Getting ahead of the game: advocating for a proactive approach to dispute resolution

December 2020  |  SPECIAL REPORT: INTERNATIONAL DISPUTE RESOLUTION

Financier Worldwide Magazine

December 2020 Issue

Disputes can be a strangely emotional business for something which will be finally decided (absent settlement) by a disinterested third party. Claimants may feel bullish, aggressive, ready for a day in court fighting for justice. Defendants may be angry, surprised, or sometimes desperate to avoid the issue and happy to put their head in the sand, hoping things will blow over. However, irrespective of which side of the ‘v’ a party is on in the dispute, that party will be best served by a proactive and early strategy for dispute resolution, to focus minds, remove emotion and manage risks.

Defining success

The first question for any party involved (or thinking about becoming involved) in litigation or arbitration proceedings should be, what does success mean for that party? It may be winning (or defeating) that litigation or arbitration, or it may be something else. Timing can be as critical as outcome, for example in terms of provisioning, costs allocation or recoveries. A disputes process can be a battle in a larger war – for example where a particular outcome would create contagion risk across a sector – such that not only the outcome but also the way and on what terms it is achieved are important.

And as much as it is important to understand the answer to the question, it is also important to communicate this between clients and advisers. A good legal adviser will ensure that the question is asked early and is understood and reflected in the broader strategy.

Downside risk

No matter how desired an outcome is, early attention should always be given to the downside risk of that outcome or strategy. Usually, the most significant downside risk in English litigation is adverse costs risk, i.e., the general rule that the loser pays most of the winner’s costs.

This risk can be material. Huge strides have been made in recent years with the improved costs management provisions in the English civil procedure rules, which should give parties much more visibility as to likely scope of adverse costs. However, this area remains difficult for litigating parties, and one which should not be underestimated at the outset and throughout the litigation. Awareness and sensitivities to adverse costs risk can be managed. A party can explore after the event insurance for this risk and will be in a stronger position if this is considered at an early stage. A legal adviser may also be able to design and pursue a strategy which seeks to mitigate this risk, for example by streamlining the points in dispute, and limiting issues and the scope of the dispute, where possible.

Relatedly, understanding own-side costs of the litigation or arbitration at an early stage will ensure that a party is able to meet those costs through the life of the dispute, and does not end up in the desperate position of running out of money before the finish line. The litigation funding market has boomed in the last decade, and law firms are becoming ever more commercial with their fee arrangements. This gives litigating parties a range of options to cover off costs (if liquidity is an issue) or manage risk. In all circumstances, early consideration of this point will put a party in a better position.

Planning it out

Once the desired outcome is known, and downside risk elements managed, a litigating party will be best served by an adviser who plans things out – and gets out there early to get ahead of the game. A top disputes strategy should map out the third parties (such as foreign counsel, experts, barristers and others) who will perform key roles in the case should it proceed all the way to trial or final hearing and get them involved as soon as possible. There is little more frustrating than finding at a late stage that the best-in-town expert is conflicted out, or the top QC leading the advocacy at trial is not on board with the case theory. This proactive approach does not have to increase costs – in fact, experience suggests it does the opposite.

Pre-action correspondence

While, of course, parties should fully comply with pre-action requirements applicable to the dispute in question, they should not be shy of moving forward when and if it becomes clear that any pre-action correspondence is going nowhere. Even for English civil proceedings subject to the pre-action protocol, parties are not required to set out every detail of their case to each other in this correspondence, and should be conscious of ‘getting on with it’ if it is clear that the parties are well aware of each other’s position but are not going to resolve the dispute without formal proceedings. Overly protracted correspondence may simply increase costs and cause delay, without any real upside.

Alternative dispute resolution

It would be remiss not to suggest that all proactive disputes strategies need to contain some consideration of alternative dispute resolution, be it mediation or some other format. What is right will always depend on the circumstances of the case and the parties involved and can be as formal or informal as is appropriate. While there is little point in mediating a dispute where it is clear that the dispute can only be resolved by a court judgment (with the effect that the parties waste costs and become further entrenched in their position), disputes where that is the case are remarkably rare. The vast majority of cases will benefit from at least some exploration of an alternative route to an outcome, without being overly slavish to the format of that route.

The early win

Putting in place a proactive disputes strategy will allow a party to take advantage of opportunities for early wins – to create momentum, put down markers and drive success.

Any party who wants quick resolution of a dispute needs to act early, either in making a formal application for expedition, or less formally to seek a swift timetable. Any initial delay may hamstring a party who wants to move quickly at a later stage (unless there has been an objective change to the circumstances).

Parties should give proactive and early consideration to options to finally resolve the dispute at an early stage. Summary judgment applications do not have to be limited to straightforward cases, as long as the requirements in the English civil procedure rules (CPR 24) can be met, and can be used to cut through some evidence-light cases to avoid a long and expensive road to trial. Similarly, it is established that such applications can be brought at the same time as other interim applications (e.g., jurisdiction challenges) in certain circumstances, particularly where similar facts arise in the various applications. Taking advantage of opportunities to do this may significantly short-circuit a dispute.

Disclosure

The English litigation community continues to agree that there is a problem with disclosure, but is not quite sure what to do about it. The Disclosure Pilot Scheme received largely negative feedback after over a year of practical implementation. Notwithstanding the continued and valuable attempts to use the Pilot Scheme to reshape disclosure for English proceedings, it has always been the case that a proactive party is able to seek to manage disclosure obligations to reduce cost and time burdens.

The English civil procedure framework has long empowered parties to be more bespoke and less broad in disclosure, subject to court oversight. Parties should always be alive to a proactive approach to disclosure, which requires an early assessment of what, in reality, is appropriate to the case in hand, and parties not being shy of challenging any default to the status quo position on disclosure.

Keep it under review

A proactive approach to act early and decisively is of limited use if it is not kept under review and adapted as things change. Litigation and arbitration proceedings have inherent uncertainty, and a legal strategy will always need to adapt to take these into account. Having acted early and proactively, parties and their advisers will continue to reap rewards from regular assessment of opportunities to shortcut to a successful outcome, to manage risk and drive forward.

 

Fiona Huntriss is a partner at Boies Schiller Flexner (UK) LLP. She can be contacted on +44 (0)20 3908 0723 or by email: fhuntriss@bsfllp.com.

© Financier Worldwide

BY

Fiona Huntriss

Boies Schiller Flexner (UK) LLP

©2001-2024 Financier Worldwide Ltd. All rights reserved. Any statements expressed on this website are understood to be general opinions and should not be relied upon as legal, financial or any other form of professional advice. Opinions expressed do not necessarily represent the views of the authors’ current or previous employers, or clients. The publisher, authors and authors' firms are not responsible for any loss third parties may suffer in connection with information or materials presented on this website, or use of any such information or materials by any third parties.