Review of Ongoing Legal Claims

A service to financial institutions and corporations engaged in expensive, time-consuming, protracted and frustrating litigation.

Our partners are experienced insolvency practitioners, have instituted several hundred pieces of commercial litigation and have managed some of the longest and most complicated cases held in Australia. Accordingly we are experienced in the costs, benefits and risks associated with expensive and protracted legal disputes and believe that, often, insufficient attention is given to trying to resolve disputes in a more sensible and commercial manner. Many cases are commenced and continued when they should be closed down immediately whilst other perfectly legitimate claims are either not identified or prematurely dismissed as being valueless. We have witnessed numerous cases where the only likely beneficiaries are the solicitors, barristers and experts retained by the client. We advise financial institutions and corporations which may have concerns and/or doubts about the costs, delays, efficacy, merits, risks and objectivity of ongoing reporting of significant litigation in which they are involved.

We would be pleased to meet with senior corporate legal counsel, senior executives and/or board members to explain our proposal to conduct a confidential and privileged, strategic and independent review of significant commercial litigation in which your company may be involved, either as a plaintiff/applicant or defendant/respondent. It is possible that you will relate to some or all of the difficulties which we have encountered in many pieces of litigation. Complaints and observations received from various clients include the following:

• Escalating costs which bear little resemblance to previously-tabled litigation budgets.

• A concern that the matter is being over-serviced by an unnecessarily large legal team. There is a frequent perception that junior lawyers are billed at unfairly high rates in relation to the value which they may bring to the matter. Many legal practices have high fixed overheads and appear to rely on protracted, fully-staffed legal claims to generate their firm’s necessary cash flow. This places such firms in a potential conflict of interest when it comes time to explore settlement options and recommend alternative resolution strategies to their clients.

• Frequently, a scatter-gun rather than a focused approach is taken to litigation. Too many unnecessary heads of damages are pleaded resulting in almost unmanageable discovery obligations on all parties. Too many parties are joined to the proceedings resulting in obvious costs and time delay penalties. Futile and unnecessary pleading and other interlocutory points are taken rather than a decision being taken to minimise the issues in dispute, sue the fewest defendants as is commercially sensible, adhere to Court timetables and hold the opponent to a similar standard, in order to bring the dispute to Court as quickly as possible. This is nearly always the best strategy to promote the most conducive environment for commercial resolution or, alternatively, early judicial determination.

• Unfortunately, although lawyers are skilled in the legal issues associated with the dispute at hand they frequently lack the appropriate commercial experience and judgment to manage the dispute efficiently.

• Many clients have become disillusioned with barristers who have provided very positive initial advices on prospects only to find a weakening in their resolve as trial approaches, following significant legal expenditure in reliance on such advice.

• Some legal firms have a practice of retaining barristers who rarely challenge the opinions, initially provided by their instructing solicitors, concerning the strength of the legal arguments and adequacy of evidentiary material. We frequently recommend that second opinions be taken to test the objectivity and accuracy of advice previously provided by counsel.

• Litigation can sometimes become difficult to resolve because of personality conflicts between respective solicitors and barristers. Egos and perceived reputational repercussions can prevent meaningful settlement discussions being suggested or sensible concessions being given. Lawyers are often concerned at ethereal disadvantages which they perceive might flow should they be the first to suggest that the parties cease hostilities to enable settlement options to be explored.

• A "win at all costs” coupled with a “take no prisoners” approach nearly always results in litigation budgets being significantly exceeded.

Our proposal

Upon execution of undertakings of confidentiality and confirmation of no conflicting interests we will expediently conduct the following and provide a related legally-privileged report to the board and senior corporate legal counsel:

• Meet with key litigation personnel including solicitors, counsel and management to quickly understand the key issues in dispute.

• Determine court timetable for hearing of matter and likely delay until final resolution.

• Review pleadings and stage of interlocutory proceedings. Assess whether only critical parties and disputes are involved and whether proceedings can be further simplified/streamlined.

• Determine whether marginal interlocutory disputes have been allowed to delay commencement of trial. Address any such unnecessary distractions.

• Review legal advices and consider whether further such advices should be obtained. In particular, is the party’s ultimate legal position, strategy and direction determined by a key issue on which a second opinion should be sought? It is difficult to overstate the importance of this particular issue as many millions of dollars of litigation costs and/or recoveries could be at risk if a single key litigation premise is wrong. Conversely, we have encountered other cases which should never have been instituted and which were based on wildly-optimistic damages estimates provided by solicitors and/or counsel.

  (For example, we conducted a litigation review concerning a claim brought in the NSW Supreme Court. Senior counsel had advised our client that an exclusion clause to an insurance policy would most likely be invoked by the underwriter to deny indemnity on an $80m claim. The client initially decided not to pursue this claim however we procured a second, contrary opinion from senior counsel with which the first senior counsel subsequently agreed. The litigation was recommenced and a very significant settlement was obtained.)

• Assess the likely ability of named defendants to meet estimated projected damages awards.

• Determine whether compliant barristers have been retained. For example, do the instructing solicitors brief widely or always within a limited circle at the bar, where barristers may become reliant on such support.

• Review independent experts’ reports.

• Review litigation budget, level of costs incurred to date and projected and consider commerciality thereof in comparison, inter alia, with the amount in dispute. It is surprising how often costs can exceed the amount actually in dispute.

• Determine whether Court-imposed timelines are being met and whether such discipline is being imposed on the other party.

• Ensure that an appropriate litigation reporting regime is in place and is followed.

• Determine whether resources have been applied in determining, from publicly-available sources, the other party’s financial and commercial position. It is sometimes possible to determine the level of insurance cover held by defendant(s), including whether the policy is claims made or claims incurred, whether the level of cover is inclusive or exclusive of costs and whether it has a cumulative limit in any one period or provides unlimited reinstatements.

• Assess level and nature of settlement attempts/negotiations.

• If appropriate and necessary assist in fresh attempts at commercial resolution including attendance at mediation/arbitration and/or settlement negotiations.

• Assess whether consideration has been given to non-litigious resolution of dispute.

Finally, we frequently advise clients in relation to the assignment/sale of all or part of their interest in potential or instituted legal claims which they may be unable or unwilling to litigate to enforce indemnity for a number of reasons including:

• the need to divert scarce management resources to the claim;
  
• the level of security for costs either ordered or likely to be ordered by the Court;
  
• the budgeted legal, court, expert and other associated costs;
  
• an apprehension that the opposing party will seek to delay and complicate the assessment of the claim and resultant litigation;
  
• the risks associated with an unsuccessful claim.

We can introduce qualified potential purchasers to evaluate and tender for such claims.

Our fees for this service

Our fee policy is flexible and can be calculated on either the traditional hourly based system or, alternatively, on the basis of an objective success fee as negotiated.

We look forward to meeting with you and your colleagues to discuss this proposal.

John Sheahan:

0418 834 540 / jsheahan@slp.net.au

Ian Lock:

0413 015 432 / ilock@slp.net.au

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