Failing to plan is planning to fail

3 May, 2016
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Practitioners need to be proactive from the outset in litigation matters.

Litigation matters can be protracted and unpredictable. Consequently, practitioners often approach these matters one step at a time and deal with issues when they become critical. To manage risk effectively, you need to be proactive from the outset.

Time limits

Always identify and diarise applicable limitation dates at the start of each matter. Consider whether there are multiple possible causes of action and double-check relevant legislation to ascertain the applicable time limits.

Although it can be difficult to have a sense of urgency at the beginning of a potentially long matter, you should not neglect identifying time limits and commencing proceedings when there are delays in advice from counsel or experts, or instructions from clients.

One claim highlighted the need to act promptly. A couple noticed cracking about seven years after moving into their newly constructed house and retained the practitioner two years later when further cracks appeared.

An engineer’s preliminary report concluded the design and construction was defective. Five months later the practitioner obtained a detailed report from the engineer and sent a letter of demand and the report to the builder.

The practitioner agreed to the builder’s request for a three-week extension to respond before proceedings were commenced. Near the end of that period  the builder appointed lawyers who sought further documents and an opportunity to inspect the property. After a further four weeks, the practitioner wrote to the builder’s lawyers advising that proceedings would be issued unless the builder’s position was known within the next five days. The letter was sent three days after the limitation period expired.

Section 134 of the Building Act 1993 (Vic) stipulates a 10-year time limit for building actions to be brought, with time running from the date of final inspection or issue of an occupancy permit. The practitioner mistakenly believed that time began to run from when the defects first came to light. The practitioner needed to quickly identify the applicable limitation period, issue proceedings and seek to negotiate afterwards.

Conflicts of interest

Potential conflicts need to be flagged as early as possible. When acting for multiple parties, it is essential to speak to all clients to ensure you properly understand their respective interests.

n another claim, the practitioner acted for a husband and wife who ran a business together. They and their company were sued by a plaintiff who alleged the couple falsely represented he would receive a half-share of the business. He sought orders for repayment of money he had paid or alternatively a half-share of the business.

The husband asked the practitioner to act for him and also for his wife and the company which were co-defendants. The allegations against the wife were essentially confined to her role in signing two letters acknowledging receipt of payments from the plaintiff to the business. It transpired the plaintiff intended to give evidence regarding oral misrepresentations only against the husband. The wife maintained she merely signed letters on behalf of the company without personally making any representations.

Eventually the parties settled with the husband and wife jointly and severally liable for the settlement amount. The couple subsequently defaulted in meeting the instalment payments under the settlement agreement and the plaintiff made a successful summary judgment application.

The wife then sued the practitioner, alleging that he failed to advise her of the conflict between her interests and those of her husband and their company. She alleged the practitioner’s failure to identify the conflict flowed through the matter and he did not advise her on options such as the possibility of bringing a strike-out application in light of the weaker case against her.

Matter planning

You should plan the matter and begin the process of managing your client’s expectations from the outset. Discuss scope and strategy, explain options and establish what outcomes will be acceptable.

Be realistic when describing how the matter might play out and the worst-case scenarios. Tell your client to anticipate interlocutory applications. Consider how the following will add to the time required to resolve the matter:

  • the client’s responsiveness
  • the way the opposing party and their lawyer operate
  • briefing experts and counsel
  • resourcing and delegation in your office.

The effect of these factors will be magnified the longer the matter takes.

At the beginning of a matter, litigation lawyers need to be particularly proactive about:

  • identifying applicable time limits and commencing proceedings where appropriate
  • making necessary enquiries to ensure pre-litigation requirements under the Civil Procedure Act 2010 (Vic) are met
  • flagging potential conflicts with clients
  • planning the matter, discussing the client’s expectations and providing a realistic cost estimate.