TOP TIPS FOR MITIGATING AND MANAGING LITIGATION RISKS
Contractual disputes are a costly reality for most commercial businesses. It is not unusual for business interests to diverge or for relationships to take an unexpectedly sour turn after contracts are formally executed. It is unwise for businesses to be blind to this reality, given the time, expense and resources that are often involved with commercial dispute resolution.
In view of the risks, there are some proactive steps that businesses can and should take during contract negotiations to limit the chances of contractual disputes arising in the future. Similarly, there are practical management steps and tools that businesses can use once a contract is formally executed to mitigate the risk of a dispute arising.
Though litigation risk can be effectively mitigated by businesses, it can never be eliminated entirely. Businesses should take steps to manage the risks associated with litigation by, among other things, agreeing a dispute resolution mechanism that affords certainty and familiarity for the business when a dispute does arise and by implementing effective record keeping through the contract term to ensure that the business is in the best position evidentially to support its narrative in court or arbitral proceedings.
This article provides some top tips for mitigating and managing litigation risks throughout the life cycle of a contract.
Contract inception
While it is not possible to eliminate the risk of a dispute arising under a contract, businesses can minimise the chances of a dispute arising by ensuring that any written contract with a contractual counterparty is clear, coherent and consistent.
Apr-Jun 2023 issue
Norton Rose Fulbright LLP