Out of court settlement

There are no prizes for taking a case to trial and going to trial is inherently risky and expensive. In most cases there are much better alternatives to trial such as an out of court settlement or mediation. The vast majority of legal disputes end in settlement. Our job is to apply judgment and secure the best available 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

• there is rarely full recovery of legal fees – the general rule is that the winner is awarded legal costs. The English courts rarely make an Order for the full legal fees assessed, typically ordering between 60-80% of the amount claimed and enforcing a costs order against a defendant is never certain.
• inherent risks of litigation – even if you win and are awarded damages at a trial, your opponent may not pay and/or may not have the means to pay.
• you may not be awarded the damages you think you will – English law is fundamentally loss and not compensation based. Losses must be mitigated and proven.There are often technical hurdles which make proving loss very difficult.
• court cases are slow – in some cases going to trial can take years.
• UK legal system is now designed to encourage settlement – this can be either directly between the parties or by mediation (discussed below).   If you do not show that there have been attempts to settle the court can order that you pay some or all of the opponent’s legal costs even if the opponent loses.

Ways to achieve an out of court settlement

When dealing with a case, it is our job to conduct a cost/benefit/risk and legal merits analysis. We keep a close eye for opportunities to explore settlement which can occur at various strategic points and in ways including :-

• Without prejudice negotiations – off the record discussions are conducted “without prejudice”. This 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 even take place once a trial 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 where an injunction has been applied for, after the disclosure of documents stage (which is a key stage where the parties get more clarity about the strength or weakness of their claim and the other party’s evidence) or where either party makes any other important application to the court, such as a strike out application.

• 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 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 when the time comes to 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.