Strategies for Managing Litigation

Litigation results when two people cannot creatively reach resolution. It turns on the notion that the people involved exhausted their ability to create a positive solution and had to resort to methodology designed to reconstruct the past and assign accountability and blame.

The decision to pursue legal action should not be taken lightly. The litigation process can be far reaching and can tap substantially into an entrepreneur’s resources. Entrepreneurs who pursue litigation must realize that once it begins, they are enmeshed in a process a lot like a parent managing a child. While the parent can direct the child, inevitably the child will be impacted by outside influences that will cause them to behave unpredictably. The more the parent works to dominate the child, the more resistant they may become to those efforts.

Tips for Maintaining Control

There is a lack of control that occurs with litigation, but there are some aspects that can be controlled in this process. It is critical to understand what they are:

Selection of Counsel

When entering into litigation, it is important that you pick the right lawyer. Consider these two points to ensure you make the right choice:

  • Select someone with whom you feel comfortable working. Experts are great, but if the relationship doesn’t come easily, opt for an experienced attorney with whom you see eye to eye. You should not select a “yes” person; rather, choose someone with whom you are comfortable speaking and whom you understand. That lawyer will naturally do a better job with your case because the communication between you is better.
  • Get information and input on the lawyers you are considering. It is perfectly reasonable to conduct a background check and investigation on the attorneys that make your short list. Friends and colleagues can also serve as good resources when looking for the right counsel.
Know Your Overall Dispute Resolution Strategy

Litigation will be expensive, so having a plan is important. Like all plans, yours must adapt as circumstances change, so you must monitor the course of the litigation continuously.

Entrepreneurs do this kind of planning, monitoring, and adapting regularly. They have a plan, have a budget, monitor progress, and change the plan as needed to meet evolving circumstances. However, this kind of watchful eye that occurs so naturally in running a business does not always happen in litigation. You must consistently and regularly measure reality against your plan and adjust your strategy based on how things are changing.

Additionally, an effective dispute resolution strategy is more than just a cost-benefits analysis. It is a second layer of analysis that gets to the core of how a lawsuit will impact your company’s strategic outlook. There is psychology to developing a dispute resolution strategy, which turns on understanding the strengths in your argument and how they relate to your overall business objectives. Some important questions to ask in the process:

  • Will developing your argument take time through research and acquiring witness statements, or do you have the information up front to drive early resolution?
  • Do you have command of the evidence in your case, or do you need to develop it?
  • Does the opponent need you to display a “show of strength” to position your case for a win?
Practice “Dispute Management”

Know how the lawsuit will affect your business. It is critical to understand what litigation might cost, measured in more than dollars, and to consider pathways to resolution, short of a win in the courtroom, that are helpful to the overall strategy of your company. Work with your counsel upfront on those criteria you need to apply in assessing litigation as the process unfolds. You will need to develop a clearly defined game plan: steps, priorities, trigger points for activity, timelines, cost estimates, and cost control. Critical milestones, such as knowing when the fight is too expensive, must be assessed as well.

Understanding Options Amidst Litigation

Litigation is a backward-looking proposition that hinges on reliving the past (often repeatedly) and holding people accountable for it. Resolution, on the other hand, is forward looking. It involves compromise and certainly some accounting of the past, but at its core is an investment in how to move away from the past and toward the future. Opportunities to change from litigation to resolution will arise many times during the course of a lawsuit, and lawyers and you must be attentive to these opportunities. Some important points to consider:

  • Alternative dispute resolution (ADR) may be an option. Either party can seek to have the dispute resolved outside of the litigation process at any time. Additionally, courts frequently push parties toward ADR.
  • Resolution is a mutual process. While you may be willing to move forward, the other side must also choose that course. Resolution begins when both parties to a lawsuite align with a general desire to look forward rather than backward.
In summary, at the heart of any dispute is the question of whether an issue is worth the fight. Knowing what you are fighting for and what is at the core of the dispute is key, and a good lawyer will have you consider these points at the outset of any lawsuit.

Litigation is rife with risks. Knowing those risks and working to manage around them is important to maintaining some aspect of control. Like a child, litigation requires a vigilant eye. While you can try to guide the outcome, it will be impacted by influences you cannot control. Litigation, just as good parenting, requires constant monitoring and involvement. Without these things, you may surely be disappointed, and the end product will likely not meet your expectations.

© 2007 Ewing Marion Kauffman Foundation. All rights reserved.

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