Obtaining a judgment is only part of the process of recovering money in a commercial dispute. Many debtors choose not to honour awards issued against them. This article will explore how investigation of an adversary’s asset position before, during and after the dispute process can overcome some of the inherent challenges of enforcement.

According to statistics gathered for the Westchester County Supreme Court in New York state in 2015, the amount of uncollected judgments was 81 percent of all judgments obtained in the court between 1996 and 2014. The process of litigation can be expensive and should be viewed as a business decision which must make commercial sense. The merits of a case might be promising, but if successful, will recovery be possible? There are steps which can be taken to limit the risk of receiving, after long and costly litigation, a very expensive piece of paper – a judgment with little chance of recovery.

The dispute process can be viewed as having three phases: before, during and after litigation. Before launching litigation it is advisable to gather asset intelligence about the counterparty. The approach will differ depending on whether the subject is a government, a corporate or an individual. Also important is whether the adversary has acted in a corrupt or fraudulent manner – an indication that it may have already gone to lengths to conceal and obfuscate its assets. Getting clarification on the subject’s jurisdictional footprint and the asset classes held will provide an initial indication about whether the adversary is a recoverable target, and can also inform future legal enforcement strategies. The litigation funding market has brought a sharper focus to this question, which can only be a good thing, and the preliminary asset investigation exercise can be termed a ‘fit-to-sue’ assessment.

Jul-Sep 2017 issue

Mintz Group