1. Introduction

Not many people intend to get into disputes. Disputes can arise out of many situations such as accidents, poor communication or people avoiding situations which should be dealt with promptly. The latter two can be avoided completely by putting in place prudent procedures to ensure that matters do not get "brushed under the carpet" and that communication within an organisation (and with other parties outside the organisation) is full, open, honest and clear.

Disputes arising from accidents may be more difficult to avoid but do not have to turn into disasters. Disputes can often become costly, not only in terms of the money you have to spend to resolve them but also in the amount of time that you have to spend in sorting them out. The best way to deal with them is, of course, not to have them at all but if you do become embroiled in a dispute you should consider the most effective way to resolve which will achieve your aims.

2. Avoiding disputes

Keep records - keep as much documentation as you can including informal notes of telephone calls and meetings. If possible get them typed up and keep both the typed document and the "contemporaneous" (made at the time) note. The former will be legible but the latter is likely to give you the ability to remember the conversation or meeting itself and exactly what was said. They will also form a useful backup in convincing a court that you did actually make the note in the meeting rather than typing a note some time later when you realise a dispute is arising

Keep records in an orderly fashion such as date order, by invoice number or by category.

Confirm in writing matters discussed on the telephone or in conversation at meetings. This avoids the possibility of people misunderstanding the outcome of the conversation. Also ask for confirmation when you are not sure, do not just assume the option which you think is most plausible. It may not be what was intended and intention can be an issue in which a court or tribunal is very interested when deciding a matter. Similarly if you believe that someone else is unsure, perhaps a business contact, employee or partner, ensure that they are clear on the issue at hand.

Be proactive. If your letter has gone unanswered or your call not returned, chase a response. Do not leave matters to drag on through lack of action. That way things cannot get out of hand. If a problem does arise, deal with it as soon as possible and do not leave it thinking it will go away. Be proactive in the management of the problem: do not let it, or the other side, manage you.

Look at the way that you run your affairs and the systems you have in place. Ask yourself if there are opportunities for problems to occur or if there are ways in which your systems can be improved. Speak to the people who you deal with in your business or personal affairs. Can they see difficulties which may arise or have arisen in the past? In effect you will be carrying out a risk assessment.

Look at the way you define your relationships with people and businesses. Are agreements in writing? Does everyone know exactly what is agreed? Putting the terms of a contract in writing reduces the opportunity for the parties to misunderstand what the other was trying to agree to (and what they were not agreeing to). Having the contract prepared by lawyers will ensure that your intentions are set out in such a way as to be enforceable in court should the worst happen. It is also a way of clarifying further exactly what the parties are agreeing to do. Spending the money on legal fees at this stage will cost you some money but you should compare this with the amount of money you may have to spend in fees to resolve it or even litigate it.

3. Resolving disputes

In the past a lawyer would only be involved in a dispute once someone had received a writ (now called a claim form) or when they were required to issue one.

In 1999 the court rules changed to give effect to reforms proposed by Lord Woolf. The aim of the reforms, and the subsequent rules, was to encourage parties to resolve their disputes without the need for legal proceedings to be issued. On balance the reforms have indeed had the effect of reducing the amount of litigation and one of the main reasons is that the new rules encourage the parties to co-operate and detail their grievances before issuing proceedings. There are some costs sanctions which are now used by the courts to penalise those who issue without giving their opponent the opportunity to investigate the claim and respond to it in a reasonable period.

3.1 Investigating the dispute

This is one of the most crucial areas in successful dispute resolution. If not done thoroughly with the involvement of both the lawyer and yourself, this can lead to huge problems later in the matter. The golden rule is let the lawyer have all the documents and tell him everything. This especially holds true for documents and facts which weaken your case and assist the other party's case. If you withhold part of the story or some of the documents and they come to light last, for example at trial, not only will you lose a great deal of credibility (therefore weakening what would have been the strong points in your case) but you will not have allowed your lawyer to provide you with an accurate assessment of the merits of your case. Without an accurate assessment of the merits it is unlikely that the most suitable way to proceed with the case will be selected.

When deciding what documents to provide to your lawyer, as stated earlier, GIVE HIM EVERYTHING. Do not decide that a document is not relevant or does not matter. You are paying for professional advice so make the lawyer decide what is relevant. It is highly unlikely that all the documents will be referred to at the final resolution of the dispute but then it is also highly unlikely that a lay client would select all the same documents to go in a trial bundle that the lawyers would select.

You can save your lawyer a large amount of time, and therefore yourself an even larger amount of money, if you provide, at the outset, a full set of well organised documents. In addition, prepare a full account of your story which the lawyer can read before seeing you to fill in the gaps. When deciding what information to give the lawyer GIVE HIM ALL THE INFORMATION. Small facts can sometimes be crucial to the outcome of a case. You do not want to find yourself saying to your lawyer "I didn't think that mattered." By then it may be too late. You should also provide your lawyer with both sides of the case. If the matter is to be resolved by an independent party then that party will hear both sides of the story before they make a decision. Your lawyer will be in a better position to advise you on the likely outcome if you tell him both sides rather than merely your version or what you consider to be your strongest case.

3.2 Planning your case

Once the case has been investigated you and your lawyer should plan your case.

You should let the lawyer know the general circumstances about you and your business. Let us say, for example, you have had a contract wrongfully terminated by another party. The advice you receive on how to proceed may vary depending on other circumstances. Consider the following:

(a) It may be that you have a large number of other contracts with that party. If so, you may not want to antagonise them by issuing proceedings for wrongful termination, even if the likelihood of success is great. Such a course of action may lead to them terminating your other contracts rightfully. Mediation is a method of dispute resolution which can incorporate non-legal solutions into an agreement resolving the dispute. In the above circumstances such an agreement may include a term that they will not terminate the other contracts for a specified period, leaving you secure in the knowledge that this particular business source will be around for some time.

