What to Do as In-house Counsel When Litigation Strikes!

  • April 02, 2021
  • KJ Chong, CCCA Executive member, general counsel of Broadgrain Commodities Inc.

Litigation files are daunting to those not familiar with litigation before moving in-house. I had the pleasure of chairing our CCCA Ontario event earlier this year on litigation management which you can access here, if you are a CCCA Ontario member:

As I practiced in litigation before moving in-house, here are my own thoughts on the matter which summarizes some of the key thoughts raised during the event. If you haven’t already, do check out the print materials from that event which were top-notch.

  1. Conduct a preliminary assessment of the claim and report to those necessary

On notice of a claim or dispute, you will want to conduct a preliminary factual assessment of the case. This may be triggered by an employee telling you of a dispute arising, or a demand letter or a statement of claim landing in your inbox.

Understand facts and key parties. Your preliminary assessment will involve obtaining the key documents and discussing the case with the key employees.

While you discuss the matter with employees, you will likely want to ensure they understand any communication to outside parties must be cleared by legal. If it is early on in the dispute, you may wish to continue communicating through your business people because if you become involved, other sides may bring in lawyers and the matter has less of a chance of settling.

Do not forget to assess any limitation dates, which are time bars to any claims. You might need to check with your external counsel on this, but if you are the plaintiff, this will be critical.

Report to others. You may need to inform various parties about the claim. Here are just a few you may need to consider:

  • Financial department/CFO: in the event you need to create liability reserves in your financial statements.
  • Insurer: You may need to have them informed otherwise you will waive coverage. They may also need to take control of the case.
  • Financial institutions: check your covenants in your agreements to see if you need to report, usually based on amounts exceeding certain thresholds or the type of issues in the litigation.
  • Board of Directors: If you report to the Board of Directors, you may want to obtain an opinion from external counsel about the merits of the case.

Preserve documents. A litigation hold may be necessary and you will need to send one to employees to ensure any relevant documents are not being destroyed. More on this below as the litigation continues.