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WHY DO BUSINESSES WASTE SO MUCH MONEY IN COURT?



I remember a time not so long ago when people were willing to have conversations and negotiate mutually beneficial outcomes. And yet, the business world seems decades from that now. We at DLPA work with a lot of construction companies, and what we are seeing occur in this industry in particular now is that legal costs represent on average a staggering 20% of all costs to the business. Sometimes a lot more. And we are all paying for that in overall cost of construction in this country.


Today I have worked with a company that went through a process of spending approximately $10,000 to agree on a $34,000 contract. That legal process wasn’t driven by our client – it was pushed for by the subcontractor because they have recently ‘been burned’. What does this do to the overall stability of an industry that is so critical to the overall economy of the country? How has the situation gotten so out of hand that people can no longer be reasonable and honourable. Why doesn’t the party that is best equipped to manage the risk do so? Instead we argue over contract terms for weeks, and spend a huge percentage of the construction value on the process. Who is being served by this overly litigious and legalised framework that builds nothing but mistrust?


One of the services we offer at DLPA are facilitated conversations. This is a process of parties meeting in a confidential environment to discuss the bare bones of the situation and reach agreement without the need to go to courts, arbitration or mediation. I strongly believe that businesses (and individuals) are best served by resolving issues quickly and openly, and in an environment where you can speak your mind and not have to worry if someone is going to sue you because you selected the wrong word. However, how many people are truly interested in this course of action? Why does everyone simply want to go to court? Court is expensive, time consuming and stressful – and in most cases entirely unnecessary.


When we seek to bully people with the law, or undermine any notion of good faith by trying to simply pass the buck to others, there can be no equity. Without equity or good faith, we find ourselves in a spiteful quagmire of lawlessness where no one can succeed. Surely this is not the destination we as a collective are seeking?


So I’m calling on businesses everywhere to stop this cycle now. Build relationships and trust with each other. Honour your agreements and work together so that everyone consistently makes money. Of course you need to have contracts in place to manage risk. However these are not instruments for bullying, and should not actually prevent the business performing its core operations. And most of all, stop running to court with every little disagreement. Show good faith and enter negotiations. If both parties simply have a conversation and remain open to mutually beneficial outcomes, negotiation is the cheapest, quickest and least harmful route. Who’s with me?