Results firms can afford

OPINION: If you have ever been to a lawyer or been involved in a court case you would know all too well how expensive lawyers and going to court can be. While lawyers have an important role to play in providing legal advice when needed, the harsh reality is that the cost of getting that advice keeps going up. No doubt the lawyers will tell us how tough things are for them and that they need to raise their legal fees to cope with their increasing costs.

The fact is that lawyers can raise legal fees simply because they have a statutory monopoly over the provision of legal services. We are told that lawyers are special, which of course is supposed to justify the expensive legal bills clients may face when they seek legal advice or go to court. Self-serving claims of being ''special'' seem to be generally associated with higher prices to consumers.

No wonder lawyers may discourage or even attack any attempts to promote much greater use of alternative dispute resolution processes that bypass the traditional court system and can significantly reduce legal bills.

Those with experience of the court system will know that it's adversarial, with the parties generally represented by lawyers and the process leading to a notional winner and a loser when the court hands down its decision.

In contrast, alternative dispute resolution processes focus on trying to help the parties find some common ground as a way of trying to resolve the dispute themselves. Such processes make use of the specialist skills of an independent third party to promote a constructive dialogue between the parties with a view to getting a win-win outcome where all the parties walk away with something. Importantly, such processes are designed to take the ''heat'' out of the dispute.

Sadly, where matters are just left to the lawyers there is a natural inclination for them to engage in a ''battle of the legal letters'' which can cost their clients dearly and may simply generate more heat. Of course, not all lawyers are the same, with many of them now supporting alternative dispute resolution processes as a way of promoting better outcomes for their clients.

Unfortunately, there are still those lawyers who continue to be as confrontational as possible. Obviously, it's a matter of style. Some lawyers, including some in-house lawyers, think that using the market or financial power of their client is the best way to resolve disputes. These lawyers may not stop to think about the danger to their client's or company's reputation from such an approach.

Smart lawyers acting for larger businesses will try to accommodate the other party whenever possible to ensure that the other party remains a useful business associate or loyal customer. These lawyers will also seek to engage constructively with the growing number of small business commissioners being established around Australia.

These commissioners have been established to assist small businesses where they have disputes with larger parties. South Australia, Victoria, Western Australia and NSW have a Small Business Commissioner. Of these, NSW is clearly out of step by not having a legislative framework to support its Small Business Commissioner.

South Australia is the most recent state to implement such a legislative framework that has now become the template for other states or territories without a small business commissioner or for those wanting to strengthen existing legislative framework.

A key theme with these small business commissioners is to try to resolve disputes as cheaply and as quickly as possible. The aim is to stop legal expenses spiralling out of control, as well as seeking to resolve disputes so as to safeguard the commercial relationship between the small business and larger party.

You would think that a small business commissioner would be welcomed by everyone, including the lawyers. Sadly, that's not always the case as some lawyers may see their success as a possible threat to their ability to keep raising legal fees.

It's already interesting to see the two alternative approaches being taken by lawyers. First, there are those from larger businesses who constructively engage with the small business commissioners to resolve disputes. Then, there are those who still want to be confrontational and seek to use their client's market or contractual power to bring the small business into line. The real danger is that they may be damaging their clients' reputations as well as costing them lots of money where the dispute drags on.

Time will tell if small business commissioners will save small businesses the trauma of escalating legal costs, but the evidence from Victoria is that they do save small businesses money by helping them resolve disputes quickly with little or no involvement from lawyers.

With evidence like that there's no doubt that ACT small businesses would benefit considerably from having access to a federal or local small business commissioner.

Frank Zumbo is an Associate Professor with the School of Business Law and Taxation at UNSW. 

This opinion piece first appeared in The Canberra Times