09/02/2015

By Mark Beaumont, Co-Founder and Director, Annecto Legal


We’re constantly being told that SMEs are the driving force of the economy; that entrepreneurship will lead us into a dynamic, innovative future. That’s all nice to hear, but it misses the point somewhat: running a business is a lot of hard work. It often feels like every hour spent on strategic planning and dreaming up fantastic ways to grow your business, equates to four hours spent on tasks that leave you with a headache like chasing invoices and filling in tax returns (as so many of us have recently done).

Add litigation into this mix, and it’s no surprise that business owners decide not to pursue valid claims, believing that they will take up too much time and involve investing far too much money in a case that may ultimately fail. Recent research by my company, Annecto Legal, reveals that over a third of British SMEs haven’t pursued a potential legal case in the last five years because of fears about cost, the time it would take and worries about losing. This has led to these SMEs missing out on an average of £172,000 each in damages. It might seem like pursuing litigation will take time away from your business, but it also has the potential to really add benefit to your company and transform its bottom line, if risk managed and funded correctly.

Litigation is a major worry for those who are unfamiliar with the processes involved. Indeed, it’s hard to find a business owner who doesn’t believe it’s a minefield. But this doesn’t have to be the case: if you have a clear strategy for handling litigation, it’s less likely to impact negatively upon your business. Here are some tips to keep in mind to make the process as pain-free as possible.

1. Gather your internal team

While you’ll clearly need legal professionals to handle your case, it’s vital to appoint a small team inside your business to deal with proceedings day-to-day. By setting out a litigation-handling team at the start, you will save a lot of time and confusion as your case progresses.

This team will include a senior decision maker to act as a point of contact for your legal team, so that important decisions can be made quickly and authoritatively as needed. This person will need to be easily accessible, as decisions will often need to be made at inconvenient times.

It’s also important to keep your business’s IT team in the loop. Evidence is increasingly submitted to the court digitally, so you will require strict data-handling procedures to ensure that important documents are preserved. The IT team will also be heavily involved in helping you scope and oversee e-disclosure.

Finally, your HR department will need to help identify employees’ roles in the dispute and liaise accordingly if they are called to give evidence in court.

2. Keep detailed plans and records

If you’re not careful with your time, the litigation process can easily take over your business. It goes without saying that the smooth running of your business should remain your priority, but here are some tips to help you make that happen:

• Plan your litigation strategy — if you don’t have a plan laid out clearly, you might miss out on claiming for wasted management costs. For this claim, you’ll need to establish that your opponent’s actions disrupted your business enough to justify the time spent away from normal business activities. This is not something you will have to do on your own, and can be relatively quick to prepare.

• It helps to keep detailed records of the time you and your staff spend working on the case, taking care to include exactly what was done in this time so you can present the exact costs of the case’s disruption.

3. Use alternative funding options

If you have a good claim, you may be able to attract third-party funders who will take on some of the litigation risk in return for a share of the damages. Other options you might want to consider include after-the-event (ATE) insurance, contingency fees and a mixture of funding models.

You don’t need to shoulder all the risk and pay your lawyer by the hour any more — there are far more options available, and most of these provide certainty from the outset. Make sure you weigh up these options thoroughly, deciding upon the risk you’re willing to take and the money you’re able to put towards your fees. The amount you need to pursue a claim is often much less than you think.