Do you or your employees know the best way to respond to a dispute, when one arises? Do you know what information you need or the processes you should undertake to respond effectively to avoid litigation? If the answer is ‘no’, then the following top 10 tips for responding to a dispute have been outlined to provide some guidance.
1. Don't ignore it
Some disputes result in Court intervention unnecessarily. This occurs when communication is ignored. Unfortunately this only antagonises those involved and can create an environment of mistrust.
Acknowledging the position and even providing an indication that the matter is being investigated starts a proactive process of resolving the dispute and mitigating its impact upon you and your business.
2. Remember privilege
Whilst focusing upon avoiding the Court room, it should be remembered that were the matter to proceed to litigation then a party is compelled to disclose all relevant documents which includes internal emails. This isn’t optional nor is it a selective process. Relevant documents can include even the most embarrassing and detrimental internal communication that was never intended to be read by anyone outside the company. Ensuring the employees and colleagues do not create documentation that has the potential to have a negative impact upon your position is crucial.
It is therefore preferable to control the circulation of comments regarding the dispute and keep it to a small number of people who are pertinent to keep the internal investigations and resolution process. Training your staff to be aware of this vital.
3. Get organised
There is little point in responding to a dispute without all of the information.
If you respond without a full investigation and later locate details that are pertinent to your position, the credibility and authenticity of those documents could potentially be questioned if you did not locate them early in the process.
It is therefore important to collate all the documentation you need which could include searching email communication. Starting a file to secure the evidence in one location can help.
In addition, there is an obligation upon both parties not to destroy any evidence and yes that even applies to evidence that does not support your position. Long gone are the days when you were able to produce only the evidence to support your case. The Courts now demand transparency.
It is possible for a party to secure an order authorising the interrogation of an I.T. system to locate evidence or indeed potentially ascertain when such evidence was destroyed.
4. Know your legal position
Having a clear insight into your legal rights when faced with the dispute will help you deal with or deflect any claims.
It may be that you are able to highlight the contractual term that rebuts a claim being made. Unless you were aware of your contractual position, you will not know how to respond. This could therefore involve reviewing your documentation or seeking legal advice.
5. Risk assess your position
Most risk assessments will include considering the strengths, weaknesses, opportunities and threats faced in a given set of circumstances.
Strengths can arise from the facts and your legal position, as indeed can the weaknesses. Opportunities of early resolution or a settlement that maintain your trading position can head off a dispute quickly. For example, if you wish to maintain a relationship with the party bringing the dispute there may be an opportunity to enter into a separate trading agreement or locate another opportunity to work together.
The threats in a dispute can come in a number of forms. Most obviously they relate to the financial cost but there is also the distraction and loss of management time as well as any potential reputational damage.
Having a clear understanding as to what the dispute means to the business from all of these aspects will assist you in deciding the best strategy to adopt in dealing with the dispute.
6. Be flexible and creative
If the dispute were to proceed to Court, the judge is bound by very strict legal protocol and legislation. There is no ability to provide a commercial solution or to trade options in order to get a deal done!
As a result, taking control of the dispute and exploring different types of settlement can be preferable particularly when both parties are faced with the prospect of court costs, a potential length court timetable and no guaranteed outcome.
Exploring all options in a detached and unemotional manner is a helpful way of finding an early commercial resolution.
7. Remember “without prejudice”
If you are making a genuine offer which compromises the position, it would be usual to caveat the proposal with the wording “without prejudice.”
We often see numerous letters and communications headed with this two word phrase but without much understanding as to its impact.
“Without prejudice” must be a genuine offer to resolve the dispute. “Without prejudice save as to costs” must be a genuine offer to resolve the dispute on the understanding that if the offer is rejected and the matter proceeds to Court, the offer would be produced to the Court at the conclusion of the case if the case is settled on terms equivalent to all less than the offer that had been made. The purpose being to try and encourage the Court that a reasonable offer had been made but was rejected and therefore the party rejecting the offer should be penalised on costs. Due to the Court’s wide discretion on costs, it is possible to win in a case and find a victory soured by the losses on costs.
8. Make any offer of settlement clear
It is important to avoid any ambiguity.
Having been in one dispute, avoiding another that arises as a result of confusion regarding the terms of a settlement proposal is certainly not a happy position to be in. The second undermining of the relationship can be difficult to retrieve and restore trust. Therefore, be clear in the drafting of any settlement terms and seek advice and guidance if in doubt.
9. Don't rush to Court
This might be strange advice coming from a litigator, however as soon as you issue Court proceedings, the court will ask whether or not you have tried any form of Alternative Dispute Resolution. (ADR)
The Courts are highly likely now to adjourn the proceedings until the parties have explored the ADR. Exploring ADR does require the co-operation of both parties. The issue of Court proceedings may encourage a reluctant party to face facts and explore a resolution. The Court should not however be a first port of call. We are able to advise on all aspects of ADR, as well as offer mediation services.
10. Legal advice
All of the above steps will help ensure the business is in the best possible position and along the way there may well be a need to secure advice to ensure that your communication does not compromise the company. For example, avoid affirming a contract, can you allege that the contract has been frustrated, could you terminate the contract and if so, what impact would that have upon the losses you can claim. What would you need to do to mitigate your losses?
Having legal advice goes beyond knowing your legal rights. It covers your strategy in resolving the dispute to give your business the best possible chance of minimising the impact and maximising the opportunity to limit costs and any claim against you.
For further information about risk assessing your business or to discuss your strategy in resolving a dispute, please contact Sarah Canning on 01604 828282 or email Sarah.Canning@franklins-sols.co.uk.