1. It takes time. While a dispute might resolve in a week, once the parties engage in court proceedings, an action may take years. Not only does it take time for counsel to review the file and research the issues, but the parties must also adhere to the rules of court, including observing the time allowances given to each party. Further, court proceedings depend on the availability of court resources.  

2. The expense can be unpredictable. No litigation is the same, and multiple factors play into a litigation’s expense, including each party’s resources, whether the parties are litigious or cooperative, and the complexity of the law and facts.

3. The opportunity cost can be significant. To participate in litigation, your business may need to divert significant resources toward the litigation. Not only does this include financial resources, but also the time from those staff who will be involved in the litigation. Tasks can include gathering records, working with legal counsel, and attending Court. All of this can be stressful and time-consuming.

4. Litigation is public and can affect your business. With certain exceptions, Statements of Claim are available to the public, and court proceedings are open to the public.

5. Confidential information may have to be shown to the other party. The court process includes a discovery stage, where each party must produce documents it has that are relevant and material to the dispute. That is, an opposing party is entitled to receive from your business any relevant and material records, even if those records are considered “confidential” in day-to-day business. While there are exceptions, litigation involves a good deal of disclosure.

6. The court process can be adversarial and ruin relationships. Litigation often enflames business relationships, including those that extend beyond the parties involved in the dispute. For example, individuals who are not directly involved in the dispute may be called upon as witnesses or to produce documents. Often, they would rather not get involved in a legal dispute.

7. It is not enough to get a judgment; the judgment may need to be enforced. If the unsuccessful party does not voluntarily pay the amount awarded in the judgment to your business, your business must take steps to enforce the judgment. This involves paying fees to institutions to cooperate in garnishing assets owed to the unsuccessful party, such as wages or bank account funds. If property is involved, fees must be paid to a civil enforcement agency to obtain the property. In addition to not having received the judgment amount, your business may have to pay the fees owing from the enforcement before the proceeds from the enforcement are realized.

8. A judgment may be appealed. A decision may be appealed if there is an error made by the Court. Further, when an appeal is filed, this may operate to stay the proceedings, effectively preventing the civil judgment from being enforced until the appeal of it is decided.

9. Even if you win, the other side does not have to pay all your legal fees. Even if your business is successful in litigation, it is likely that the opposing party will only have to pay a portion of your business’ litigation fees.  

10. There are other options for litigating. Alternative Dispute Resolution, or ADR for short, provides a different means of resolving a dispute, confidentially. The three main alternatives are negotiation through lawyers, arbitration, and mediation.

The takeaway: Court litigation can be unpredictable and can have significant affects on your business’s financial and human resources, as well as its relationships. When deciding whether to litigate, you need to consider not only available financial funds but the time away from work and the impact on employee morale and business relationships. It is almost always worthwhile to consider alternatives to litigation to resolve disputes.