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Litigation v Dispute Resolution

Dispute resolution is a comparatively new term which is getting a firm foothold in the lawyers’ lexicon.

Litigation used to be the standard means of resolving a dispute. A strongly worded solicitor’s letter threatening court proceedings if the recipient failed either to do as he was supposed to do (such as pay a bill, pay his rent or perform his part of a contract) or stop doing what he was not supposed to do (such as trespassing, retaining property which was not owned by him or making noise at unsociable hours) would either produce the desired result or leave the victim free to issue court proceedings. Usually the letter required compliance in 7 days and the second letter on file was to the Court with a writ or summons and a cheque.

Things are different now. It does not matter whether the claimant is owed money or has a property dispute, a lease dispute or a contract dispute. The rules require a detailed letter which sets out the claim in a way which is akin to the way it would look in a court claim. It needs to allow a comparatively generous period of time in which to comply or to provide a detailed response setting out the arguments. The parties are then expected to do all that they can to settle the argument and court proceedings should be a last resort.

The problem is that every dispute is different and the ways of trying to settle the various types of argument are many and varied. In a contract dispute there may be arguments as what the contract required (common in unprofessionally drafted contract and even standard form contracts such as the JCT terms usually incorporated into a building contract) or whether there has been a breach. This is a very common problem with contract disputes relating to software design where the person ordering the software knows what he wants but does not know whether it is possible and if so the best way in which to achieve it. The designer may know or think he knows what is possible but the specification is inherently unclear. This is a new area of professional services and very often the contract will not specify what is required on each side well enough to make the answer to a problem clear. Whether the end product works and if so whether it works as expected will often lead to issues which fall within the term “contract dispute” but it is a very different type of dispute to one over the sale of goods or the building of a house. In a property dispute there can be arguments as to ownership, the cause of defects or problems, the meaning of a particular term in a conveyance or how dealings with the property have affected ownership and responsibilities. A lease dispute can extend to whether or not a business tenant has a right to a new business lease, whether a residential tenant under a lease has a right to extend the lease or acquire the freehold or whether particular conduct or a failure amounts to a breach of the covenants in the lease.

The possibilities are endless. It is often difficult to work out the best way to resolve a dispute without going to Court. If there is an agreement on the facts but a problem with how the law applies to it, Court is the only sensible option unless the parties are all prepared to concede something. Whether they should is another issue and raises questions over what the rules require.

Where the legal issues are clear, appointing an expert at an early stage rather than after the expense of litigating to the point of instructing him will be the answer. In litigation the expert’s report will often be determinative so why not go straight to that rather than spend money on the “litigation preamble” to instructing the expert?

Mediation is the standard method of “alternative dispute resolution” but it does require everyone approaching it with an ability to make concessions and to try to reach an agreement. The mediator does not “decide” an outcome. He encourages the parties to work out their own.

It needs some thought and even some imagination to identify the real problem and to find ways of solving it. Very often the cost of litigation plays a part and people will prefer to concede a little with a view to saving a lot of expense including the risk of paying all or some of the other side’s legal bill. The regret is that the rules’ approach to saving costs by trying to have disputes resolved without litigation means that a lot more has to be done at the beginning of a dispute and very often that cost will not be recoverable if the case is settled. It may even prevent settlement because the parties would rather litigate and have a chance of getting their costs back.

It is sometimes difficult to see the point of alternative dispute resolution when litigation at an early stage might be quicker and cheaper. However it is now a requirement that we attempt it.