Why Legal Proceedings Should Be Your Last Option

Written by Sukhman Sandhu

Sukhman Sandhu is the Founder & Managing Director of Sukh Law. Sukhman's practice focuses upon complex real estate and commercial law transactions and related litigation. Licensed to practice law in the Province of Ontario, Sukhman currently represents individuals, small businesses and large institutions and maintains a great track record of obtaining successful results.

June 7, 2024

When disputes arise, the knee-jerk reaction might be to rush to court and let a judge decide. However, initiating legal proceedings should be the last resort due to several critical factors that can make the process more burdensome than beneficial. As a business and real estate lawyer in Ontario, I’ve seen firsthand the myriad complications and costs associated with litigation. Here’s why you should think twice before heading to court.

Cost and Time

One of the most significant deterrents to initiating legal proceedings is the cost and time involved. Legal fees, court fees, and other associated costs can quickly add up, making litigation a financially draining process. The stages of litigation—filing claims, discovery, pre-trial motions, and the trial itself—can span several months or even years. In my practice, I’ve seen clients spend tens of thousands of dollars and countless hours on cases that could have been resolved more efficiently through other means.

Risk and Uncertainty

Litigation carries inherent risks and uncertainties. The outcome of a trial can be unpredictable due to various factors, including the availability and reliability of evidence, the performance of witnesses, and judicial discretion. There’s always the risk of losing the case, which could result in not only paying your legal fees but also those of the opposing party. This uncertainty makes litigation a gamble that can have severe financial repercussions.

Strain on Relationships

Legal battles often strain or completely break relationships between the parties involved. Whether it’s a business partnership, a family dispute, or any other form of relationship, the adversarial nature of litigation can lead to irreparable damage. In my experience, I’ve seen business partners who were once close friends become bitter enemies due to prolonged legal disputes. This strain makes future cooperation difficult or impossible, which can be particularly damaging in business settings.

Emotional and Psychological Impact

The stress and emotional toll of litigation can be significant. The prolonged process, coupled with the adversarial environment, can lead to anxiety, stress, and other negative emotional impacts on the parties involved. This emotional burden is often a compelling reason to seek resolution through less confrontational means. I’ve had clients who were emotionally drained by the end of their cases, questioning whether the legal battle was worth the toll it took on their well-being.

Alternative Dispute Resolution (ADR)

Ontario’s legal system encourages the use of alternative dispute resolution methods, such as mediation and arbitration, to resolve disputes without going to court. ADR can be faster, less formal, and more cost-effective than traditional litigation. It also allows parties to reach mutually agreeable solutions, preserving relationships and providing more flexible outcomes. In my practice, I’ve seen ADR successfully resolve disputes that could have otherwise dragged on for years in court.

Publicity and Confidentiality

Litigation can attract unwanted publicity, which can be damaging to personal or business reputations. Alternative dispute resolution methods offer a more private way to resolve disputes, keeping sensitive matters out of the public eye. This privacy can be particularly beneficial for businesses that want to avoid negative publicity.

Complexity and Procedural Burden

Legal proceedings involve complex procedures and documentation, which require careful attention and legal expertise. Failure to comply with procedural rules can result in significant setbacks, including dismissal of the case or adverse cost orders. This complexity can make litigation a daunting task, especially for those unfamiliar with the legal system.

Impact on Business Operations

For businesses, litigation can divert significant resources and attention away from core operations. The extensive management time required to deal with litigation, including liaising with lawyers, gathering documents, and attending court, can be a substantial distraction from business activities. In my experience, businesses embroiled in litigation often find their operations suffer as a result.

Personal Thoughts and Examples

Although it might seem satisfying to intimidate someone who has wronged you with a threat of litigation, sometimes you must stop at the threat and not carry it out. The main reason is the cost and time you have to endure to see it through. I’ll give you a couple of examples and my recommendation, but I only provide advice to my clients; whether they want their day in court is up to them.

First example: You are a purchaser of a real estate property, and at the time of closing, you notice that the house is damaged or an appliance like the oven is not working. You try to seek reimbursement from the seller via your realtor or lawyer, but the seller refuses. Now, you cannot halt a real estate closing because a $1,000 oven is not working, so your other option is to close and then decide to file a lawsuit against the seller to recover that money. My recommendation would be a 100% no to retaining a lawyer to represent you in court, 100% no to retaining a paralegal, and 80% no to representing yourself. Any claim under $35,000 would be filed in small claims court, which restricts the awarding of costs to a maximum limit of 15% of the claim amount. So, if the action is properly defended and you and your lawyer go through the entire litigation process, you may be looking at legal costs of anywhere from $15,000 to $30,000. Even if you win and even if you pay on the lower end of the legal costs spectrum, being $15,000, you would be negative $13,850.

Second example: You purchased a business from another entity and realized after the transaction that the financials were manipulated at the time they were disclosed by the seller, and you are making a monthly revenue of $50,000 less than what was represented. Without getting into the nuances of calculating damages, let’s say the damages amounted to $700,000. This I would recommend going to court for, and with the help of a lawyer, as this case will be heard in the Superior Court of Justice, which has a much more complicated procedure to follow. Although you may end up spending anywhere from $20,000 to $60,000 in legal fees, your reward of $750,000 plus costs will be substantially higher.

If you require legal advice or representation with your real estate property purchase or refinancing, or have questions about residential or commercial real estate law in general, contact us at Sukh Law.

Sukh Law publishes articles for information purposes only and is not intended to constitute legal advice.

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