How to reach a settlement

Our lawyers know that the measure of their success is often not whether they win a case in court, but whether they can avoid taking the case to court in the first place. For the latest in our series of GSC Stories, celebrating 50 years of GSC Solicitors LLP, Mark Richardson explores how to reach a better settlement.

It’s often not in the best interests of a client to go to court. It costs a lot of money. It can be incredibly stressful and time consuming. And even if you’re extremely confident in your case, litigation is inherently risky. There’s always an unpredictable element, a risk that the judge will find against you.

Much of a lawyer’s effort will, therefore, be spent attempting to reach a settlement that avoids a court hearing. What follows are five approaches I might take to keep clients out of the courts.

1. Avoid pursuing litigation on a point of principle

I’d always encourage a client to take a dispassionate, commercial view of their case. For example, if your likely legal costs will far exceed the amount you are likely to recover then, even if you’ll obtain a lower amount through an early settlement, that is surely the better option than taking the case to court and running the risk of no recovery at all.

Separating the emotion from a case isn’t always easy for clients. I’ve dealt with numerous cases in which family members or friends in business together suffer a falling out. If they were able to step back and look at things objectively, they would probably take the commercial view and settle. But it’s hard to stay objective when personal relationships are involved. It often becomes a matter of pride. Other issues which should, ideally, remain entirely separate from the case, become wrapped up with it. There’s a reluctance to be the ‘one who backs down’.

In business, however, points of principle can prove costly.

2. Take advantage of Alternative Dispute Resolution (ADR)

Mediation or arbitration (just two of several processes which comprise ADR) can lead to a quicker and cheaper settlement with the help of an independent third party. ADR is designed to keep cases out of courts. In fact, failing to engage in ADR may result in you being penalised in costs at any subsequent court hearing.

It is important not to go into the settlement process with an adversarial mindset. That erects barriers and makes it difficult to have any kind of productive communication. Avoid making personal attacks and be open to finding a creative resolution.

3. Disclose expert reports and/or counsel’s opinion

Sending an expert report to the other side which sets out a strong case can encourage settlement. Similarly, while legal advice is normally considered privileged (and therefore not disclosable to the other side), if the advice you obtain overwhelmingly supports your position while condemning the other side, it can sometimes be an effective tactic to waive the privilege and provide a copy of the advice to the other side.

4. Take advantage of ‘part 36’ offers

The Civil Procedure Rules provide a way of settling a claim which puts pressure on the other side to accept a reasonable offer by providing financial incentives to do so. If your offer is not accepted and you obtain a judgment that is at least as advantageous as your offer, the court will award interest, costs on the indemnity basis (which is more generous than the standard basis) and award an additional amount of up to £75,000. This is calculated as being 10% of the money awarded up to £500,000 and 5% of any amount awarded in excess of this up to £1 million. If the case is a non-money claim, this additional amount is calculated on the amount of costs ordered instead.

For many, the risk of these significant additional costs can be enough to encourage them to settle.

5. Don’t delay – take advice

Where litigation appears to be a possibility, you should obtain professional advice at the earliest possible opportunity. The earlier you act, the greater the chance that you’ll reduce costs and save time. Taking early action may help you avoid litigation entirely.

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