Allison Speigel is a commercial litigator with Speigel Nichols Fox LLP, a boutique commercial litigation law firm.
Canada is always touted as one of the best countries in which to live, but it ranks an unimpressive 112 from 190 countries according to this . For good reason: Our civil-justice system is on the fritz. Litigating a civil claim (e.g. contract claim, land rights claim, etc.) can take several years and cost tens or hundreds of thousands of dollars.
Even though you may know about some of the issues plaguing our civil-justice system, you probably don’t care. In actuality, you probably feel that this problem does not affect you. You’re incorrect. An ineffective civil-justice process is bad for our economy, and everybody, including you, is affected by the strength of our market.
As the Organisation for Economic Co-operation and Development (OECD) explains the ability to correctly protect contractual and property rights promotes investment, promotes economic relationships and . The World Bank succinctly concludes that effective contract enforcement is vital to economic growth and . To put it more bluntly, in order for our economy to function properly, people will need to think that contractual, property and other legal rights mean something. However they could only mean something if they’re enforceable.
To understand why, ask yourself if you’d purchase a home if you didn’t feel you could stop someone from squatting in your garden. Or if you would send $70,000 worth of merchandise with no contract. However, you need a signed contract, you say – great for you. Now ask yourself how you will respond when you learn that your contract is effectively unenforceable.
Luckily, in the present world, people still feel that a signed contract means something. At least until the man or woman is confronted with a breached contract, calls for a attorney and learns that, regardless of the strength of this claim, it might ultimately not be worth the time, cost and risk to fight until the bitter end.
From a purely economic, risk-management standpoint, a civil claim value less than $75,000 (which figure is probably low) being attracted from the Greater Toronto Area with a local attorney is seldom worth fighting to a final conclusion. Typically, the potential recovery is not really large enough to warrant the risk.
That’s not to say that parties must always walk away from claims worth less than $75,000. Finally, most claims settle because reasonable parties attempt to prevent mutually assured destruction. In choosing to begin the procedure, however, potential claimants must factor in the risk that their opponent will be unreasonable, in which case the plaintiff must be ready to go all of the way.
The problem doesn’t disappear with claims worth over $75,000. I recently attended a pretrial hearing where the presiding judge implored the parties to settle. He explained that, from a purely economic risk-management standpoint, proceeding with a three-week trial for a $500,000 claim would probably not be worthwhile in the long run. He explained that both parties were more likely to shed, with one party losing a great deal more than the other. Although I agreed with him for the most part, his message boiled down to this: In our system, parties are better off settling than rolling the dice.
This raises the question: If it doesn’t make economic sense to apply a contract and a party is effectively required to settle for pennies on the dollar, is that contract actually worth the paper where it’s composed? Similarly, if it doesn’t make economic sense to apply other legal rights we believe we have, do we actually have them? Without the security of knowing that one’s legal rights will be protected, individuals will be less inclined to transact — and fewer trades are bad for company and, thus, bad for our economy.
Unfortunately, fixing our civil-justice system won’t be easy and, apparently, there’s little desire to tackle the issue.
More money. Cases take too long to be heard, and for that reason cost too much, in part because there are too few judges, too few courtrooms and also little technological innovation. While the rest of the world goes forward, our judicial system remains firmly entrenched in the past — relying on fax machines, process servers, paper documents and on site appearances.
Attorneys with more skin in the game. It’s naive to think that a lawyer’s course of conduct isn’t affected by their financial incentives. Every customer’s goal is to get the best result as economically as possible. Under the popular billable hour version, however, lawyers make more money the longer a case drags on and whatever the final result. In some ways, a customer’s financial incentives are diametrically opposed to those of its attorney. Clients should retain attorneys whose billing structures provide them with the suitable financial incentives. Value-based billings and flat fees are just two such models: they guarantee lawyers are rewarded for results and efficiency.
A change in culture. Although the principles governing the system and the judges who use them are paying lip service to the notion that litigation costs should be proportional to the amount at stake in the lawsuit, they haven’t gone far enough. Deadlines should be tightened, the rules should be stricter and the courts must apply both — even if it means that some cases are determined based on non-compliance with technical rules. Paradoxically, the system’s pursuit for near-perfect justice causes too little justice.
The granting of adjournments is a very simple illustration of the difficulty; they are handed out like candy on Halloween. Every last-minute adjournment, however, causes an enormous amount of wasted time and money. It’s akin to walking into a last examination for which you’ve spent weeks studying, only to be advised that the examination was postponed by four months.
Even though the legal community has to be forcing the train for change, it can’t solve the issue alone. The absence of public pressure translates into government inaction. Said differently, the government does not care because you don’t. However, you should care because, 1 day, you might want to rely on a perfectly drafted contract which is, practically speaking, unenforceable.