The outcome of litigation is often uncertain. Even if you have a strong case, success cannot be guaranteed. Even if you are successful, you may not be able to recover the costs you spend with us or, if you are, it is likely that you will only be able to recover a proportion of those costs. As such, in most cases, litigation should be a last resort.
We pride ourselves on providing our business clients with creative, flexible and practical ways of resolving their disputes, wherever appropriate and possible, in order to avoid the costs, delays and uncertainties of litigating their disputes through the courts and in order to achieve the best possible outcomes for our clients.
The purpose of Alternative Dispute Resolution (‘ADR’) is to find a way for parties to resolve their dispute without relying on the court to determine it. We advise and assist our Clients in a wide range of legal matters that can be resolved by alternative means, including the following: –
Negotiation is the most informal and flexible ADR process. It involves parties attempting to reach agreement on matters in dispute without the assistance of a third-party. It is very likely that in the course of any dispute, we will advise you to enter into negotiations in an attempt to resolve your dispute. Whilst they typically do, negotiations need not necessarily involve lawyers.
Mediation is the process whereby parties, with the assistance of a neutral third-party mediator appointed by the parties, identify the issues in dispute and attempt to reach an agreed resolution. It is invariably faster and cheaper than litigating a dispute through the courts. It is likely that, in the course of any dispute, we will advise you to consider mediation.
A mediation is not binding until the parties sign an agreement, setting out the terms agreed. If one party refuses to abide by the agreement, the other party can sue in the courts to enforce it. If the parties do not sign such an agreement, the matters discussed at the mediation cannot be referred to in any court proceedings.
Arbitration is the process whereby the parties agree to submit a dispute to be determined by an independent third-party arbitrator who, acting in a judicial fashion, makes an award, determining the dispute, which is binding on the parties. The parties cannot then refer the matter to the court appealing against the Arbitrator’s decision unless he has reached that decision having made a manifest error of fact or law.
Adjudication is the process whereby a dispute arising under a contract (typically certain construction contracts) is, according to the terms of the contract, referred to a third-party adjudicator for determination.
ADR has a number of advantages, including the following:
If ADR does not result in settlement, undertaking an ADR process can result in wasted time and costs for the parties. However, even if ADR does not result in settlement, it should test the merits of each party’s case and narrow the issues in dispute between the parties. In any event, ADR should allow the parties the opportunity to fully and frankly air their different perspectives.
Even if ADR does not result in settlement itself, it is common for ADR to increase the chances of settlement being reached at a later stage before trial.
Parties should also bear in mind the potential adverse costs consequences of unreasonably refusing to undertake ADR.
A party may be contractually obliged to use an ADR process. However, even if they are not, the court rules robustly encourage it.
Unless the particular circumstances of a dispute make it inappropriate to do so, before starting proceedings the court rules require parties to take appropriate steps to resolve their dispute and, in particular, to consider the use of an appropriate form of ADR in order to do so. The Court will expect the parties to have complied with the court rules.
The Court has a broad discretion as to whether the legal costs of one party should be paid by another, the amount of those costs and when they are to be paid. When the court decides to make a costs order, generally the unsuccessful party will be ordered to pay the successful party’s legal costs as well as their own. However, in deciding what order to make about costs, the court must have regard to the conduct of the parties, both before and during the litigation, which includes the extent to which they have complied with the court rules. Accordingly, where a party refuses to use ADR or fails to consider the use of ADR, that can be a relevant factor for the court to consider when deciding what orders to make as to costs. Undertaking ADR at an early stage can reduce the prospect of an adverse costs order being imposed by the court at a later stage.
Refusing to use ADR because you do not believe it will be successful and proceeding with litigation should be very carefully considered. There is a risk that the court will find that proceeding with litigation on the basis that ADR has no reasonable prospect of success is not a good enough reason to refuse to engage in ADR and the party making that decision may be subject to an adverse costs order.
A dispute may be wholly unsuited to ADR in limited but important circumstances; for example, where a party requires urgent injunctive relief.