For NM business, legal system capricious

Lawyers are in the business of foreseeing the future. A typical business contract will usually start by setting out what the parties have agreed to do for each other. That part of the drafting process is easy. The parties could do it themselves.

A lawyer’s contribution is all the paragraphs that follow, anticipating every single thing that could possibly go wrong and spelling out what happens if it does.

What if the buyer doesn’t make payment, or makes only a partial or late payment? What if the goods are late, substandard or damaged in transport? What if the leased premises burn, flood, develop mold or are flattened by a meteor? What if regulations change, or civil war breaks out? Such contingencies, the likely and the far-fetched, are covered by typical contract language (though meteors, war, plagues of boils and the like are usually lumped together in “force majeure” or “act of God” clauses).

But the lawyer must also give some thought to all the ways that other lawyers representing clients with adverse interests might seek to twist the contract’s meaning. To frustrate such efforts, the contract’s language must be weasel-proof. It’s not enough to foresee problems and provide solutions. The lawyer must anticipate problems with the solutions, too.

That’s why it’s often said that business people shouldn’t involve lawyers on a project until the very end of the negotiation process. Entrepreneurs are optimistic almost by definition. Lawyers aren’t, and shouldn’t be.

While the entrepreneur envisions everything that can go right, the lawyer’s job is to envision everything that can go wrong. Both outlooks are necessary to the success of any major business project, but it’s generally best to begin with the enthusiasm and hope.

If a business dispute explodes into litigation, the lawyer must make a different set of predictions. That’s one reason for handing the case off from an office practitioner to a litigator. The litigator plans strategy based on predictions about which legal issues will arise during the litigation and how the trial judge will rule on them. Such predictions also contribute to the decision to make or accept a settlement offer.

But a lawyer’s predictions are valuable only to the extent the law itself is predictable. In New Mexico, it’s not always easy to predict how the courts will rule. This forces lawyers to give their advice in the form of probabilities — a point spread — which is not ideal for business planning purposes.

The lack of predictability has two main sources. One is self-perpetuating. Gaps in our business law don’t get filled because their very existence discourages parties from taking the steps that would result in their being filled.

The problem has historical roots. New Mexico began as an underpopulated agricultural territory and state. Our courts didn’t develop much in the way of business law because we didn’t have much in the way of business. In more recent decades, as the state’s economy has modernized, the lack of existing precedent made for conditions of unpredictability. Few business owners wish to stake the company on the turn of a card. And so the long-existing gaps in the law are in themselves reason for parties to settle before trial, or after trial while an appeal is pending, depriving our appellate courts of any occasion to fill the gaps. Uncertainty begets uncertainty in a vicious circle.

Second, appellate decisions have a short shelf life in the Land of Enchantment. Precedents are established one year only to be re-examined the next. An objective marker of this tendency

is the extreme length of the opinions issued by our appellate courts. Appeals that in other states would be handled in two or three pages require 20 in New Mexico. That’s because the courts of other states consider it sufficient to say “this issue has already been settled.” But in New Mexico, no issue is ever truly settled. Every issue is up for reconsideration in every case, producing endless pages of legal analysis in a constant churn.

The nonstop re-examination of settled issues and the writing of unreadably long opinions slows the operation of our appellate courts. No business appeal is ever decided in New Mexico until months have passed. Many, many months. Picture the sloths from Zootopia dealing blackjack and you get some idea.

Fortunately, there are ways for New Mexico business owners to reduce the odds of getting stuck in a legal system that is both slow and unpredictable. Insist on contract language requiring arbitration or its more informal cousin “mandatory mediation.” Such alternative dispute resolution (ADR) mechanisms are almost guaranteed to be faster, cheaper and — crucially — more predictable than litigation.