Getting Even

MYOB 2008-05-19
Show #81
Release date: 19 May 2008

Notes

“Don’t Get Mad, Get Even” goes the old saying. In this podcast Guy Kingston and John Richards take a look at the options open to entrepreneurs to resolve disputes.

Is it wise to use the courts? Who wins? Is it just the lawyers?

But, what happens if you get a reputation for never defending yourself?

Based on their real-life, practical experiences Kingston and Richards impart a few tips and cautionary tales on the best way of getting what you’re owed and protecting yourself from the wrongs of others.

Litigation

Law is big business.

Indeed, it is a growing business that seems immune to recession. Yet there is nothing new about this.

Most modern legal systems owe their origins to one or both of two ancient legal traditions, both of which were driven by market forces.

Roman Law is the basis of most Continental legal systems, and the legal systems of former colonies of Continental European powers. The ancient Romans were famously litigious. Magistrates were elected, and ambitious politicians won popularity by inventing new grounds for litigation. So the law expanded.

There was a theoretical limit on how much a lawyer could charge a client – the not insubstantial sum of one hundred gold pieces – but even this was generally considered unenforceable. The best lawyers became extremely wealthy. They also became magistrates. Thus the people who were responsible for expanding the law were the very people who made a living out of it.

The same is true of the other great legal tradition, English Common Law. This system, influenced by Roman Law, but with its own peculiarities, is the basis of the legal systems of all those parts of the world which were, at one time or another, under the authority of the English Crown – including all the British Commonwealth nations and the United States.

As befits the native land of the modern free market, English Common Law was the product of the most overt commercial competition. Where Roman lawyers were paid by the case, but magistrates were supposed to serve out of public duty, in medieval England, the judges, as well as the lawyers, were paid by the litigants.

It was therefore in the interests of the judges to encourage as much litigation as possible. To this powerful incentive was added the element of healthy competition: the medieval Kings of England established not one Royal Court but three.

Initially, each had its own specialist jurisdiction: one maintaining the King’s Peace, one for the King’s Exchequer, and one for relatively minor disputes among subjects. However, as each court began to expand its own jurisdiction, in order to maximise the judges’ income from court fees, considerable areas of overlap developed between them. Potential litigants had a choice of courts, each offering a range of “remedies” – a free market in laws.

Lawyers, politicians, and bureaucrats like to portray “The Law” as something almost mystical, but it has always been what it is clearly is today: a money making operation.

Entrepreneurs in particular should bear this in mind before they embark on any litigation.

People seem more litigious than ever. Yet perhaps it is not human nature that has changed – after all, this all began with the ancient Romans’ taste for dragging a dispute into court. Perhaps what has changed is that every year brings thousands of pages of new statute law and new case law, every one of which provides new pretexts for litigation. Human nature – in the form of stubborn litigants and lawyers ready to take advantage of them – will always do the rest.