The Next Alexa? Surfing the IP Challenges for Artificial Intelligence
13 September 2018
There are no prizes for taking a case to Court. In most cases there are much better alternatives to litigation. Our job is to find those alternatives to litigation and implement the solution.
It is not uncommon for costs in some cases to exceed the potential benefits. For example, a complex claim worth £1m could easily cost more than that to run in Court. 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. So, alternatives to litigation should be found.
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.
If you are receiving threatening correspondence from the other side and sometimes wild claims it can be easy to lose sight of proportionality. Our experience will rein you in.
When dealing with a case, it is our job to conduct a cost/benefit analysis. We can then tell you how we think the dispute can be resolved. Often this will involve two streams of attack as follows:
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 or other alternatives to litigation.
We find the best tactics to deploy to find alternatives to litigation include:
We need to build a case to get the Judge on side. This usually requires creating a decent document and correspondence trail.
For example, consider a group of minority shareholders aggrieved with a sole director’s breach of duty by paying himself an unjustifiable large salary reducing profits otherwise available as a dividend. The minority shareholders do not know how much the director has paid himself but want to exit the business. We might consider:
A wise solicitor would advise the director to entertain the methods of resolution. However, if no settlement is reached, using the Court may be the only means of resolving the dispute. Having built a case by carefully presented communications we would be in a position to present a stream of correspondence showing the Judge that we have exhausted all options to resolve the dispute. This then works to the shareholders’ favour upon a Judge considering costs.
Court rules are designed to facilitate early settlement. If an offer to settle is made in a certain way, and a party rejects it, the rejecting party can face severe cost penalties come trial if (i) the rejecting party loses altogether or (ii) the rejecting party wins but does not beat the offer submitted.
Therefore, even if you win a case, you could still face cost penalties.
Many people do not realise that mediation is a successful alternative to litigation and resolves disputes in a great many cases. With such a high success rate mediation should be seriously considered.
The basic idea is an independent third party assists:
Mediators are often, but not always, trained lawyers. For example consider a shareholder dispute. Here an active or retired commercial solicitor with appropriate mediation training and experience might be ideal.
Mediation is becoming an increasingly common method of dispute resolution, because:
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.
An attraction of mediation is that ultimately, 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.
Mediation is voluntary. Although, as will be seen, failure to partake in mediation can have severe cost penalties if the case reaches Court.
Once the parties have agreed to mediate, the parties can either select a mediator themselves or request an ADR organisation, such as the Centre for Effective Dispute Resolution (“CEDR”), to appoint a mediator on their behalf. A venue will have to be selected and it is common for one of the parties’ solicitors to hold the mediation at their offices.
A mediator’s costs will usually be shared between the parties. The parties will also agree to pay their own legal fees in respect of the mediation. If the mediation fails, the costs may be considered as part of a party’s costs in the case come trial.
Before the mediation, the parties’ solicitors will often prepare a bundle of documents to be submitted to the mediator in preparation for the mediation itself. Not only does this save time, it gives the mediator the opportunity to understand the merits of each party’s case from the outset.
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.
Court of Appeal guidance indicates that a party who unreasonably refuses an offer to mediate or settle risks an adverse finding on costs. The cost implications are:
Given such severe costs penalties, parties must be sure of their position before refusing to consider ways to settle. Over recent years the following, seemingly reasonable, arguments have been advanced:
These arguments are usually unsuccessful in Court. This means that reliance on what will be regarded as an excuse will not remove the risk of facing an order from the Court to pay the other side’s legal bill in whole or part.
Having been through the court process before, we were keen to avoid action. Gannons brokered a settlement for us, and we were delighted with the outcome.
Costs were important to us. John repeatedly suggested mediation to the defendant which meant we eventually resolved the dispute without the need for court.