How to Not Land in Litigation
-- by Jessie Gabriel
What many people don’t know about our All Places team is that both our senior partners started off as litigators. Earlier in the firm’s life, we were hesitant to mention this. We didn’t want people to think that we didn’t know what we were doing on the corporate side. But now we know better. Being litigators has made us even better corporate lawyers: we know what leads to litigation and how to avoid it.
This is not going to be a list of legal terms. A great contract is only one piece of reducing litigation risk. It is important, but a great contract alone is not enough to avoid being sued. We are a litigious society—you need to go beyond what’s in writing. Here is what we know from a combined twenty years of experience resolving lawsuits.
Trust. As a generalization, there are high-trust people and low-trust people. High-trust people tend to be both trusting and trustworthy. Low-trust people tend to be the opposite. This is not to say that low-trust people should be avoided. It is only to say that it’s important to know this from the outset, as you move into the phases below. If you are partnering with low-trust people, you will want to double down on everything suggested below.
Clarity. In chronological order, we’ll start with clarity. Having clarity at the outset of the relationship is critical. Most partnerships (whether professional or personal) go south as a result of misaligned expectations. This can be expectations about the nature of the partnership, expectations about your respective roles in the partnership, or expectations about what it means to be a partner. The value of good counsel starts here—before you move into contracting. You may not need us to get clear on what you want, but you may need us to identify other key terms where clarity is required that might not have been on your initial list.
Very thoughtful contracting. No, this is not the first thing to think about. Contracts should reflect the clarity that has already been gained between the parties, along with additional terms to guard against likely risks. This is where we really start thinking about litigation. We know from our time in court which terms present the highest risks, and thus which terms require the most thoughtful drafting. We also know how to be proactive about risk reduction where it counts, and how to back off where it doesn’t. Nobody wants an over-lawyered agreement when you have two parties who really just want to be in business together.
Relationship management. Along the way, and even after the contract is signed, you must manage that relationship. Having the contract is not enough. Even the best contract will not anticipate every possible fact pattern. And even if it does, that doesn’t mean someone won’t try to argue that it doesn’t. In the U.S., because we do not have automatic fee shifting (where the prevailing party has to pay the other party’s attorneys’ fees), it is easy to file a lawsuit even when your argument is weak. The best way to prevent this is to manage those relationships. Be a good business partner. Be a good communicator. If tensions arise, work in good faith to resolve them.
The question that we almost never get is, Why did you stop litigating? Really, no one asks us that. But I’ll tell you anyway. Litigation sucks. It really does. It sucks for the parties and the lawyers. It’s an enormous outlay of money, time, and emotional energy. You are signing on for months, if not years, of aggressive posturing, lying, condescension in oral and written, and the general unhappiness of your client, even when you are doing your very best. It’s dreadful.
At All Places, we like to say, “litigation is for losers.” Because if you end up in litigation, you’ve already lost (and for other reasons that just make us sound like jerks). Being intimately familiar with its misery, though, is a strong incentive to avoid it. That’s our role in the litigation process. Well, that, and listening to SCOTUS oral arguments streaming.
