding disputes and claims if possible
At all times, we work with our clients to avoid disputes and claims going to court including through early resolution and if they cannot be avoided, we focus on:
- getting to the core issues;
- helping them manage the impact of the dispute on their business;
- managing legal costs;
- achieving commercial outcomes as quickly and as cost effectively as possible.
Risk management – structuring and asset protection
Not all risks can be avoided but effective structuring of a business, through:
- the best choice of the business structure;
- the choice about who controls the business (including as to who should act as its directors);
- being careful about what assets it owns;
- being careful about the asset ownership of its principals,
can all help minimise the damage that flows from an uninsured risk.
Upfront thought about these things can be a very effective way of minimising the fallout from a dispute or claim.
Risk management & insurances
Assuming a dispute is covered by the terms and conditions of the insurances of the business, there is no substitute for being well insured once a dispute surfaces.
Sydney Business Lawyers has many contacts that can help you with your insurance needs, including specialist lawyers.
If the dispute or claim is covered by an insurance policy, normally the insurer will appoint a lawyer of the insurer’s choice to manage it.
Risk management & good contracts
Disputes are best avoided by a business having sound risk management systems and properly documenting its transactions.
There is again no substitute for operating to sound risk management systems and having well written plain English contracts clearly setting out the rights and obligations of the parties with whom the business is dealing.
Risk management & sound management systems (Prevention better than cure)
Often lawyers are only thought of when a dispute arises. At Sydney Business Lawyers, we believe that “prevention is better than cure”. By putting in place sound risk management systems, a business is able to de-risk its operations and stop disputes and claims arising. We are able to assist with this process by creating awareness of where risks can arise and working with your business to put in place systems to deal with those risks.
Risk management & good contracts and business documents
Sydney Business Lawyers is able to prepare and advise you on all of the normal forms of contracts that are needed to record business transactions. These include:
- terms and conditions of credit offered by a business;
- terms and conditions for the supply of goods and/or services by a business;
- a contract to supply goods and/or services to a business;
- premises lease;
- partnership agreement;
- buy sell agreement to deal with the passing of control of the business on death or disability of a key person and the funding of that including by insurance;
- confidentiality agreements;
- license agreements;
- distribution agreements;
- intellectual property agreements;
- employment contracts;
- agreement to purchase or sell a business;
- doing due diligence on a business transaction;
- assistance with a tendering process.
Alternative binding dispute resolution that avoids having to go to court
A key part of those contracts is to include in them when appropriate an obligation of the parties to participate in binding non court based processes to resolve a dispute arising out of the transaction. These processes are often referred to as alternative dispute resolution.
Alternative dispute resolution almost always delivers a more cost effective outcome than court based disputes and those outcomes are most certainly more timely.
Where the alternative dispute resolution process gives a binding outcome, it is often called arbitration. In recent years, due to changes in the law and its application, the courts have determined that, when properly written, arbitration clauses and the arbitration decisions that flow from them are final and binding on the parties, when once this was not always the case. There are only limited rights of appeal to the courts due to:
- incapacity or invalidity of the arbitration clause;
- lack of notice of the arbitration;
- a party being unable to present its case;
- the arbitration award going beyond the terms of the arbitration agreement;
- the arbitration tribunal not being formed in accordance with the agreement or the mandatory provisions of the Commercial Arbitration Act;
- the subject matter of the dispute is not capable of settlement by arbitration;
- conflicts with public policy.
Mediation as a non binding alternative dispute resolution mechanism
Instead of an arbitration clause, sometimes contracts will have a provision that requires the parties to the contract to enter mediation in an attempt to settle their dispute before they are entitled to take the dispute to the courts or through an arbitration process under the contract.
Mediation is another form of alternative dispute resolution but it does not deliver a decision that is binding on the parties. Mediation is run by a person (mediator, often a retired judge or barrister) who works with the parties to try to settle their dispute on agreed terms and conditions.
What if there is no mediation or arbitration clause in the contract?
If you do not have a mediation or arbitration based contract to deal with your dispute, we still encourage the parties to a dispute to consider, if not informal negotiation, mediation or arbitration before going to court.
As it is, most courts require the parties to a court dispute to have been through a mediation process before the court will finally hear the dispute. So there is everything to gain from being able to resolve a dispute early and quickly through voluntary mediation (or arbitration).
Looking to alternative dispute resolution in assessing the dispute or claim
When a dispute is brought to Sydney Business Lawyers, in working with our clients to provide practical advice that realistically looks at the prospects of successfully resolving the dispute, we look at the alternative dispute resolution processes of mediation or arbitration and when required, court action.
It is always important to:
- assess the strengths and weaknesses of your claim to properly advise and assist you in resolving your dispute;
- identify realistic outcomes;
- develop a strategy for achieving those outcomes, where possible, without the need for court action.
The time, effort and money involved in resolving any dispute, not to mention a court based dispute, can be better channeled into the management and growth of your business. So where appropriate, we encourage our clients to achieve agreed commercial outcomes as early and cost effectively as possible.
There is no certainty in the law!
Even:
- if you think that your claim is water tight, there is no guarantee that you will get a decision in your favour – there is no such thing as a sure thing in the law;
- in successful court action, it is not normal to recover 100% of your legal costs;
- if you win, if the other party does not satisfy the judgment and pay your costs, you have to take action to enforce your rights under the judgment and “you cannot get blood out of a stone”;
- if you win, you will never recover the cost to you of the personal anguish and lost time from being involved in a dispute.
So you should do whatever you can do to avoid being involved in a court based dispute or claim.
Our aim is to keep clients out of court, starting with a well structured business and asset ownership, effective insurances, sound risk management systems and thorough Plain English transaction documents. Our commitment in any unavoidable dispute is to deliver the best result and the most affordable outcome. However, some disputes are left to be resolved through the courts.
If you would like any assistance with dispute resolution please contact us at Sydney Business Lawyers on 8915 4900 or mail@sydneybl.com.au