Our approach to costs in disputes
For any client with a dispute, costs will be a key concern, which makes it a key concern for us.
At AB, our experience has taught us some valuable lessons around how to approach litigation costs from a strategic perspective.
Watch out for stalemates
A key factor with managing costs effectively in a dispute is to understand when you have reached a stalemate – namely a state where no further progress will be made without escalation. Often parties will be looking to avoid escalation as this will typically involve incurring costs – for instance by drafting a statement of claim or filing proceedings. However expending time and energy exchanging letters during a stalemate will ratchet up costs considerably, and in the end the stalemate will have to be broken so the next phase of costs will be incurred regardless.
Decide if you want to be reactive or proactive
At a high-level, we view this as breaking down into two main strategies – reactive and proactive. Both strategies can be effective – but determining which is appropriate for your circumstances requires a genuine commercial understanding of the drivers of your dispute.
Reactive measures are less costly in the short term, and generally take the form of increasingly aggressive reminders, demands for payment, and threats of escalation. They are appropriate if you have reason to believe that the other party will want to actively avoid escalation. Factors that may indicate this include a solvent, well-funded counterparty, ideally running a business as a going concern, who has a reputation to protect and is not defaulting on multiple obligations.
The proactive approach involves taking control of the dispute and activating the legal and court system much earlier in the process – for example by commencing proceedings as soon as a letter of demand goes unanswered. This approach involves a larger investment upfront, but can lead to more efficient outcomes (both in terms of time and cost) in the longer term – especially if you have reason to believe that reactive measures are unlikely to succeed. Indicators of this might include a situation where your counterparty is a larger company, a seasoned litigator, or a professional borrower who may be in default on multiple obligations at any given time.
Deciding which approach to take is not always easy, but there are often strong indicators – and after a few communications are exchanged, a good assessment can almost always be made. In our experience, this analysis is often not undertaken early enough, or at all - leading to considerable wastes of time and money.
Always consider settlement
The other, and potentially greatest tool available to control costs is negotiation and settlement. We differentiate ourselves from many competitors in this space by one simple fact - if at any given point we think that settlement is your best option (and it often is), that is exactly what we will tell you. The longer a dispute goes on, the smaller the amount available to both parties – and huge amounts of value can be preserved simply by coming to the table earlier. In our experience the impediments to this are often emotional – and one of the littler known benefits that lawyers can provide is taking the heat out of a situation to allow productive discourse to re-emerge. To the extent that we can facilitate that, we will.
You have options
At AB, we are seeking to form long-term trusted relationships with our clients so, when it comes to costs, we are open to discussing flexible pricing structures including a conditional costs model, third-party funding arrangements, or instalment-based invoicing. We are very commercial around these areas, and there are often options available that you may not have been aware of.
If you’d like to get in touch, consider sending us an email using the button below - we are happy to have a free 30-minute chat with you without any further obligation.