Civil litigation involves the deployment of financial and human resources to obtain – from a state-sponsored jurist or private adjudicator (in private civil matters) – the answer to, mostly, two questions. First, was an act or decision lawful? Secondly, where unlawfulness provides rights for compensation, what is the correct amount of compensation?
The function of lawyers responsible for managing litigation files is to apply their knowledge of the law and critical thinking skills to optimise the use of the litigation tool rationally. I acknowledge that litigation is sometimes pursued because it involves ‘matters of principle’ or unresolved emotional issues between the parties. I assume there is no mandate for in-house counsel to conduct litigation based on these drivers, at all or for very long.
My argument is that applying appropriate planning and project management disciplines ensures optimisation, transparency and accountability in the deployment of resources. I also contend that success is often finding the right or best answer (allowing for the often considerable litigation risk) using techniques without ultimately needing the decision-maker to perform that function.
I start with the idea of choice. All resource deployments involve choices and the appreciation of the options in conducting litigation is sometimes weak. Because, for example, if an organisation is named as a respondent or defendant, there is no obvious choice by the organisation to litigate, and a loss of a sense of agency ensues. Alternatively, a belief exists that few options are available about how the process is run as the court determines these. These misconceptions are the start of irrational engagement in the litigation process.
I will illustrate the point about the availability of choices by a public law example.
In the late 1990s and 2000s, it was reasonably common for citizens to challenge local authorities’ decisions under the Resource Management Act not to notify resource consent applications affecting rights to be involved in the consenting process. It still happens but statutory changes have reduced the incidences. The council has a statutory role in deciding on notification. If the decision is found in judicial review proceedings to be wrong, then the decision is remitted back to the council for reconsideration.
Statistically, one would expect at least 5% of decisions in a busy planning department to be erroneous because of skill variances among employees, workloads, differences in the conscientiousness of individuals and human error.
The consequence for the council if an error is found is minimal and mostly non-financial except for the possibility of costs being awarded. The range of legitimate choices of a council in such a case are broadly three-fold with massively different resourcing implications:
- Accept that a mistake has been made and attempt, by open offers, to resolve it by remitting it back based on an agreed view of the correct law or better facts. The fact the council is functus officio does not require it to deny the reality an error was made where that is obvious.
- Defend the decision by submissions only and advise the court that the council will be taking a role of assisting the court and put all relevant information from files before the court in a way that is helpful to the parties and the court. The parties affected by the decision are otherwise left to argue their positions.
- Fully engage in the defence of the decision as if the loss of the case would have significant direct consequences for the organisation. Including obtaining more detailed expert affidavits supporting the decision beyond the material available to the decision-maker and outside the reasons that were given.
Local authorities have often (as the case law attests) adopted the third approach even when it is irrational, and on any cost-benefit analysis wasteful. There are, at least, several possible reasons for that.
First, decisions about the conduct of litigation are materially influenced by the decision-making person whose decision is challenged. Because that person will not incur the cost of litigation, they perceive litigation optimisation as involving successfully defending their decision-making skills and their status within the organisation.
Secondly, the organisation does not have the managerial skills or resources to make rational choices because litigation is unfamiliar and outside management’s expertise. Decisions then are outsourced to external counsel who have different incentives or may relish the opportunity for argument.
Finally, there is no accountability in the system set by the organisation’s governance team to ensure appropriate litigation management and planning. The consequence is that poor litigation management is not identified. For these reasons, the local authority wastes vast sums of precious public funds without a commensurate public benefit.
Another situation is where the council is also an applicant for resource consent or has interests in the application and fails to maintain a clear separation between its regulatory role and other interests.
Who, why, what and how
To secure rational litigation, it is necessary to examine and record who is making the decisions, why the decisions are made, and what and how future decisions will be made during litigation.
On the first question: the ‘who’. If someone challenges a public sector entity’s statutory decision-making, it is essential to ensure the person who made the decision does not have responsibility for the litigation. It requires the deliberate allocation of what can be called a ‘litigation mandate’. The mandate can also set parameters, that evolve, for settlement. A litigation mandate held by an independent person is particularly important in the public sector because the individual responsible for the litigation does not incur the cost of litigation, and there is, therefore, no financial accountability affecting choice optimisation leading to poor public-sector choices.
An assessment of purpose; the ‘why’, is always crucial. Decision-making theory encourages the stating of goals or a mission. Unless these are committed to in writing, then there is no point of reference for all the decisions that follow. In some cases, the outcome desired will, legitimately, be to clarify the law to assist with the administration of the organisation’s affairs. By framing the issue to be answered, one can assess its value and importance. The goal statement should be accompanied by a justification for why the goals should be pursued. That should demonstrate an analysis of the costs and benefits of pursuing the goal. In framing the goal, the range of choices must be appropriately examined and their relative impact on the value of deployment to ensure some degree of rationality in goal choice.
The ‘what’ and ‘how’ will be informed best by early work on developing and recording what lawyers call the ‘theory of the case’: this is an analysis of the main issues in contention and how they can be resolved correctly. When a litigant has not developed a credible theory of the case, they behave like a dog that barks at every passing car. A theory of the case identifies what will be persuasive in the case, and that helps determine where resources should be focused.
For the team, or what I like to call the ‘platoon’, assembled to address the litigation, the sort of critical analysis described above enhances the understanding of individual roles and the part each person can play in achieving the defined goals.
Virtually all avoidable inefficiencies in litigation arise from poor planning. Organisations without litigation management tools often make unwise or profligate choices and do not learn from their mistakes. My view is that every organisation that can expect litigation should institute an accountability system for the use of resources just like any other deployment decisions. Because litigation is fluid and evolves to address the unexpected, the planning will be iterative, but it is, nevertheless, an essential discipline to apply. In the public sector that is consistent with good public-sector management.
John Maassen is a barrister based in Wellington with 30 years’ experience in litigation involving public and private sector clients.