Going to Court is (Usually) an Irrational Way to Resolve a Dispute — Part II of II: Making Litigation the Absolute Last Resort


The Point

Primary responsibility for settling conflicts between your company and a party outside of it should lie squarely with the executive who runs the affected business unit or corporate function:

“Businesspeople need to resolve the disputes in which they are involved.” “Give it to the lawyers” should be a last resort.

But for now, “give it to the lawyers” is the go-to move that prevails in most American companies.

This Matters to Your Business

So writes Patrick J. Lamb after practicing 39 years as a litigator defending complex business cases. Part I of this two-part series described Lamb’s conclusion that going to court is usually self-defeating for a company: “B2B litigation is a sign of business failure”.

Mr. Lamb argues that executives’ strike a pose of helplessness when they reflexively place the proverbial “monkey” of business disputes on the back of their lawyers. It is, he argues after his 39 years in court, just plain bad management:

“In the abstract, people know the waste and futility of litigation. But the reality is far worse than what most understand. Lots (and lots) of legal fees. But worse, uncontrolled and unpredictable legal fees. E-discovery has become a license to print money, and disputes about process frequently overwhelm the true dispute between the parties ….

“The real world intervenes and the intervention [a lawsuit] rarely helps … The lawyer who accepted the monkey feels pressure to achieve an outcome judged to be acceptable by someone who frequently has no real insight into the original dispute. A resolution is reached, begging the question of why the resources were spent fighting when the dispute is solved by a negotiated resolution.”

Hence Mr. Lamb’s recommendation:

” … In the face of growing demand for already limited resources, modern General Counsel are going to have to create an institutional expectation that business monkeys will not be accepted. Businesspeople need to resolve disputes in which they are involved. A dispute is not different from any other business issue where negotiations and compromise are the order of the day.

Because …

This decisive shift in expectations promises to change the game for settling conflicts between the company and other parties — if taken to heart, and implemented. By removing the easy out which is the conventional go-to move in such situations: “Well, it’s a lawsuit, so I have to send it to Legal.”

But I have a point of respectful disagreement with Mr. Lamb: General counsels are not going to take such responsibility on themselves. For two reasons:

1. They don’t want to do it: General counsels, for the most part, continue to embrace the billable hour, slow-walk labor-saving and accuracy-enhancing process improvements and technology, and hold fiercely the litigation management “monkey” that Mr. Lamb says they should refuse to take on. As a group, the former law firm associates who hold these jobs — with rare and noble exceptions — (1) believe in the legal profession’s business model and (2) the service delivery and cost structure it dictates. And they show little interest in materially changing that.

2. They are not able to do it: General counsels are in no position “to create an institutional expectation” that assigns new duties to executives who are their peers — i.e., as here, to retain the “monkey” of dispute resolution and not reflexively shunt it off to Legal. The CIO whose vendor has failed it, or the business unit head whose customer refuses payment on grounds of contract breach, are each co-equals with the general counsel — not subordinates to whom the he or she can give an order.

Patrick J. Lamb’s prescription makes compelling business sense, but it won’t be ushered in by general counsels or law firms. Only C-suite business people are sufficiently free of Legal’s powerful incentive to maintain its now-preeminent role in litigation management. And only C-suite business people have the institutional prestige and management reach “to create an institutional expectation” company-wide. One that’s different from what prevails now: one that leaves that proverbial “monkey” of responsibility on the business unit or corporate function where the dispute originated.

Patrick J. Lamb

“Here’s my prediction for the company that determines that ‘the business’ is responsible for cleaning up its own messes: There will be fewer messes.

“Quality will improve. People will do things right the first time. Contracts (and thus performance expectations) will become clearer and simpler — people will insist on clarity and simplicity so they will know what is expected of their operations … For the company, the resources previously spent on litigation can be used to provide higher ROI for the company.” 

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