01/08/11

By Katherine Caswell, Solicitor at Blandy & Blandy.

With the public spending cuts beginning to bite one of the first areas to be cut back will be the courts. The Ministry of Justice has announced that it is considering closing up to 103 magistrates courts and 54 county courts. Already many court offices are open for shorter periods and a backlog of work is developing.

In tandem with the reduction in available court time the Coalition Government is emphasising the need for parties to try to resolve civil disputes before they reach the court system. The Justice Minister Jonathan Djanogly, writing in the Government Gazette, stated that many disputes would be better resolved between the parties at an earlier stage with a more satisfactory outcome rather than what he termed the “winner takes all” approach offered by litigation.

In a climate where resolution of a dispute via the court system will most likely be delayed due to lack of resources it makes even more sense to try to resolve a dispute prior to issuing court proceedings. Even where proceedings need to be issued at court to protect the claim from being ruled out of time they can still be stayed to allow for alternative methods of resolving the dispute.

The winner takes all view of litigation referred to by the Justice Minister is not one recognised by those specialising in litigation. Unless the losing party has behaved particularly badly in litigation it is more usual for the winner to recover only a proportion of its legal costs. This means that the winner can end up paying tens of thousands of pounds, even if it succeeds in recovering all of its claim. This is hardly winner takes all.

Most disputes are settled before they get to trial. Settlement inevitably involves a compromise and the accurate picture of litigation via the courts therefore is that it rarely produces a winner in the general sense of the word.

Settlement makes commercial sense. The earlier in a dispute the parties attempt such a compromise the better since positions are usually less entrenched at that stage and less has been spent in the way of legal fees.

Solicitors specialising in dispute resolution are well versed in settlement options. From more formal structured processes such as mediation or adjudication to less formal settlement discussions and round-table meetings these options are almost always considered. As a client you can help by trying to maintain a commercial approach to the risk/reward analysis that settlement involves and by prompting your legal adviser to explore settlement of the dispute.

Often the sign of a successful settlement is that neither party is satisfied. A compromise is not the same as winning at court. However when winning at court risks liability for extensive legal fees and will not recover all your legal fees, let alone the management time lost to dealing with the dispute, a compromise is by far the best solution.