Archive for March, 2014

Sometimes a Sow’s Ear is Just That …

Thursday, March 13th, 2014

I’m sure you are familiar with the expression “making a silk purse from a sow’s ear”.  In case you are not, it means to make something wonderful out of something either awful or, at least, not very nice.  Personally, I have no use for either a silk purse or for parts of a pig that aren’t easily edible.  In any event, I have had a series of meetings with potential clients lately that have reminded me of this phrase.  It synchronizes well with the phrase “I’m only human”.

Without getting into details, the common thread among these matters has been that the potential client is in some sort of a jam and what has happened is “unfair” but the legal system isn’t easily oriented to quickly solve the matter in the potential client’s favour.  Money was lent but it wasn’t properly documented and now the borrower refuses to pay.  Money was lent but the borrower cannot pay and is likely to go bankrupt.  Money was lent but it is relatively small and the legal fees to sue would exceed the amount owing – especially since the borrower would try every trick in the book to delay or avoid payment.  Business partner A has screwed business partner B but the way that it was done is in compliance with the strict wording of the partnership agreement, but they had agreed long ago to not follow those strict terms and now business partner A has used the strict wording to his/her advantage.

In each situation, the potential client is clearly the victim or has been taken advantage of by either the other party or else the legal system (although not intentionally by the legal system).  If you want to sue on a debt, you have to be able to prove that you paid the money, when the money was to be repaid and other terms of the loan.  If you cannot prove these elements, you will lose your lawsuit.  It’s not that the legal system is “against you”, because the same requirements apply whether it is you suing on a debt or anyone else suing on debts.  As between the parties and God (or Karma or whomever or whatever other higher power you want to bring into the equation) the matter will resolve itself eventually.  But as it relates to the legal system, as unfair as it may be, the lender loses the lawsuit.  Similarly, the question of “throwing good money after bad” is often an unwelcome, but necessary, consideration that one should make before starting litigation.  If it’s going to cost you $2,000 to sue to collect $2,000, what’s the point of suing – other than spite or to set an example?  But, even then, if it’s going to cost you $3,000 to sue for $2,000, is the spite or example worth the net loss of $1,000?

I had a meeting a few days ago where the potential client was an older person who said “I don’t want to sue anybody, I just want to get paid back my money.”  I’m not a miracle worker.  If the other person can’t, or won’t, pay back the money, then the only legal option is to sue.  And if you haven’t papered your loan properly, then even if you sue you may not succeed and will have spent a lot on legal fees for ultimately no return on investment.  I can’t easily turn your “stinker deal” into something that smells like a rose – which means that you have two choices: (a) move on to other endeavours; or (b) be prepared to spent a LOT of money to try and prove the deal existed, and on the terms you say existed, through something other than simple documentation (like a loan agreement).

What you should always do is have a frank discussion with your lawyer about the chances of success.  Any lawyer who tells you that you have a guaranteed winner is not gonig to be helpful.  Even if he/she is correct, if that’s all you are told, and no mention is made that once you have the judgment you may still have to chase after this person to get paid on the judgment, you’re not being given the whole picture – although in that case it would also fall on you to ask about what happens after you get the judgment whether you would be paid at that point.  Similarly, even if you’re told that you have a guaranteed loser of a case, you shouldn’t necessarily treat that as being the end of the matter.  Lawyer A may mention 10 different ways to present the lawsuit and each of them is a loser.  Lawyer B may have had experience with an 11th way and that could be enough to convince a judge to find in your favour.  It’s not that Lawyer B is brilliant and Lawyer A is terrible.  Sometimes, it’s just that you get the right judge on the right day in the right mood and he/she agrees that, in your circumstances, the 11th possibility is a winner – but a different judge might not find that way (which is always possible because the law isn’t a series of absolutes – otherwise it would become rigid and inflexible and cease to have use after a while) and that’s why Lawyer A didn’t mention this 11th option.

But sometimes, a sow’s ear is just a sow’s ear and can’t be turned into a silk purse and you should realize that there are often no miracles and lawyers cannot find the magic happy ending for you – or they cannot find it right away and for little to no cost.

Something to think about.

CALC