At­tor­neys vi­tal for dis­pute res­o­lu­tion

It may never be nec­es­sary for the client to dis­close that it has sought legal ad­vice

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW - TIM FLETCHER

FOR dis­pute res­o­lu­tion to be ef­fec­tive, it is im­por­tant to recog­nise that at­tor­neys are not to be re­garded as a last re­sort when all other ef­forts have failed. In­volv­ing a skilled at­tor­ney in po­ten­tial dis­putes as early as pos­si­ble gives the great­est prospect for the client to be guided to the best so­lu­tion, a so­lu­tion which, if pos­si­ble, avoids the need to go to ar­bi­tra­tion or lit­i­ga­tion al­to­gether. In fact, it may never be nec­es­sary for the client to dis­close that it has sought legal ad­vice at all.

Where the res­o­lu­tion of the dis­pute re­quires a for­mal process it is im­por­tant to iden­tify the process most likely to achieve the re­sult that the client re­quires in the cir­cum­stances. Lit­i­ga­tion through the courts is of­ten the best way for a client to achieve its pur­pose but al­ter­na­tive dis­pute res­o­lu­tion has many ad­van­tages, al­though lawyers are crit­i­cised for ad­vis­ing their clients to avoid the courts. Not least of the ad­van­tages of al­ter­na­tive dis­pute res­o­lu­tion are con­fi­den­tial­ity and main­tain­ing some con­trol over the ad­min­is­tra­tive side of the process.

There are also sig­nif­i­cant ef­forts be­ing made to pro­mote the ben­e­fits of me­di­a­tion in SA. We have been slow in this coun­try to fol­low the trend to­wards me­di­a­tion seen in Europe and the US but me­di­a­tion has sig­nif­i­cant ad­van­tages over other forms of dis­pute res­o­lu­tion. It is quick and cost ef­fec­tive and by con­trast with lit­i­ga­tion or ar­bi­tra­tion, re­la­tion­ships are less likely to be de­stroyed. Once a party has been cross-ex­am­ined, re­la­tion­ships are of­ten ir­repara­bly harmed.

The de­lays that are ex­pe­ri­enced in our courts are a real concern for clients in com­mer­cial dis­putes and one of the rea­sons for the pop­u­lar­ity of the al­ter­na­tives. The man­ner in which many courts op­er­ate also pro­vides op­por­tu­ni­ties for par­ties to frus­trate the process and de­lay mat­ters ac­tu­ally com­ing be­fore a judge. Ar­bi­tra­tion by com- pari­son is not a cure-all by any means, but a firm and proac­tive ar­bi­tra­tor can make it more dif­fi­cult for par­ties wish­ing to frus­trate the process.

Look­ing to the fu­ture, the new Com­pa­nies Act prom­ises some chal­lenges for dis­pute res­o­lu­tion spe­cial­ists as there will in­evitably be dis­putes around the in­ter­pre­ta­tion of the leg­is­la­tion as the com­mon law, which has de­vel­oped around the ex­ist­ing Com­pa­nies Act, will have lim­ited ap­pli­ca­tion. Fur­ther, the new act in­cludes its own al­ter­na­tive dis­pute res­o­lu­tion pro­ce­dures and it will be in­ter­est­ing to see the ef­fec­tive­ness of these.

Busi­ness res­cue also in­tro­duced by the Com­pa­nies Act is an ex­cit­ing de­vel­op­ment, adding a fur­ther al­ter­na­tive to the old chest­nut of liq­ui­da­tion, and legal firms will un­doubt­edly be called upon to ad­vise their clients on the ap­pro­pri­ate use of busi­ness res­cue as well as rep­re­sent­ing prac­ti­tion­ers, com­pa­nies and in­di­vid­u­als in­volved in the process.

De­spite the re­ces­sion, it is in the area of com­mer­cial dis­putes that we have re­ally seen growth in the dis­pute res­o­lu­tion prac­tice. This goes against the tra­di­tional as­sump­tion that re­ces­sions bring only in­sol­vency, debt re­cov­ery and di­vorce. Per­haps those tra­di­tional as­sump­tions will be less re­li­able now that the lit­i­ga­tion sausage ma­chine is no longer good enough and clients re­quire more flex­i­bil­ity from dis­pute res­o­lu­tion prac­ti­tion­ers.

Pic­ture: GRAUR RAZ­VAN IONUT/freedig­i­talpho­tos.net

Lit­i­ga­tion through the courts is of­ten the best way for a client to achieve its pur­pose but al­ter­na­tive dis­pute res­o­lu­tion has many ad­van­tages

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