Do you want to be right, or do you want a practical outcome? If you’re facing a legal dispute and considering litigation, you’ll probably have to confront this question.

If you just want to be right, there are certainly legal pathways that can help you achieve that. Going to trial being the most alluring. And when emotions are running high, there is certainly a temptation to rush down those pathways. But there is a danger in doing so.

The litigant who is fuelled by emotion will generally want to do everything possible to prove that they’re right. Answer every allegation. Respond to every point. Bring everything to the table.

With this approach, you might find yourself wading into areas of risk and cost that were unforeseen, unexpected, and ultimately unpleasant. You might find yourself making the kinds of decisions that see you spend far more than you should have and take far longer than you should have, just to be told that you’re right. By then, of course, much of that originating emotion will have diffused, and it likely won’t feel worth it.

If it’s not just about being right, if it’s about getting the most practical outcome, then you need a different mindset.

The investment mindset

In our experience, the most effective way to approach a legal dispute and the way in which to achieve the most effective and practical outcome, is to adopt an investment mindset.

Now, this is not to say that we can ignore the emotion. The emotion, of course, is there. It is what motivates our behaviour and desire to pursue legal action: to right some kind of wrong. But it’s crucial to be able to separate that emotion from the approach to attaining an outcome, treating litigation as if it were an investment or a balance sheet item. Because, ultimately, it is.

If you were to say, ‘I want this is a matter of principle’, you probably don’t mean, ‘I’ll spend $20 million to achieve $5 million.’ Some people do, but usually, somewhere beneath that kind of language is a series of other rational considerations that are going to play into the kind of outcome that will be satisfying in the end. Considerations that would apply to most other investment decisions.

Applying the investment mindset

So, what does having an investment mindset in litigation look like?

Rather than initiating legal proceedings quickly, it involves analysing the range of factors that will affect your expected return of pursuing legal action, all before making the investment decision.

These considerations include:

  1. Objective: The person with the investment mindset starts with figuring out their objective. That is, what do I want to achieve from this dispute? What outcome do I want? This should be more than just vindication. The first meeting with your lawyer is a good arena to discuss this thinking.
  2. Range of outcomes: The next step involves seeking an assessment of whether the desired outcome is realistic. If it isn’t, then it means understanding what the range of reasonable outcomes are.
  3. Amount to invest: Based on the desired outcome/s, there needs to be a decision about how much to invest (both time and money) in order achieve it/ them. What is appropriate? What are you willing to invest? Will you require funding?
  4. Risk: The moment you start to consider how much you need to invest to achieve a particular outcome, you immediately turn to the risks of achieving it. In a litigation context, the analysis of risk can extend to the legal risks, the parties’ interests, motivations, triggers and representation, the relevant case law and the likely approach of the judicial officer.
  5. Risk appetite: Having regard to your understanding of the potential outcomes, investment and risk, there should be a determination about the degree of risk you are willing to accept.

All of this leads to a mindset that is focused on how to achieve the most effective, practical outcome in the shortest possible time, at the least possible cost, to achieve the biggest possible return.

 

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