five ways to make litigation cheaper

Presented byChris Greenwell Claire Herbert 29 May 2012

before the event

the pre-litigation process

litigation itself

what do we mean by litigation?

• This presentation is about commercial civil disputes

• Disputes which are argued about• Few businesses plan to be involved in

litigation

• Make sure the risk of it is managed

risk management

risk management

• Terms and Conditions• Before the event insurance• Credit insurance

• Risk manager• Clear audit trail in contact with suppliers and

customers

terms and conditions • Have terms and conditions of sale• Have terms and conditions of purchase • Make sure they are incorporated and prevail • Keep a clear record of the contracting

process • Make sure the terms

• Maximise exclusions• Clarify recoverable consequential loss

• Have them reviewed regularly

before the event insurance

• Surprisingly cheap • e.g. £150.00 premium for £50,000 worth of

cover• Masses of providers - 4m Google ‘hits’ in

0.29 secs• Can be tailored to your particular business • Gives massive leverage in negotiation• A matter to refer to your insurance broker• Don’t be left saying ‘If only if…..?’

credit insurance

• Minimises risk • It imposes discipline in contracting • It does not eliminate litigation which is usually

required to be pursued• Be selective about your credit insurance

provider• Ensure the conditions are observed. Many

will decline on the flimsiest pretext• The message to your opponent is you will not

give up

risk manager

• Not ‘rocket science’• Someone responsible for documenting

contracts and agreements• Management of insurances and terms • Collation of evidence and documents• Management of e-communications

• Takes overall control of disputes

clear audit trail with suppliers and customers • The biggest problem for clients in disputes is

lack of records• This is easy to fix, it just needs priority• Responsibility should be delegated to risk

manager• All verbal communications on the issue

should be followed up in writing• All meetings should be minuted • Some record is better than no record if

pressed for time

a few home truths

a few home truths

• It is always better to settle than fight• Even success at trial is rarely a full ‘win’• ‘If in doubt leave it out’

• Except ‘without prejudice’• Always build in ‘kentucky windage’• Don’t leave it until the last minute • ‘It is a matter of principle’; consign it to the bin

going to the solicitor

• key tips on engaging with the solicitor

engaging the solicitor

• Remember litigation solicitor’s bill by time• Not to ‘milk’ clients but because it is difficult to

estimate something that may be over in a week or may be over in years

• Keep solicitor’s time to a minimum• Do preparation on the facts yourself

engaging the solicitor

• Send your solicitor a detailed statement in advance

• Cross index it with key obvious documents• Limit calls, limit emails, limit letters• Solicitors are required to give estimates.

Make sure you have one and keep track of it • Costs significantly exceeding estimate may

not be payable

the pre-litigation process

protocols

• Claims and defences to be exchanged by letter

• Disclosure of relevant documents must be given

• Objective is to foster settlement• Parties required to consider alternative

dispute resolution• Cost penalties for not observing the rules

alternative dispute resolution

• You interacted with your opponent. Meet them ‘without prejudice’

• Part 36 offers• Calderbank offers

• Mediation

mediation

• Mediator is honest broker• Parties meet on one day • Their polarised positions are exchanged

• Mediator negotiates to bring parties together• Worse case and best case scenarios are

compared

• Contractual deal is reached on the day

mediation

• Deal never the best but must be capable of ‘being lived with’

• Costs massively less than litigation• Court cannot yet force parties to mediate• Increasingly there are cost penalties for not

mediating (court’s require explanations for refusal)

• Overwhelmingly the swiftest and easiest way to save legal costs

mediation

• See my dreadful home video on the subject at http://sodiesha.re/ojp/YNS

• Leave your card for a free emailed guide to mediation

other forms of alternative dispute resolution

• Arbitration • Adjudication• Non-monetary agreements

• Pay what’s obviously owed

the litigation itself

• Funding• Legal expenses insurance• ‘Conditional fee’ or ‘No win, no fee’

agreements• Hybrid agreements• New regime pending • Government keeping it a secret • See my blog http://wp.me/p1Jm7L-2z• Regime better suited to claimants acting

against insured defendants • ATE insurance and third party funding

counsel and assistants

• Closest comparison of counsel and solicitors is to consultants and GPs

• Question indiscriminate use or worse total reliance

• Experienced solicitors should only use counsel in more complex or unusual cases

• Find your solicitor’s opinion

counsel and assistants

• Find why your solicitor needs to go to counsel • Ask ‘don’t you know the answer?’• Unnecessary use can easily add one third the

cost of a claim

• Solicitors like to delegate. Not everything needs lots of experience

• Make sure this does not mean you pay twice or worse for a team of people

the start of proceedings

• Make sure you get the claim documents right first time

• Avoid your solicitor trying the case in wordy or lengthy correspondence

• Security for costs• Summary judgment • Interim payments• Take a practical view. What the rules allow

and what is cost effective are not the same

disclosure

• Must be thorough• Risk manager should marshall emails • They should be stored in folders by subject or

sender• They should be sent to solicitor in

chronological order in zip files by subject or recipient

• Big email cases that are not controlled by client hemorrhage costs

disclosure

• Judges hate it and bad management means potentially massive irrecoverable cost

• Be practical about trying to find non existent documents

witness statements

• This is a series of stories about the events in the case

• Write the first statements right at the start of the case (when your memory is fresh) yourself

• Credibility comes from detail • Avoid numerous travelling drafts • Be wary of counsel examining every last word

experts

• Expert issues are matters where the judge needs guidance on what is or is not right

• If it is that sort of case they cannot be avoided

• If you are confident; get your expert report early and avoid getting to the stage where they are being exchanged

experts

• Consider the possibility of a single expert or narrowing areas of real dispute

• Two expert cases add very substantially to costs in reports, meetings and attendances at trial.

trial

• This is the most expensive part of the case• It is also the part of the case where it is really

hard to save cost (cheaper counsel the only practical choice)

• It is absolutely full of risk on costs, part 36, experts, facts, law and the vagaries of the judge

so where do the costs ramp up?

• Solicitor undertakes factual preparation for the client

• Solicitor places excessive reliance on counsel• Disclosure is mismanaged• Client contacts excessively and unnecessarily

with Solicitor• Unrealistic approach to settlement and merit

of the case

so, the five best ways to cut costs?• Settle early and don’t forget the managerial

downtime• Always agree to mediate; you’ve little (especially

in big value cases) to lose

• Forget ‘principle’ and don’t lose sight of proportionality

• If you must fight, work hard on your own preparation and set the opponent up with offers

• Try and ‘lay off’ your legal costs; CFA, hybrid CFA, BTE insurance

questions