Strategies for maximising success with dispute resolution: Insider tips for resolving commercial disputes fast

Introduction.

Inside this e-book you'll find Pragma's strategies for maximising success in dispute resolution, including at various stages of litigation. These are strategies which are intended to deal with disputes in the most efficient and effective way, to avoid long and costly court proceedings that distract you from getting on with life and business.

Tips to consider before going to Court.

Often when a dispute arises, deciding to sue the other party is a knee-jerk reaction. Before "taking it to court", there are some important considerations to factor in which can help you in the management of your dispute and improve the prospects of a favourable outcome.

The most important factor is whether you have attempted to resolve the dispute outside of Court. Attempts to resolve a dispute might include sending a letter of demand, meeting or negotiating with the opposing party or their representative, sending emails to chase up outstanding invoices, and responding to correspondence from the other party.

Some Courts will not permit you to start a legal proceeding unless you can demonstrate (by filing a statement with the court) that you have taken genuine steps to try and resolve the dispute.

Irrespective of this legal requirement, making attempts to try and resolve the matter before court is a valuable step in almost all cases. This is because whether or not you have a lawyer to represent you, litigation is inherently costly, time-consuming and stressful. There is also no guarantee of success.

Once you start a legal proceeding, it is difficult to stop it without risking adverse cost consequences. Resolving a dispute outside of Court is almost always a better option in the long-term, because it allows you to move on with your life or business in (usually) a confidential manner without the hassle, cost and stress of a protracted court case.

Get an expert.

There are many different areas of practice within the legal profession. It is not practical for one lawyer to be across the ever-changing developments in all the different specialised areas of law. By engaging an expert who specialises in the area of your matter, it will likely result in: 1. services being provided in a shorter time frame and less cost; and 2. higher quality of service. In Western Australia, there are rules around lawyers presenting themselves as "experts" or "specialists" to ensure that lawyers do not engage in misleading advertising. The term 'specialist' predominately connotes a lawyer who has undertaken a specialist accreditation program, although this is not mandatory. The Law Society of Western Australia (Law Society) currently only offers a specialist accreditation program in family law (although other institutions around Australia offer others). To be eligible to participate in such an accreditations program, a lawyer must have practised for at least five years and be able to demonstrate substantial involvement (at least 25%) in the area of the accreditation for the three years prior to application. In circumstances where a lawyer has not undertaken a specialist accreditation program but has advertised as being a specialist, the Law Society will take into consideration the same criteria set out above in determining whether the advertisement was false or misleading.

The term 'expert' in advertisements may be understood by the public as implying that the lawyer has a particular knowledge, skill, training or experience in an area of law above that of other practitioners, even accredited specialists. In circumstances where a lawyer has held themselves out to be an expert in advertising their services, the Law Society will take into consideration a number of factors including the same criteria set out above, and a similar criteria used by the courts to satisfy themselves that a witness is a qualified expert, such as whether the lawyer "has some particular knowledge, skill, training or experience in that area of law and would properly and reasonably be accepted by his or her peers as being an expert in that area of law" . While the hourly rate of a lawyer who holds themselves out to be an expert in a particular area may be higher than another lawyer, their knowledge, skill and experience will enable them to provide you with the services and outcome you require in a faster time frame, ensuring that the amount you pay is lower.

Security for costs.

A common concern that can arise at any stage before or during a legal proceeding is what happens if the other party doesn't have enough money to pay your legal costs? If you are the Plaintiff, this is a risk you need to weigh up before commencing legal action. Is it worth pursuing a claim against a party you suspect will not be able to pay your legal costs even if you won? If you are the Defendant who has decided to defend yourself in court, you can apply to the court to get an order for security for costs. Applications for security for costs must be brought promptly, either at the start of a legal proceeding or (if during a proceeding) when new factors come to light putting the Plaintiff's ability to pay into question. If a Court is satisfied that a Plaintiff may not have adequate funds to cover a Defendant's legal costs in the event the Defendant were to succeed at trial, the Court can make an order that the Plaintiff pre-pay a sum into Court or give a bank or other form of guarantee. This is an order given by way of "security" in the Defendant's favour.

These kinds of orders are typically made where Plaintiffs reside outside the jurisdiction, where the Plaintiff is not suing for their own benefit but for the benefit of another person, or where the Plaintiff is a corporation and there is evidence to suggest the Plaintiff doesn't have funds to satisfy a costs order. The Court will consider a range of factors when deciding whether to grant security, including the strength of the Plaintiff's case, whether the Plaintiff's impecuniosity was caused by the Defendant's conduct (usually argued in response to an application for security), and where there are persons standing behind the Plaintiff who are willing to provide the necessary security.

