Litigation should never be embarked on lightly. There is no such thing as a “clear-cut case”. Most lawyers will rarely give even the strongest case more than a 70% chance of success. There are a number of questions which you need to ask yourself before seeking to resolve a dispute by embarking on litigation:
- Is the dispute one which you need to address? It is important to look at any dispute dispassionately and without emotion.
- Have you looked at every possible way of resolving the dispute?
- Can you afford to lose the case, which could involve you having to pay not only your own costs, but also a large portion of the other side’s costs?
- Is there a significant disparity between the respective financial strengths of the 2 parties?
- Will you be able to withstand the attacks you and your business will face from lawyers experienced in our adversarial legal system?
- Can you afford the distraction that a lengthy court hearing could cause?
I will address each question:
- Disputes can often be triggered by hostile personal relations. It is important to try and be objective and to avoid allowing feelings of personal animosity to influence the interaction between the parties.
- Until fairly recently, commencing proceedings at the early stages of a dispute was considered a sensible strategic approach. However, the cost of issuing a Claim Form has increased significantly in Court fees alone with a claim in the High Court costing 5% of the amount claimed above £10,000(or 4.5% if issued online) up to a maximum of £10,000 for claims of £200,000 or over. Every possible way of resolving a dispute must therefore be considered before embarking on litigation.
- The changes introduced by Lord Woolf in 1998 in the Civil Procedure Rules have also acted as a disincentive to anyone contemplating embarking on litigation. One of the cornerstones of these changes has been to encourage parties to a dispute to seek mediation at an early stage. Failure to do so can be penalised by adverse costs awards against any party refusing to consider mediation for no good reason, even in cases where such party has won his case.
- Those with deeper pockets will not only be able to afford higher quality lawyers, although more expensive does not necessarily mean better, but more importantly have greater staying power. It is often difficult to predict how proceedings will progress and one has to expect the unexpected. Running out of funds in the middle of a case can be catastrophic, as one would probably have to pay the other side’s costs, in addition to one’s own, in order to pull out. It is also important to bear in mind that even if you are successful, it is unlikely that you will be able to recover more than 70% of your costs from the other side.
- One should not underestimate the hostility that our legal system allows and to a certain extent encourages in our adversarial system. Being cross-examined by an experienced barrister is not something that should ever be taken lightly.
- Being involved in litigation is time-consuming and distracting and can cause serious damage to small businesses where senior executives find themselves unable to give their companies all the attention that is needed.
- Every dispute requires very careful consideration before embarking on litigation, whether you are the plaintiff or the defendant.
- Every effort should be made to resolve a dispute at an early stage without resorting to the courts. This can often mean having “to swallow one’s pride”.
- A carefully prepared letter can often nip a potential dispute in the bud. If this fails, try not to lose direct contact between the parties.
- Sometimes bringing in a third party to act as a mediator on an informal basis can help avoid litigation.
- Once solicitors become involved you must ensure that you receive a very clear indication of costs throughout the process and ensure that you receive regular progress reports. If possible give one person within your organisation the responsibility for acting as the point of contact with the solicitors on your behalf and ensure that such person has a clear understanding of how solicitors charge fees.
- Always try to find a way to maintain contact the other side, either directly or through your solicitors.
The time when everyone was entitled to their day in court is long gone and the consequences of doing so now can have unexpected and damaging consequences. If you want to talk this through, why not contact Tom Elek by e-mailing firstname.lastname@example.org calling on 07768 772148.