(b) Your business demands you have good cashflow. Waiting for litigation to conclude in the period of, for example, one year may eventually get you all your money but if the business has gone into liquidation by then, that is of no use to you. In this situation a speedy settlement or resolution may be more important to you than recovering every penny to which you are entitled.

(c) You intend to sell your business in the medium term or you have the possibility of winning a major contract. To have litigation ongoing at the time that these events are due to happen could be catastrophic so a quick resolution is needed. Expert determination is where the parties pay an expert in the relevant field to determine which of the parties is in the right and can be completed much quicker than litigation.

The advice you should receive in each of the above examples should differ but the basic fact remains that your contract was wrongfully terminated and you have the right to litigate and could well be successful in the litigation. However, your own circumstances and what you want from your lawyer should determine the advice you receive. Gone are the days where you go to a litigation department, tell them to issue proceedings and find yourself in a court action before you have decided, with the help of your lawyers, what the best solution is for you!

Once you have investigated the case and discussed with your lawyer your circumstances, you should know which method of dispute resolution you intend to pursue (although some, like mediation, can run alongside litigation).

You should know how you intend to pursue that course, what is required to make it successful, what you are expected to contribute and what your lawyers are expected to contribute.

You should also have an estimate of how much it is going to cost you and when you are likely to need to pay so that you can plan your cashflow.

4. Methods of dispute resolution

There are various methods of resolving disputes each with its own characteristics. You and your lawyer should discuss the most appropriate method for your particular circumstances. Those circumstances will include the timescale for resolving the dispute, the binding nature of the outcome, the cost and what you want to achieve from the whole process.

4.1 Litigation

Litigation is only one method of resolving a dispute. It can, in some circumstances, be used to put pressure on another party to settle a dispute. This can be risky sometimes because once the courts are involved they will set a timetable and ensure that the parties stick to it. The timetable of events for involving the court will in most cases include:

(a) The claimant issuing and serving the Claim

(b) The defendant acknowledging the receipt of the Claim

(c) The defendant filing at court a defence

(d) The court sending out Allocation Questionnaires and the parties returning them

(e) A hearing to agree the future conduct of the case

(f) Disclosure by both parties

(g) Exchange of witness statements

(h) Exchange of Expert evidence

(i) Pre-Trial Review Hearing

(j) Trial

Before the claim is issued you need to have investigated the claim, identified the legal issues involved and assessed whether you have, or can obtain, the evidence to resolve those issues in your favour. You also need to look at your witnesses, and those of the other side, and consider who will be more convincing in court. It may be that an opposing witness may be more convincing telling lies than your witness who is telling the truth. You will also want to consider the possible outcomes of litigation, the cost and whether there is another way of achieving your objective. Once these matters have been considered you can then decide if you want to issue proceedings. The above steps are explained in more detail in the document "Steps in a Typical Litigation Action".

4.2 Arbitration

Arbitration is a flexible alternative to litigation. The parties can choose who the independent arbitrator should be, the location, the forms of evidence, the issues subject to arbitration and how the process is organised to a large degree compared with litigation. Another factor is that arbitration is a private process whereas once court proceedings have been issued, anyone can look at the claim at the court office.

However, the arbitrator's decision will be binding on the parties and can be enforced through the courts just as a court judgement would be enforced.

4.3 Mediation

Mediation is most often used when the parties genuinely want to achieve a settlement. The parties will meet with the Mediator prior to the mediation day to agree the scope of the mediation and the documents which are required. On the day of the mediation, both parties will give a statement of their position and then will retire to separate rooms. The mediator will speak to each party separately to discover what is important to them and will explore settlement possibilities. The mediator can only reveal information to the other party if he is given authority to do so by the party who gave him that information.

Mediations generally last a day. It may be that the parties will not leave until the early hours of the morning but they stay until an agreement has been thrashed out or it is clear that no agreement is going to be reached. One of the biggest benefits is that the parties can include in their agreement provisions which a court would not be able to order, such as an agreement to continue trading with each other for a specified period.

Because there is no winner and no loser in mediation, each side pays their own costs of the mediation.

4.4 Expert determination

Where the dispute is a technical one but the majority of the issues are clear or not in dispute, the parties may wish to have an expert in the relevant field decide the outcome. The parties can select an appropriate expert in the field and have him decide which party is correct in the stance they are taking.

4.5 Early Neutral Evaluation

When the parties cannot resolve a dispute but do not want to incur the costs of litigation and going to a full trial in order to find out the result, or even if one party does not consider that the other is being realistic about the legal merits of its case, the parties may seek early neutral evaluation. This is where the parties put the relevant documents before a judge or other professional who gives his opinion as to who would be likely to win should the matter go to trial. Effectively, this is a mini-trial and can be useful in giving the parties an idea of the final outcome should the matter go to trial. It is not binding on the parties or on the court but is a tool for helping the parties realise their position before the huge costs of going to trial are incurred.

4.6 Adjudication

Currently limited to construction disputes, this 28 day dispute resolution process may be widened to cover other types of dispute. Any party to a construction contract may refer a dispute to an adjudicator who has to have made his decision within 28 days of the referral. In order to enforce an adjudicator's decision, one must apply to the court but the fact that this system is so quick provides it with a big advantage, especially in an industry where cashflow is notoriously difficult to maintain.

For more information, please contact the head of the Dispute Resolution and Litigation team: Nick Bowman 01279 713819