Tuesday, November 24, 2015


The Three-Thirds Rule

I once read somewhere that 1/3 of all cases settle after getting lawyers involved but before any court action is started, another 1/3 settle after the start of court action but prior to the case going to trial, and another 1/3 are only resolved during or after the trial (or motion or application or other type of contested hearing). I'm not sure if these figures are accurate for Ontario courts, but I do believe they provide a good guide for determining when and how you should resort to professional legal help and the courts when you're involved in a contentious legal dispute.

Make sure you take full advantage of that first 1/3 of settlements without court chance before you rush off to court. And even when you are in court, don't rush off to trial without maximizing that second 1/3 of settlements prior to trial chance. 

A Modest Legal Investment at the Pre-Court Stage

Some disputes are always going to settle without any lawyer involvement, because all parties to the dispute are reasonable, and there's not much need for legal advice about respective rights. These could involve business or personal debts, or simpler disputes over property rights. 

Other disputes might still have reasonable parties involved, but require a little nudge from the lawyers in the advice department because of the stakes at play. A good example is family law situations where, regardless of how amicable the split, spouses will need solid legal advice on asset split, spousal and child support, and child custody in order for any agreement arrived at to be later defensible in court if one of the parties subsequently decides he or she is unhappy with the arrangement. 

Still other conflicts could need a lot of lawyer involvement prior to the court phase in order to reach a settlement, with the lawyers playing the roles of negotiators, mediators and advisors on next steps. You should always bear in mind what is the best alternative to a negotiated agreement. That extra lawyer involvement at the pre-court stage will usually come at a fraction of the price of lawyer-led court action. 

A couple of hours of lawyer time, or even a dozen hours depending on stakes, can be a total bargain if it solves your legal issue for you. As soon as the court action ball starts rolling, the lawyers will start to burn through time. Court action is expensive not because of the fees the courts charge - they only amount to a few hundred dollars, with your tax dollars covering the vast majority of court judge, clerk, reporter and building time - and not even because of lawyer hourly rates, but because of the amount of time lawyers need to devote to becoming properly prepared for court, and then appearing for you in court. 

Four Tips for Deciding When to Proceed to Court

1. Wait as long as is humanly possible. Even if it feels almost impossible to wait any longer, because your situation has become intolerable, it may pay to wait even longer. Once you pull that court action trigger, the positions of parties harden, lawyer bills shoot up on both sides, and it becomes difficult for any party to disengage from the action. 

2. Start court action if there is a true stalemate in negotiations. I'm not saying you should wait forever to go to court. Eventually, enough is enough, and sometimes initiating court action may break a stalemate, causing the opposing party to immediately settle in order to avoid legal fees and the possibility of losing in court. But you shouldn't count on that settlement. 

3. Start court action sooner if the stakes are so high that they justify the cost, and you have the resources to fund such action. If you're fighting over $10,000, you should be much more cautious over initiating court action than if you're fighting over $1,000,000. In the first fight, your legal fees could exceed the sum in dispute. In the second fight, the legal fees might be just a few percent of the amount of loss. Non-monetary high stakes that also could justify sooner court action might involve child custody arrangements, or if your own personal liberty is at stake. 

4. Immediately start court action if your position is going to be significantly prejudiced by waiting. If assets that could compensate you for your loss or evidence that can prove that loss is at risk of disappearing, because the opposing party might hide them or destroy it, you might need to immediately go to court to freeze those assets and preserve that evidence. A Mareva Injunction or Anton Pillar Order are interlocutory remedies that a court can give you to preserve assets and seize evidence. An injunction can generally force a party to do or not do something on a temporary basis when there is a risk that you will suffer irreparable harm if the injunction is not granted. 

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