free small business advice & information

Article Index
Is It Worth It?
Initial Action
Which Court Track?
DIY Litigation
Alternative Dispute Resolution


2. Initial Action

Your first objective is to settle the dispute without going to court. Failing this, your objective is to build up clear evidence that you have given the defendant a reasonable opportunity to settle out of court. This will count in your favour when costs are awarded.

2.1 With your legal adviser, plan your approach to solving the dispute. Your approach will depend completely on the circumstances.

2.2 Send your opponent a letter stating the details of your claim. Insist that you require satisfaction or a reasonable offer within a reasonable and specified time.

  • This letter will be a key document in your legal case. Seek advice on what details it should include.
  • Say what you will do otherwise (eg issue a claim). Do not make empty threats. If you give a deadline, stick to it.
  • Be aware that the threat of legal action may provoke a counterclaim against you.
For certain types of cases (eg professional negligence), there is a specific pre-action protocol which you must follow. The court may impose costs sanctions against you for failure to comply with the pre-action protocol.

2.3 If there is no satisfactory response, instruct a solicitor — or abandon the claim.

  • Choose good lawyers (see 5), though costs can be substantial in anything but the most straightforward cases (see 5.4).

2.4 Be prepared to compromise both before and during any court case. You can settle either in or out of court, at any time before judgment.

  • Decide whether you are prepared to accept payment by instalments, or payment of less than the full amount.
  • Consider whether any offer exceeds or matches what you can expect to win. Make sure you understand your potential liability for costs if you reject an offer but fail to win more in court.
  • Consider whether making your own formal offer to settle (by serving a Part 36 offer) could save time and costs. Take legal advice.
  • State that the negotiations are conducted ‘without prejudice’.
  • Most cases turn on the court’s interpretation of disputed facts or points of law, and therefore litigation carries an inherent risk, even if you think that you have a very strong case. You should always factor this risk and the likely irrecoverable costs which will be incurred into the settlement equation.

2.5 Before issuing court proceedings, it is essential to consider if your case might be settled by mediation (formal negotiations assisted by a mediator), which may save time and legal costs.

BHP Infosolutions

Labels: Getting Paid