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What are the main causes of disputes and litigation for businesses?

What are the main causes of disputes and litigation for businesses?

Published on : 26/06/2024 26 June Jun 06 2024
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In 2022, judicial courts handled nearly 200,000 new contract law cases, while labor courts dealt with over 100,000... (Key Figures of Justice 2023 Edition, Ministry of Justice, Published in May 2023). These disputes have a significant impact on businesses, both financially and in terms of human resources. To better avoid them, it's essential to understand them!

Overview of Business Disputes

Businesses face numerous litigation risks of various natures. These potential disputes are often resolved amicably but can also escalate into litigation.


Commercial Disputes

These are the most common types of disputes for businesses. They arise from contractual disagreements, disputes over the quality of goods provided or services rendered. Payment delays, which are also a part of commercial disputes, are the most frequent. These disputes often result from a poor interpretation of a contract due to insufficiently precise drafting.


Intellectual Property

Disputes related to Intellectual Property stem from the violation of a patent or copyright, or the use of a protected trademark. The business can be either the victim or the accused in such violations.


Labor Disputes

Disputes between the business and an employee (or former employee) fall under alleged violations of the Labor Code. They can involve working conditions, wages, dismissal, accusations of discrimination, or harassment complaints.


Other Disputes

A business can also be involved in civil disputes (e.g., a dispute with neighbors), administrative disputes (related to regulations, public contracts, etc.), or even tax disputes. Moreover, in an increasingly globalized context, businesses face risks and potential disputes arising from unfamiliarity with laws and regulations in countries where they establish new commercial relationships.


The Challenge of Prevention

A business must deploy a robust strategy to prevent litigation risks before optimizing their management. This helps avoid disputes and their costs, while also boosting employee engagement and loyalty. Employees are indirectly affected by disputes, which can also call into question their own work.


Risk Assessment for Better Prevention

Litigation represents a crisis for a business. Besides imposing financial costs, it can affect employee morale, the company's image, and employer branding. Proactivity and risk prevention are essential to avoid these issues.


Prevention Strategies

Litigation software is a key asset for businesses in mitigating litigation risks:
  • It helps identify risks to implement preventive measures.
     
  • It aligns actions, decisions, and contracts with legal or regulatory texts to avoid non-compliance (in labor law, commercial law, etc.), which can lead to disputes.
     
  • It helps develop and deploy an effective internal risk prevention policy.
     
  • It monitors training on risk awareness for relevant employees.
     
  • It manages and tracks audits to ensure regulatory compliance.


Litigation Software in Dispute Management

Once a dispute arises, optimizing its management through litigation software helps minimize its impact and cost.


Optimizing Dispute and Litigation Management

Litigation software not only reduces risks beforehand but also supports the legal department in managing legal proceedings resulting from disputes. By providing a comprehensive view of risks and disputes through reporting tools, it enables better understanding and analysis of risks, costs, and impacts of disputes (by case, region, period, etc.).


Automating Dispute and Litigation Management

Litigation software automates and optimizes dispute management through various complementary features:
  • Automated processing of summonses or judgments simply by scanning, without manual entry (which can introduce errors), for greater speed and fewer human errors.
     
  • Simplified collaboration with internal or external counsel, with real-time sharing of information and documents.
     
  • A clear, integrated view of the financial impact of disputes to better control costs.


Incorporating Risk Management into Legal Strategy

Developing a risk management approach involves a comprehensive analysis of risks and the involvement of all departments and services within the business.


Analyzing the Current Situation

The first step in a risk reduction approach is to analyze all activities and functions of the business to identify associated risks. For example, this involves identifying all obligations of an activity (regulatory and legal compliance of production, mandatory safety measures in a workshop, etc.) or function (HR, finance, etc.).

This analysis can rely on internal expertise (lawyers, safety experts, environmental experts, HR, etc.) and/or internal auditors. It must review all activities and processes concerning regulatory or legal texts: a dispute brought to justice always refers to an obligation the business failed to meet. Note that such an internal audit identifies current risks but cannot anticipate their evolution. Legal and regulatory monitoring is necessary to consider new obligations the business might face, and any new activity will require a complementary analysis within its scope.


Identifying and Implementing Preventive Measures

For each identified risk, the business must assess the likelihood of its occurrence (which varies based on activity, workforce, employee expertise, environment, etc.). Any actual risk, i.e., one with a non-zero likelihood of occurrence, requires action.

This might involve simple employee awareness on a specific issue, training relevant employees, revising internal documents, developing an internal policy on a particular aspect, or finally, compliance work. By analyzing past disputes, the business can also prioritize the most urgent actions.


Deploying a Risk Management Solution like Litigation Software

To manage a genuine risk management approach more effectively and easily, a business can rely on litigation software. This solution helps better anticipate, manage, and monitor the resolution of disputes while providing a view of their economic, financial, and strategic impacts.

The ideal solution is modular, integrated into a comprehensive software suite that places litigation within all the legal challenges the business faces. It simplifies access to regulatory and legal texts associated with each identified risk and enables legal monitoring in the business's activity areas. Such a solution, being scalable, will support the business in its growth, new locations, new activities, etc.
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