Shortening the odds – how to improve your chances of success in the Litigation Lottery…

In my last post, I highlighted the difficulty in predicting outcomes in certain types of claims

Businesses can, of course, help themselves by taking these simple steps:

  • Keep better records of correspondence and communications, including retention of all written communications (including e-mail) and creating a written note of every important telephone discussion with a customer/supplier;
  •  Ensure that their Terms of Business (also often referred to as Terms and Conditions of Trading or “Ts & Cs”) are up to date and kept under regular review;
  • Ensure that Ts & Cs are incorporated into every contract. This is absolutely critical. Ts & Cs must be sent to all customers before you enter into a contract, such as by using signature to Ts & Cs as a pre-condition to opening a trading account. If they are sent out only (or for the first time) with invoices, then they will not be incorporated and will have no contractual force. There is no point having perfect Ts & Cs if you then fail to use them properly;
  • Obtain and retain proofs of delivery or certificates of completion (as appropriate) signed by a person with the relevant level of authority in the customer’s business;
  • Operate an effective credit control policy and do not allow accounts to become so long overdue that the risk/exposure might threaten the viability of your own business. The only customers worth having are those who pay!

If businesses follow these steps, then the chances are that they will become involved in fewer disputes and those that they do pursue will have better prospects of success.

However, one issue that remains a factor in most disputes is that, once proceedings have been commenced, the parties will probably become entrenched in their positions out of a fear of showing weakness, and find it difficult to back down. The dispute can become personal (as between the key protaganists) and as a consequence the relationship between the parties will be damaged, often irretrievably.

But what if this was your biggest customer or the only supplier of key products/services within your market? Breakdown of that relationship could be devastating to your business.

Would it not be better to find a way to resolve matters quickly, without the inevitable clash of opinions and in a way that allows the parties to continue or even improve their trading relationship? It sounds like a utopian concept, but in my experience, it is one that we can often deliver, provided that both parties are prepared to compromise. This will be the subject of the third and final part of this blog.

Robert

Robert Whitehead is a Partner in the Commercial Dispute Resolution Team at Shulmans LLP

rwhitehead@shulmans.co.uk

www.shulmans.co.uk

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Litigation Lottery

As a litigator, I am often consulted by clients who find themselves in dispute with other commercial parties, but where the client’s claim is far from what you might call a “cast iron” case. Critical documents such as engagement letters, proofs of delivery, orders and standard terms of business will be missing or unsigned, there will be disputes as to who said what and when (or sometimes as to who signed what and when) and there will be a great deal of uncertainty as to, among other things, what documents or evidence the opponent holds to support its case (and more importantly, if we don’t have the critical document, does the opponent have it?).

Against this incomplete background information, I will then be asked questions such as:

Do you think we will win?”;

How long will it take?”; and 

What will it cost?” 

For obvious reasons, the answers to the above questions will often include the words “it depends”, which (for obvious reasons) clients do not always find  very helpful! Nevertheless, without complete information and good records/documentation, this is about as good as the advice can actually be in many cases. In such circumstances, clients must enter the unknown and, if they wish to pursue the claim, will sometimes have to go to trial still not knowing whether or not their claim will succeed, leaving the outcome in the hands of the judge who will have to decide which parties’ evidence he “prefers”.

As a consequence therefore clients historically have had to take leaps of faith which ultimately may or may not bear fruit… 

In the modern era, and particularly during times of financial crisis, clients need greater certainty than this, otherwise they cannot commit to the costs of pursuing a claim (and the risk of having to pay the opponent’s costs too).

So what can we do to shorten the odds and increase our chance of a successful outcome? Some of the answer lies in better credit control or administration by the client, but there are alternative ways to resolve disputes, which I shall cover in my next post.

Robert.

 

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