Settling disputes out of court
Having been through the court process before, we were keen to avoid it. Gannons brokered a settlement and we were delighted with the outcome
In most cases there are much better alternatives to litigation such as an out of court settlement or mediation. Our job is to apply judgement on how best to avoid litigation and find a workable solution.
There are no prizes for taking a case to Court. In most cases there are much better alternatives to litigation such as an out of court settlement or mediation. Our job is to apply judgement on how best to avoid litigation and find a workable solution.
Please get in touch for an initial review on how to get the best available outcome for your dispute. We do provide fee estimates, legal analysis and a range of options.and strategies
Reasons to work with us
- Very few of our cases reach court as we usually achieve settlement outside of court. For example, we have found solutions for disputes surrounding the buying and selling of businesses, contract disputes, partnership disputes and disputes between shareholders with experience in acting for minority shareholders.
- We have the skills to handle commercial fraud claims, court injunctions, employment litigation and disputes around the enforcement of restrictive covenants and trade secrets.
- Our team includes John Deane who is a qualified mediator and solicitor.
- We handle claims of ranging complexity and value. Our clients know they know they will receive a sound steer which is honest.
Reasons not to litigate
It is not uncommon for litigation legal fees to exceed the value of the claim. There are several reasons for finding an alternative to litigation:
There is never full recovery of legal fees
The general rule is that the winner recovers its legal costs from the loser. But the recovery is never 100% and generally falls between 60% – 80% of the total legal costs.
There is a need to be proportionate
All costs have to be reasonably incurred and proportionate. Use of expensive lawyers when more reasonably priced lawyers have the skills is increasingly dangerous. The risk is that you are forced to pay some or all of the other side’s legal bill. This is even if you win the case.
UK legal system designed to encourage settlement
The UK legal system is designed to encourage settlement either directly between the parties or by mediation (discussed below). If you do not show attempts to settle the court can order that you pay some or all of the opponent’s legal costs even if the opponent loses.
Out of court settlement
When dealing with a case, it is our job to conduct a cost/benefit/risk and legal merits analysis. We can then tell you how we think the dispute can be resolved. Often this will involve two levels of planning:
Without prejudice negotiations
Off the record discussions are conducted without prejudice. Off the record means that the discussions are private and not admissible in court. They are used to explore pressure points and the appetite for settlement. Settlement is possible at any time and can take place once a court hearing has commenced. The key to successful out of court negotiation is timing and a realistic assessment of the strengths and weaknesses of your case and commercial reality.
Using court process to achieve an out of court settlement
In almost all claims that have been issued at court there are tactical and procedural opportunities to seek settlement. Examples of strategically important or best opportunities to maximise chances include :
- injunctions – succeeding or failing with an injunction application is often a key stage where the party that has failed or succeeded (this can be in defeating an application) may be in a strong position.
- After disclosure – a key stage in any case where the parties get more clarity about the strength or weakness of their claim.
- A strike out application – where the defendant applies to strike out either the whole claim or parts of it. The parties will have their attention focused on risk and legal costs at this point.
- If a counterclaim is made by the defendant or more parties are added to the claim. Often if additional parties are added to a claim this can be a high risk way of increasing what’;s at stake for everyone and can lead to opportunities to settle out of court.
- Where a costs order has been made following an application made to court as part of the legal proceedings. being ordered to pay the other party’s costs of a pre-trial application tends to remind that paying party of how risky and costly litigation can be.
Sometimes we ramp up the pressure on the other side knowing that they or you do not want the case to end up in court. The reason is this can then open a route to settlement discussions. Sometimes initial offers are rejected initially only to be re-visited further down the line.
Timing for a settlement offer
There are certain points when we find settlement is most likely to be achieved. The pressure points usually coincide with dates for when the parties have to progress the case and hence incur legal fees – for example prepare witness statements.
Using mediation to avoid litigation
The UK legal system is designed to encourage settlement out of court. If settlement cannot be achieved by direct negotiation it can often be achieved via mediation. Many people do not realise that mediation is a successful alternative to litigation and resolves disputes in a great many cases.
Basic idea behind mediation
The basic idea is an independent third party mediator assists:
- Each party understand the other’s point of view,
- By suggesting settlement options the parties may not have considered,
- In brokering an agreed settlement.
Advantages of mediation
Mediation is becoming an increasingly common method of dispute resolution, because:
- Mediation is quick and inexpensive compared to court proceedings;
- The parties are in control of the decision and the terms of the resolution. Unlike the position with a court hearing or arbitration a decision is not forced upon the parties. All decisions reached via mediation have to be consensual.
- Communication between the parties is facilitated through a neutral third party;
- The mediation process is flexible, sensitive and adaptable; and
- The client’s commercial and technical interests and aims can be achieved through mediation.
Even if the mediation proves unsuccessful, the parties are likely to have benefited through having the opportunity to listen to each other’s views, which in turn narrows the issues in dispute.
Arbitration as an alternative to litigation
Arbitration can be an alternative to litigation. Arbitration is conducted under a statutory framework and is usually presided over by a former Judge or expert barrister. The arbitrator’s decision is binding on the parties and there is a set process for the parties to follow which is not dissimilar to the Court process involving disclosure of documents.
Arbitration clauses requiring the parties to arbitrate in the event of a dispute are common in shipping, oil, gas, insurance, property, and aviation contracts. Arbitration is more suited to technical disputes involving complex issues on fault. Arbitration is not as flexible as mediation which means that it is less commonly used in practice.
Refusing to seek alternatives to litigation
You run the risk of being ordered to pay the opponent’s legal fees if mediation is unreasonably refused. The court is likely to regard the following as an unacceptable excuse:
- It’s a win lose situation – there’s no middle ground;
- The parties are too far apart;
- It’s a black and white matter of contractual interpretation. This requires a judge to decide;
- The parties hate each other and won’t negotiate;
- The party wants his “day in court” to prove they are right;
- The other side hasn’t fully particularised their case and we haven’t seen all the documents;
- We reasonably believe the other side’s case has no merit.
After studying at Cambridge University, Alex spent 5 years with an international law firm before joining Gannons. He specialises in high-value and complex commercial disputes and employment law.