In the commercial world, disputes can arise in many different ways. They could relate to commercial property, development agreements, commercial contracts, misrepresentation, professional negligence, injunctions or shareholders and partnerships. Regardless of the nature of the dispute, its effects can be very damaging in terms of the cost, time and resources used in resolving it, but also in terms of bad publicity for one or more of the parties involved.

Commercial litigation changed dramatically following the introduction of the Jackson Reforms in 2013. Courts are now much stricter with parties who do not comply with court rules, directions and orders. When it comes to costs, the court is now able to set the parties’ budgets in terms of how much they can recover from each other, with the successful party unable to recover any costs which are “disproportionate.”

Funding has also changed. Parties can still enter into “no win no fee” agreements with their legal representatives. However, success fees due under conditional fee agreements are no longer paid by losing parties, making this arrangement far less attractive. Damages based agreements have now become an option, which enable legal representatives to receive a share of any damages recovered.

As a result of the various changes, there is greater commercial pressure on all involved to keep legal costs down and to resolve disputes prior to court action. Businesses need to be much smarter in how they manage commercial disputes, by having prepared procedures in place and taking specialist legal advice from trusted and reliable sources such as Luscombe Gray.

A formal dispute can materialise through the receipt of a claim form or a letter threatening legal action, or maybe you yourself have found you have a potential legal claim against a third party? Either way, it is important to focus on the real issues and to get the matter dealt with swiftly and decisively, so here are five things you need to be aware of…

1. Establish the problem

What are the key details in dispute? Can you piece together what has happened and who is the key person you need to speak to? This may involve someone external to your business, but primarily you need to gather information quickly and establish a team you can rely on and depend upon. You need to consider who you need to inform and when, and you need to remind people of the sensitive nature of communications and confidentiality. You need to establish strict communication channels and identify who is going to lead communications, both with the external parties and internally within your business, and within the team.

2. Damage limitation

One of the first things you should do is check whether the dispute is covered under any insurance policies, so consider notifications, the policy terms, costs and what information is required, to see if you can recover some money to address any losses and costs. Then you might need to consider product recall, informing relevant regulatory authorities or maybe you need to obtain a freezing order if the other side is at risk of dissipating assets? Information regarding a dispute can make its way into the public domain whether you want it to or not. Think about whether this would impact your business and talk immediately with your internal communications team if you have one. You may need to retain a PR company to address a specific issue.

3. Get good legal advice

It is imperative that you seek legal advice as soon as possible to ensure that you are aware of the strengths and weaknesses of your position and your available options.

Legal advisers can check any relevant contracts or agreements for any dispute resolution clauses, which may dictate how you need to act. You then need advice on the pros and cons of attempting alternative dispute resolution or pursuing court action without delay. There is usually a strict procedure to follow before formal legal proceedings can begin, and it is generally sensible to attempt discussions between key individuals from each party, at the very least, before resorting to legal proceedings. You cannot be sure of the best approach without specialist legal advice. As leading commercial litigation solicitors in Yorkshire, Luscombe Gray are ideally placed to make this assessment for you.

If legal action is being taken against you then you will often have no choice but to defend it, but is there a possibility for a counterclaim? Or could the other party make a counterclaim against you?

Also, there are usually strict time limits for when actions need to be completed, including the time period in which you can bring a claim and the deadlines for complying with the court’s timetable in any litigation. It is important that you receive advice on this to avoid being caught out by a “technicality.”

4. Keep good documentation

Of course, this applies in all aspects of your business, but particularly so where commercial disputes are concerned. You will almost certainly need to disclose documentation to the other party or in a court or tribunal. But you will need to put a procedure in place to ensure people know their responsibilities regarding the preservation, accessibility and obligations to disclose this information.

5. Costs analysis

You need an assessment of the risk and the potential costs of legal proceedings, balanced against a possible early settlement. It may be that an early settlement is the quickest and least costly resolution.

Are the other party’s assets accessible? Is a court judgement likely? Do you want to maintain a commercial relationship with the other party after the dispute is settled? These are all cost factors to consider. You are unlikely to recover all your costs in legal proceedings, even if you are successful. This why the Jackson Reforms came about – to encourage early settlement and discourage costly court proceedings. But regardless, a cost benefit analysis and trusted legal advice from a specialist commercial litigation law firm such as Luscombe Gray will allow you to weigh up all the factors and decide how to proceed in resolving your dispute.

Contact us today to discuss your commercial dispute.