The frightening cost of commercial litigation for the average “Joe”

Run your life and business to avoid it, at all costs

How often have you heard a person say, “Well, we will sue them!” How often have you also heard a person say, “Well, let them sue me!”

These words reflect my personal adage that “the first casualty of emotion is common sense.”

Persons who make such statements, like the ones above, are entirely ignorant of how horrendously costly it is for the ordinary person or business to be a litigant as either a plaintiff, or a defendant, in a legal action.

The costs of litigation involve a solicitor to prepare the case and a barrister to advise on precedents and to help draft the pleadings and to ensure proper pre-trial processes are being followed and then stand up in court to argue the case of the plaintiff or defendant, as instructed by the solicitor for the client.

It is important to note that it does not matter in which jurisdiction or court a plaintiff or defendant finds itself, the local or magistrates court; the district court or the supreme or federal courts. No matter what the court, the time and effort involved for your barrister and solicitor is exactly the same. And they charge exactly the same no matter what the jurisdiction. Their fees are all time-based.

Also, bear in mind that if you win, you will only be awarded a maximum of 50-60% of your legal costs and if you lose, you will be liable for the other party’s costs.

From experience, when you think litigation (a contested claim), for even a minor claim, think a nominal minimum of $20,000.00 in costs to be funded by you as a plaintiff or defendant, excluding any award for costs against you. Ask your solicitor to explain all the cost scenarios to you and make then make commercial judgements about letting the matter go, or negotiating a settlement, if possible, rather than going to court. There is a lot of merit in putting things down to experience. 

So how does a person or a business avoid or minimise the prospect of the cost and distraction of litigation?

My answer is to adhere to the old banking adage of doing due diligence on your counterpart before entering into the arrangement; seek experienced legal advice on contracts or arrangements before you enter into them; have them properly negotiated and documented; and ensure that they are adhered to and properly managed during their term; don’t ‘set and forget!’.