How to resolve disputes early to minimise legal costs

Legal disputes can be costly, in terms of both your time and in dollars. Here, lawyer Michael Milton offers five handy tips to help you minimise your losses if your company finds itself tangled in a legal dispute.

Legal disputes can be costly, in terms of both your time and in dollars. Here, lawyer Michael Milton offers five handy tips to help you minimise your losses if your company finds itself tangled in a legal dispute.

#1 Conduct investigations as quickly as possible

If the matter is not litigated, investigations can take significant time. Freedom of Information (FOI) requests can take months and information will not be readily available. Often the best experts will also not be available at the drop of a hat and enquiries should be made well in advance. If the matter is litigated, it assists to request copies of key documents with the initial request for particulars. Making calls to potential subpoenaed parties prior to issuing subpoenas may also assist to ensure that you are not sent on a wild goose chase or left waiting for information that will not be produced.

#2 Attempt to form views on the information you do have

While it will not always be possible to determine the ultimate legal outcome of proceedings until very late in the day (sometimes not until a High Court judgment), it is usually possible to assess from an early stage whether a claim or proceedings have any merit. In some cases, it is also possible to gain a reasonable idea of what a claim is worth early on, for example, by making phone calls to experts for a quick chat or speaking to the client for a best guess as to quantum.

#3 Make early settlement offers

If a claim is considered hopeless, there is usually benefit in making a “walk-away” offer in order (hopefully) to provide some level of costs protection and also to emphasise the costs risk to the other side. It is a good idea to set out a reasonable estimate of your legal costs spent to date in order to make this clear and to avoid dispute later on. Such an offer together with a persuasive Calderbank letter may even avoid legal proceedings altogether. If a claim is arguable, then it can be beneficial to at least seek to cover off the risk of a “best case” losing result at an early stage (depending on the circumstances). This will create some pressure for the other side from a costs protection perspective and encourage the other side also to consider their position early.

If a claim is on balance a likely losing result, there is likely to be little to be gained by litigating it to death in the hope of a reduced settlement down the track. The more likely outcome is that legal costs on both sides will make the case uneconomic to settle. If the other side is being unrealistic, then there is much to be said for putting your best foot forward with a strong offer at an early stage to cover off the risk of years of future legal costs and/or a hearing.

#4 Avoid interlocutory disputes

Filing motions can sometimes be a good way to dispose of hopeless claims swiftly; however, they often result in significant delay to proceedings and costs mounting on both sides.A carefully worded letter asking the other side to reconsider their position in light of X may be the solution and result in a concession being made, rather than having a lengthy fight over a relatively small issue.

#5 Be flexible in your proposed settlement terms

While it is often beneficial to make offers on an “exclusive of costs” basis for the purpose of costs protection, it also assists to make an alternative offer at the same time which is inclusive of costs. In order to do so, you need some basis for an assessment of the other side’s costs (for example, by requesting an itemisation or rough estimate prior to making the offer).

The benefit is that the “inclusive” offer may be closer to the ultimate total figure sought, may encourage the other side’s legal representative to compromise their own costs and may also avoid the expense of further disputes over costs down the track. Consider whether there is some other solution to make the offer attractive – or example, by way of an apology or retraction in a defamation matter, by all defendants pooling their resources in difficult multi-party litigation, or by insurers discussing matters between themselves under the Cross Liability Claims Protocol. If you are seeking to obtain a settlement deed, consider whether an indemnity is necessary or whether the other side would be willing to forgo any future claims against other parties.

Michael Milton in a senior associate in the Sydney office of CBP Lawyers.

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