In today’s business-oriented world, disputes of increasing complexity and cost arise all the time. Disputes between the partners or shareholders of a firm, disputes between managers and shareholders, disputes between competing firms, disputes in the process of a mergers and acquisitions, disputes between governments and private sector entities on public procurement, discriminatory practices, regulatory capture, and non-compliance, and more generally litigation between total strangers whose paths have crossed adversely through some unfortunate incident are common occurrences. Breaches in contracts, wrongful termination disputes, real estate disputes, negative externality disputes giving rise to damages, failure to enforce laws or to comply with regulations in force and investor disputes also elicit various legal actions in which a blend of economics and legal advice is required to support a case. At Equinox Advisory, our unique combination of economics consulting professionals, legal practitioners and corporate services experts can assist a wide range of clients with tailor-made solutions and expert witness services to help solve their legal disputes successfully.
Economics as a subject is not fundamentally about money or any specific country’s economy, as many people who are not well-versed with the subject seem to believe. It is rather about the understanding of a socio-economic context, together with its political and technological backdrop and the analysis of choice, allocation and incentive systems in those specific contexts.
The relationship between law, which tries to regulate the behaviour of individuals bound by that law and economics which tries to optimise decisions in a socio-economic context and to shed light on practical problems in that area was discussed quite extensively throughout the history of economic thought. Influential figures who helped shape economics into the discipline it is today, such as Adam Smith, Karl Marx, and Friedrich von Hayek have discussed the relationship between law and economics at length. Under neoclassical economic theory, individuals are assumed to be rational and they are assumed to make rational decisions under conditions of certainty. However, the neoclassical model has been criticised under a great number of fronts and outside of the ivory towers of theory and in most situations where the law needs to be applied, there is a large element of uncertainty and a plethora of sub-optimal outcomes starting from agreement clauses and assignments of rights all the way to litigation and legal drafting. Moreover, quantitative economics comes in very handy in traditionally legal settings such as determining damages where they arise and assigning values to a wide variety of outcomes, goods and phenomena that do not have an intrinsic market price.
An important economic theoretical construct that has strong and far-reaching implications and applicability in the legal-institutional sphere is Coase’s Theorem. Ronald Coase radically changed how economists looked at externalities and also suggested a new way of defining property rights and of dealing with them, even when such rights were not very clearly defined. Property rights are the rights that a party that has “ownership” of a property or a resource is entitled to. Usually, such rights are exclusionary in that their enjoyment by one party precludes other parties from enjoying the same resource(s). However, there is also common property where the principle of exclusion does not apply. As an advisory firm, we make most use of Coase’s Theorem where judiciary, legislative and executive institutions are weak and the case for Coasean bargains is therefore strongest.
When a legal dispute is being handled by Equinox Advisory, great care is taken to thoroughly study the facts of the case in relation to the applicable legislation and case law. All the required analyses are carried out to look at the client’s claims from different angles and are subsequently weaved into a bespoke case strategy. Data analysis might also need to be employed to reveal relationships that may have led to or that are a consequence of the legal dispute. This is frequently resorted to, for example, in damagesand competition cases where the status quo needs to be compared to a counterfactual without the competitive abuse or the events leading to the materialisation of the damages. Economic techniques can also be used to determine the impact of a regulationor a law on an individual, a firm or a market. In the case of disputes over intellectual property, our economics team can conduct an analysis of the investment attributes of the property to determine its fair market value. Calculations of damages pertaining to infringements in intellectual property rights or other disputes are also offered by Equinox Advisory.
Economic principles can be applied to legal disputes to answer questions such as:
- Was profitability affected (lucrum cessans)?
- Were prices affected by the dispute?
- Has the trading structure been affected?
- What is the geographical scope of the effects?
- What costs have been incurred to bring the perpetrators to justice (damnum emergens)?
- What was the reaction of consumers and how will the dispute affect potential consumers?
- What was the impact on supply factors of the product or service?
- Over what period of time have the effects been caused, and when will they cease to be in effect, if ever?
- Did the dispute cause changes in the market structure and what was the impact on competitors?
- What bargaining power do the parties involved have?
- Will a lawsuit have sound economic and legal standing?
Equinox Advisory’s Economics, Corporate and Legal departments work with individuals and organisations in conjunction with their own legal departments, where the client so desires, or on its own in representation of the client’s best interests to draw out practical dispute resolution agreements both in the judicial system and in out-of-court-settlements. Through our engagement as external experts to forensically assess the dispute or lawsuit at hand and to construct expert evidence in support of our client’s cases, corporations and individuals can establish or strengthen their legal position. Equinox Advisory’s past experience in financial analysis, investment appraisal, damage quantification, competition law, copyright law, financial services law and intellectual property law has given our staff the tools required to support a client’s claim with evidence that strengthens their case.
Equinox Advisory can be of assistance in covering your dispute/lawsuit support needs by:
- Preparing the client for litigation or Alternative Dispute Resolution (ADR) methods such as mediation, arbitration, or out-of-court settlements;
- Acting as expert witnesses for economic, corporate, legal or financial matters by giving professional testimony;
- Preparing individuals and external expert witnesses for effective, consistent, coherent and credible testimony;
- Supporting the client in disputes with the authorities, both at administrative appeals tribunal and national court levels;
- Supporting clients with public tender award appeals;
- Providing clients with mediation services;
- Preparing the client for hearings before the courts, regulatory bodies, authorities, and tribunals;
- Solving and settling contractual, joint venture, and shareholder disputes;
- Providing family/inheritance dispute settlement support; and
- Providing valuation services using standard valuation methods that aid, solve or prevent disputes from arising.