Settling a commercial dispute

Most commercial disputes are settled, but why would you settle a strong case that you are confident will succeed?

A settlement gives the business certainty and closure, and avoids the anxiety of having to wait for a judgment from a court and the uncertainty about that outcome. It also avoids the expense of continuing with litigation. Even if the business wins in court and is awarded costs, it will rarely get all of its costs back from the other side.

Settlement is likely to be a priority if the business is concerned about adverse publicity - settlements can be protected by confidentiality commitments.

Review your case

Early on in any dispute, conduct an analysis of continuing to fight the case - compare the analysis with possible settlement outcomes. If an offer is made, consider its value, bearing in mind how long it will take to get to trial and the potential cost of litigation. Settlement negotiations aren’t a sign of weakness, and can take place at any time during the litigation process.

How to Discuss Settlement

Settlement discussions are conducted on a “without prejudice basis”. This means that anything said about the dispute during the settlement negotiations or in any written settlement offer cannot be used later at the trial. This protection only applies to statements made purely in an attempt to settle the case – something which businesses sometimes forget.

Recording the Settlement

If the business does not want to be bound by a settlement until after it has spoken to a solicitor, it should make sure any oral settlement is made subject to contract, to take binding effect only on entering into a written settlement agreement.

Greg Hollingsworth is a Director with specialist Litigation and Commercial law firm, Hollingsworths.