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!
Businesses face numerous litigation risks of various natures. These potential disputes are often resolved amicably but can also escalate into litigation.
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.
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.
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.
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.
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.
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.
Litigation software is a key asset for businesses in mitigating litigation risks:
Once a dispute arises, optimizing its management through litigation software helps minimize its impact and cost.
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.).
Litigation software automates and optimizes dispute management through various complementary features:
Developing a risk management approach involves a comprehensive analysis of risks and the involvement of all departments and services within the business.
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.
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.
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.
