The one-word secret to reducing your legal spend

Dignity.

That’s it. Not much of a secret. But there you have it.

Let me explain.  

In more than 20 years of commercial litigation practice, I watched the transfer of many millions of dollars from corporate legal budgets to law firms (including mine) through litigation bills. A common pattern emerges as I look back over that time – the absence of dignity at the moment of ignition of the dispute, and structural impediments to recovering it throughout the dispute resolution process.

I sense your skepticism. Surely it can’t be that easy! I’ll step it out, and I’d love to hear from you if you disagree. Even better – I’d welcome your stories of giving this a try.

The anatomy of the typical contract dispute goes something like this:

1. Relationship formation – alignment around a common objective. A plan to do something specific is reduced to written form by the lawyers. A contract is an abstraction of an unknowable future in a particular structure which does the best it can to allocate risk and reward on a set of assumptions (only some of which are usually articulated and expressed)
2. Project execution – performance of the respective obligations. This bumps up against the reality of a world different from that which was assumed, in simple or  fundamental ways
3. Misalignment crystallises – the negotiated or expected allocation of reward is not met, with a perceived winner and loser. (Spoiler alert: This represents the critical moment of opportunity. The significance of the moment is usually sensed, but often misunderstood as an opportunity to secure additional upside or dodge an unforeseen loss.) My phone never rang as a litigator if the misalignment was addressed through respect for the different interests and exploration of an outcome which honoured both. It rang some time after point 5.
4. Offence – The taking of that upside by one participant offends the other. Ordinarily, the perceived loser attempts to regain the anticipated outcome (often in a clumsy way, common to those who feel their dignity has been undermined) which is rebuffed by the party with the windfall gain or sidestepped loss.
5. Blame – The first evidence of offence having been taken is usually an accusation, or a shifting of blame. The anticipated “we” has returned to a focus on “me”. 
6. Force – Since blame signals the fragmentation of relationship, it rarely generates the concession that was hoped for. Instead, it is the starter’s gun for the tired, expensive and ultimately value-destructive pattern of positional conflict resolution, where the incentives are stacked in favour of entrenching positions and pointing fingers.

A useful exercise for your contract management or in-house legal team may be to test this model against your most recent (or current) conflict. See if you can identify the moment of opportunity in point 3 and what path was chosen. Then assess whether the resolution process restored or further diminished the relationship.

Please do not hear me to suggest that the moment is simple to navigate well. But I am saying you have options (hint – think of how you deal with conflict in your most enduring personal relationships), and they are not as uncommercial as you might have been taught to think.