In these difficult economic times, Small Business Owners need to be 100% focused on putting in place strategies to stabilise and grow their businesses. They need to maximise the benefit from hard-won opportunities in a challenging market, in order to take advantage of the upturn when it comes. Therefore, for a Small Business Owner, becoming embroiled in costly litigation is counter-productive and , in extremis, can be life-threatening for the business. It is difficult to find studies which look in detail at the effects of litigation on Small Businesses. However, there is a useful study originating from the USA a few years back*, which ( on the basis that what happens in the US eventually crosses the Atlantic) holds lessons for Small Businesses here in the UK today. The US study concluded ( perhaps not surprisingly) , that litigation is costly to Small Business owners in terms of both money and time: resources which could be better and more productively spent pursuing new opportunities, rather than fighting rearguard actions. The cost of litigation amongst those surveyed ranged from $3,000 (£1900) to $150,000 (£96,000). Small Business Owners attempted to recoup their litigation costs by cutting operating expenses, targeting new customers, or expanding services to existing customers. Raising prices was not an option, as it would have put them at a competitive disadvantage.
The effect of litigation on a business can be so severe that it modifies the way Small Business Owners do business: most will go to great lengths to stay out of court , which was their major motivation to settle claims prior to trial. There is nothing new in this: Charles Dickens’ 1852 novel Bleak House, is a cry of frustration against the exceedingly slow and expensive English legal system, epitomised by the fictional case of Jarndyce v Jarndyce which went on for years and drove everyone connected with it to madness. Jarndyce was based upon a real case in the English courts which ran on for 53 years, and prompted Dickens to write “Suffer any wrong that can be done you rather than come here!"
Well, times have changed, but not all that much! It is still wise to avoid litigation if at all possible, even in these straightened economic times, when the risk of bad debts and the need to protect business interests may point towards litigation, rather than to other potentially more productive and business-friendly ways of resolving disputes.
The study also found, and this is a point that is often overlooked, that litigation causes emotional hardship within Small Businesses, and that Small Business Owners became more wary of customers and employees as a result of their litigation experience.
At EDC Lord and Co, we understand and appreciate the pressures on Small Businesses, precisely because we are a Small Business ourselves. We understand the need to take early action to avoid disputes if possible, but when that fails, we also understand that we need to be part of the solution , rather than adding to the problem. That is why our first priority is to work with our clients to ensure that they receive good advice to enable them to comply with their obligations across the whole range of business interactions, whether it be customers, suppliers, employees or regulatory authorities, to prevent disputes arising in the first place. However, even the best run business cannot always avoid disputes arising, and that is why we provide advice, assistance and legal representation to our clients to help them to resolve disputes when they do happen. However, we only recommend litigation as a last resort when all other avenues have been tried and failed. We make extensive use of Pre-Action Protocols to try to resolve matters without recourse to the courts, and we will always consider with every client whether some form of Alternative Dispute Resolution ( ADR) , primarily mediation, could help. We value our clients and we prefer to build long-term business relationships , which enables us to provide the best quality advice tailored to the specific needs of our clients’ businesses. Accordingly, we guarantee we will not “pad” the costs of a case by issuing court proceedings unnecessarily before other avenues of settlement have been tried, nor will we “drag out” cases to maximise our short-term billing. What we will do is work with you to achieve a reasonable commercial outcome at a proportionate cost and with minimum disruption to your business. This is our guiding philosophy. But, don’t just take our word for it. This is what our clients say:
“Many thanks for your efforts to achieve such a satisfactory outcome at such short notice; it is a huge weight lifted from our shoulders” Mr and Mrs P 2009
“I am very pleased with the professional way in which you and your firm dealt with my case” Mr W 2009
“I would like to thank you for the stress free and efficient process in obtaining possession of …..
Road. I would not hesitate to recommend your services.” Ms W 2009
“Thank you for bringing this matter to a very successful close” Mr and Mrs G 2009
“The successful dispute resolution in our favour is a result of great team work and you being the core of it all. Your experience and advice got us through. It was a good experience working with you.”
Mr C (Director of Overseas Company) 2010
“Thanks for the last job, it worked wonders for us”.
Mr H ( Company Director) 2010
“I extend to you my warmest thanks for your excellent professional help and guidance, in particular for the charming calm manner in which you assisted me. Your help made a torrid experience considerably more bearable than it might otherwise have been”
Ms H 2010
“Your advice was the best out of all the lawyers I went to regarding this matter” Ms CA 2010
“Thank you for dealing with this. Although we did not recoup all of our losses, the final settlement is easily enough to make us happy that we do not have to waste further time going through the lengthy court process”
Mr B 2010
(Dispute Settled by Mediation)
“May I take this opportunity to thank you for the service you have provided and let you know how much it is appreciated”.
Mr C 2010
* Impact of Litigation on Small Business, Klemm Analysis Group for the Small Business Administration, Office of Advocacy, USA 2005
For more information contact our Dispute Resolution Partner Andrew Isitt on 0208 862 8969 or email aisitt@edclord.com