Early mediation.

Less than 2% of the disputes referred to the Supreme Court of Western Australia make it to trial. The remaining 98% are either settled or discontinued. The difficulty with this statistic is that settlement usually occurs after the parties have incurred, sometimes unnecessarily, significant legal costs. There is little or no advantage in leaving mediation until right before the case goes to trial. In reality, by this time the parties will likely have each incurred significant legal costs that they will be less willing to walk away from the dispute in a settlement scenario. By mediating early, the parties are given the option to achieve an early resolution to the dispute with minimal time and cost expended on both sides. An early mediation allows the parties to come to more flexible arrangements that would not be possible if the dispute was tried by a judge.

Mediation is a process and not just an event. It is one of the most important stages of a legal proceeding, because it provides an opportunity for the parties to come face-to-face, to talk and to listen. They explore options for resolution (with the aid of their lawyers) which may not have occurred prior to a mediation, and which may not be possible by litigating the dispute to trial.

District Court of Western Australia Statistics

Discovery.

Discovery is the exchange of all documents in a party's possession, custody or power, which are relevant to the issues in dispute in a legal proceeding. Each party is entitled to know of, and inspect all documents that the other party has, with a few exceptions. The main exception is that a party can't inspect any documents that contain legal advice the other party has received in relation to the dispute. These documents are referred to as "privileged". Discovery is usually given after the parties have each filed their pleadings (an outline of their case) and after a mediation has occurred. Ideally, by the time discovery is due to be given, the issues in the litigation are defined which in turn narrows the field of documents that will need to be discovered by the parties. When a dispute involves a high volume of documents, the process will take longer and the legal costs associated will be higher. Discovery was described in a 2011 Australian Law Reform Commission Report as 'often the single largest cost in any corporate litigation'. Discovery is often the single largest cost in corporate litigation, and the costs associated with giving discovery can become disproportionate to the amount in dispute. For this reason, discovery is a milestone in any legal proceeding. Where there is a possibility of resolving a dispute without trial, it is in both parties' interests to have those discussions prior to the discovery stage so that unnecessary costs can be avoided.

Pre-action discovery.

When a prospective Plaintiff lacks sufficient information to decide whether or not to commence a legal proceeding against a prospective Defendant, it may be possible to obtain an order for pre-action discovery. This is called "pre-action discovery" because it is a limited discovery that may be ordered before a legal proceeding or "action" has been commenced. The order is obtained by application to the court. If, on the application, the court is satisfied that a potential cause of action may exist, the court can grant an order enabling the party to obtain any documents and information required to help it decide whether or not to commence the action.

Offers of settlement.

An offer to settle a legal dispute can be made at any time, including before or after a legal proceeding has been commenced. Offers to settle serve two main functions:

1. Firstly, they can result in the finalisation of a dispute without the need to start or continue a legal proceeding; and
2. Secondly, they can provide valuable costs protection if the offer is not accepted and a legal proceeding is commenced.

Multiple offers can be made at different points in time (for example, after the parties have filed evidence, or given discovery). When structuring an offer to settle, it is important to ensure that the offer provides for all loose ends to be tied up to ensure the dispute if fully and finally settled.

A legal regime exists to create costs implications for parties who unreasonably reject offers of settlement. Making an offer to settle (sometimes called a Calderbank Offer) is therefore a way of protecting yourself in relation to the legal costs that will necessarily be incurred in pursuing legal action.

When a legal proceeding goes to trail, one of the questions that always arises is what happens with respect to the legal costs the parties have incurred. While the general rule is that the losing party pays the winning party's legal costs, it is rarely (if never) the case that 100% of those costs are repayable by the loser to the winner. This is because a statutory "scale" exists, which moderates legal costs charged by lawyers. On average, a winning party might get an order that approximately 50-60% of its legal costs are repayable by the losing party. These are called "party-party costs".

However, a Calderbank Offer can displace this general rule. If, after a trial, the court considers that a Calderbank Offer made at some point in the proceeding was reasonable, and contained an offer to settle the dispute on terms that were more favourable that what was ultimately achieved at trail, the court may order that the offeree pay some or all of the offeror's costs on an indemnity basis. These are called "indemnity costs".

" Compromise is the best and cheapest lawyer. "

Closing remarks.

Litigation is inherently risky. Once the wheels are in motion, it is difficult to stop it without coming to a full resolution with the other party. That said, litigation is often unavoidable. Whether you are the Plaintiff or the Defendant, it is important to approach a legal proceeding equipped with knowledge and understanding of the process and the means to enhance your prospects of a successful outcome in all the circumstances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.