Business Negotiation December 30, 2013

Legal Intimidation and How to Handle It

It’s regrettable that the legal profession is held in such disrepute.   Newspapers are full of stories about lawyers who abuse their clients and charge unconscionable fees...

It’s regrettable that the legal profession is held in such disrepute.  Newspapers are full of stories about lawyers who abuse their clients and charge unconscionable fees. It is no surprise that so many people wonder if the legal system and its army of lawyers is out of control.  Lawyer jokes say much about the frustration people feel.

Almost everyone is afraid of getting involved in legal battles.  Disdain for the profession is pervasive.  People are intimidated by the threat of legal action, and for good reason.  In an extended legal battle opposing lawyers are certain to expose weaknesses in your procedures, policies and judgments.  They can cause the most competent and self-respecting executives to lose confidence in themselves.  In a lawsuit, business secrets may be exposed.  Is it any wonder that we are intimidated by lawyers and lawsuits?

In addition to the stress of going through a lawsuit, we have to consider the huge costs involved.  Top lawyers earn $1000 an hour.  It’s easy to run up a bill of two or three hundred thousand dollars on even a simple matter.

Legal intimidation does influence negotiation.  One of the parties may be afraid of the legal process.  One may have the resources to pay high legal costs, while the other does not.  There are people in business who budget legal action into their competitive strategy, knowing that others will run from it.  The possibility of a lawsuit is often a hidden factor in determining the outcome of negotiations.

What can be done to reduce the impact of legal intimidation?  These countermeasures can help:

  1. Few threats to sue end in lawsuits.  When the other party threatens, don’t overreact.  They may talk big but be unwilling to pay the costs or do the work that goes with legal action.  Keep talking.

  2. Because we live in a litigious society, it’s wise to build the cost of legal action into your overhead and pricing strategy.  Legal intimidation is less effective when you have the cash to defend against it.

  3. Build mediation and arbitration into your business relationships.  It reduces the tendency toward legal adventurism.

  4. It pays to put an attorney on retainer, or to hire one for your staff if business warrants.  It will help avoid legal pitfalls before they arise.  If legal problems are allowed to fester, the cost of protecting yourself will rise.  Getting good legal advice early on pays for itself.

  5. When a serious lawsuit threatens, use the services of the best law firm you can afford.  The difference between a good firm and a mediocre one is enormous.

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