Disputes between corporate entities can have adverse repercussions for the company, its officers, shareholders and customers.
A corporate dispute may concern a myriad of legal issues including breach of contract, the correct interpretation of an agreement, shareholder disputes, consumer and competition matters, insurance disputes, debt recovery, insolvency and administration issues.
Corporate litigation can be expensive and protracted. Fortunately, disputes may be resolved out of court by using alternative dispute resolution processes.
Early negotiation and informal settlement conferences provide an opportunity to settle the matter quickly and more cost-effectively than litigation.
Mediation involves a neutral person (the mediator) meeting face to face with representatives from the corporations in dispute to facilitate a resolution. The mediator does not determine the dispute and the meeting is generally confidential.
Mediation can be effective where the parties are willing to negotiate in good faith and make genuine attempts to resolve the dispute. If the mediation does not provide an overall resolution, it may at least identify and narrow the matters in contention. Mediation can be used for complex matters and the parties may obtain expert reports to support their position. If a resolution is reached, the agreement can be formalised in a deed of settlement.
Mediation offers an opportunity to preserve the parties’ relationship, particularly when they intend to continue working together. This is beneficial where the parties have long-term commercial arrangements such as the ongoing provision of products or services.
If early dispute resolution unviable or unsuccessful, the corporation may need to commence litigation or defend a matter in court proceedings.
Company officers considering the commencement of legal action should be guided through this process so an informed decision can be made.
Essentially, before legal proceedings are commenced there must be a legal cause of action or right to seek a remedy from the other party. Each case is different, and a careful assessment must be made of the unique circumstances of the matter, the available or obtainable evidence and the likelihood of success. A cost / benefit analysis is also relevant as there is sometimes no point in pursuing action against an entity that will inevitably be unable to satisfy a judgment. A thorough investigation of all possible avenues of redress must be made.
Legal proceedings must be commenced within certain limitation periods, so it is important to have a matter assessed promptly to ensure adequate preparation to file proceedings and properly present a case.
How your company fairs when facing a dispute will depend on a range of factors. Choosing an experienced lawyer to represent a company facing legal issues and possible court action can greatly improve the potential outcome and mitigate loss.
A corporate lawyer should:
- Assess the dispute, the strengths and weaknesses of the company’s case and identify any specific issues that will negatively impact the case and / or the company.
- Recommend one or more courses of action, outlining the pros and cons of each, so an informed decision can be made. Recommendations should include consideration of resolving the dispute informally through negotiation or other processes such as mediation, conciliation or arbitration.
- Have experience in handling a range of corporate disputes as well as strong negotiation and advocacy skills and a track record for successfully representing corporate clients.
- Provide an estimate of the value of the case (if relevant), or the likely losses for defended proceedings, including an assessment of potential costs awards if the matter is litigated.
- Provide a legal costs agreement outlining the fee structure, whether hourly or fixed, and the issues that will impact upon the legal fees (for example, delays in proceedings caused by the other side) and an outline of disbursements such as court filing fees, expert and barrister fees.
A corporate dispute will almost always interrupt the daily operations of an entity and exhaust additional financial and human resources. If not managed effectively from the outset, a corporate dispute can escalate rapidly and may lead to substantial financial and reputational loss. Early advice and action are essential.