Bluffing in commercial litigation
Most disputes that come to lawyers are, almost by definition, problem disputes. The route to resolving the problem, the rights and wrongs and often even the scope of the dispute are often unclear. How you present the case at the early stages will determine whether a quick deal is possible or you are going to have to grind out a solution. A well timed bluff can be a useful tactic.
Sometimes the problems surrounding cases can be tackled with the application of a rigorous legal analysis or bringing independent expert help. Other times the problems can remain intractable. This can particularly be the case where there may be evidential problems. Documents may be missing or destroyed, witnesses gone walkabout or reluctant to assist.
There are legal mechanisms to deal with these issues. Production orders can be sought for documents and witnesses can be compelled to give evidence. However, this may mean that a substantial sum has to be spent on legal fees in pursuing a case before it becomes apparent that the case was not as strong as you hoped it was. Even worse, the weaknesses in the case may then be exposed for the other side to see.
This is where the value of experience comes into its own. You have to move beyond mere process and instead apply the darker litigators arts. Whilst nobody can turn a case that is a pigs ear into a sow’s purse, with smoke and mirrors you can make it look more like one. If you can paint a picture that makes the other side doubt their own position, even for a short period, then you have gained a psychological advantage which can give you significant leverage in discussions.
Timing is key. The further you go down the litigation track with a problem case the more likely it is that any major flaws in the case will be exposed. At the same time the investment in the litigation can make it much more difficult to back down. This means that the best time for bluffing is early on.
The point to note is that the other side is likely to be in an equal state of ignorance about the real strength of the case. They may not initially know about lack of documentation or shaky witnesses. At the early stages both parties can hold their cards close to their chest. Each will know some of the key factors in play (the flop in Texas Hold Em!) but not what the other is holding.
Then is the time for an experienced litigator to spot the “tells” from the other side. Are they scared of the case? Do they just want it to go away? Are they over confident and susceptible to a reality check? Are they inviting discussions either directly or subliminally?
In light of these clues a confident bluff can often be an effective tool. A clear indication of belief in the strength of the case, backed with some case law or selected factual evidence, and spiced up with an implied threat to go to court if necessary, can often open the door to successful negotiations to resolve the dispute.
It always needs to be done carefully as you need to leave yourself somewhere to go. A simple litigator’s dictum is to never say that unless X happens you will do Y unless you are ready and willing and able to do Y. To fail to carry out such a clear threat will look weak and damage your position.
Every case is different and needs to be looked at own its own merits. This means that a litigator who overuses the bluff will be found out, just like a poker player in a regular game. Nevertheless, used sparingly and in the right circumstances it can be a powerful tool.
Tags: shareholder dispute resolution
Boardroom Dispute Resolution, Shareholders disputes | Ed Weeks | 
February 1, 2012 9:50 am
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