1 Choice of counsel
It is an obvious point, but an important first step is to choose your lawyer carefully. Make sure you have the right person for the job. Lawyers tend to specialise and certain individuals may have specialist court or arbitration skills, as well as sector expertise.
Be mindful of the questions you should ask when you interview lawyers to handle your dispute. Does the lawyer have the in-depth experience to handle a litigation case such as yours? Above all, make sure your lawyer is a person you will work well with and in whom you have absolute confidence to handle all aspects of the case.
2 Build one team
Most large and complex legal disputes require a team of lawyers. The team can involve solicitors, barristers, in-house counsel, experts and sometimes foreign lawyers as well. These people make up your team and it is critical that they all work together well, have a clear leader and approach the litigation process in an organised and efficient manner. Significant cost savings will result if a team operates smoothly and establishes clear information flow.
3 Team management
Provide information to the external lawyers in an efficient way. Ensure staff members provide the lawyers with answers to their questions. Supply documents in a chronological fashion and ensure all electronic documents have been provided as well. Consider preparing a briefing note of the key facts and background to accompany the documents.
Agree a budget with external counsel from the beginning. The progress of a dispute is difficult to predict. Cases can take unexpected turns and this is why lawyers tend to build in caveats to the budget. A way round the caveats is to be upfront about the costs as they are being incurred and talk about the issue regularly. Insist on monthly updates about how the case is progressing and whether the budget remains accurate.
5 If you are the claimant, consider alternative funding options
Lawyers in the US sometimes look shocked when their English colleagues tell them that they are not allowed to take on a case in return for a slice of up to a third of the damages. These ‘contingency fees’ are criticised in England because the lawyer then has an interest in the outcome of the litigation and particularly in maximising the damages.
The closest thing to a contingency fee in England is a conditional fee arrangement or ‘no win, no fee’ deal. Solicitors are then all owed a 100% uplift on their hourly rate if they win the case and receive nothing if they lose. However, a party’s liability to pay the other side’s costs in the event of a defeat remains. Conditional fee arrangements tend to be used with specialist insurance products in order for a client to minimise their risks further.
The other option is to obtain third-party funding. This is a more recent development (at least in the UK) and is being watched closely. A third-party funder agrees to fund the costs of a case in return for a percentage of the damages awarded (typically 25% to 50%).
The funding is structured in such a way so as not to fall foul of the legal principles of champerty and maintenance. Third-party funding can be an effective tool to remove having to fund litigation if a party is willing to sacrifice a slice of the possible reward.
However, funders are understandably only interested in cases with a high chance of success, where the defendant will be able to pay the amount awarded and where there is a very healthy margin between the costs of funding compared to the amount being claimed.
6 Consider the peacemaker option
Never underestimate the possibility of arriving at a settlement. Make sure your lawyer is mindful of the words of Abraham Lincoln: ‘Discourage litigation. Persuade your neighbours to compromise whenever you can. As a peacemaker the lawyer has superior opportunity of being a good man. There will still be business enough.’
It is important to consider on an ongoing basis whether there is scope for a settlement and, if so, how it might be achieved. There is one highly effective tool – whether in the midst of litigation or arbitration – and that is mediation. The success rate for cases using mediation is very high. And even in cases where the mediation itself fails, there are often settlements within a short period after the mediation. Mention the possibility of mediation early on in a dispute and it may save you a great deal of time and money.
This article first appeared in Legal Strategy Review, issue 3