Whilst the number of commercial disputes is on the rise the biggest concern for those involved in a dispute is the cost and lengthy procedures involved in issuing a claim which often makes commercial litigation an impractical method for resolving disputes.  To minimise the risks involved in litigating, parties should engage in settlement discussions in an attempt to prevent further action being required.  In this article I discuss my 5 top tips for negotiating a successful settlement that should hopefully leave you feeling positive about your dispute experience.

1.     Be Prepared - prior to a dispute arising, make your position as strong as possible.  Agree terms and conditions prior to carrying out any work and evidence those terms in writing.  Make those terms clear, unambiguous and reasonable and make sure you take steps to bring them to the attention of the other side before ensuring that they are incorporated into your contract.  Once it is clear that a dispute is likely, invest time and costs from the outset to understand your legal position and develop a clear strategy to meet your commercial objectives.  Investment at an early stage will enable you to identify the strengths and weaknesses of your own case (and that of the other side) and enable you to successfully dodge the bullets fired by the other side later in the process.  I often draw a resemblance between litigation and a game of chess – tactics and strategy are key.  Rushing in early and making random moves is cheap and easy but will inevitably result in failure - even if that failure is simply a worse result than should otherwise have been achieved.

2.     Is there anything on which you agree?  -  Accepting some liability at any early stage or, at the least, empathising with the other side’s position will engender goodwill and help promote an opportunity for settlement.  Narrowing the issues in dispute will also save time and costs invariably leaving more time for all parties to focus on the main issues requiring negotiation.

3.     Look at it from another perspective - when tensions are running high it’s easy to focus internally on your side of the dispute but do you really understand where the other side are coming from?  Listen carefully to their side of events and don’t anticipate what they are going to say – this is often the source of misunderstandings.  In order to persuasively present your case you need to identify and appreciate the other side’s position – what are the strengths and weaknesses of their position?  What are their key objectives?  What are the commercial considerations that come into play for them?  Once you have seen the dispute through their eyes you can develop your strategy.

4.     Be ready to compromise – agree some parameters for settlement rather than a set figure and remember that a settlement could include commercial considerations and not just money.  To calculate those parameters spend some time considering the Best and Worst Alternatives to a negotiated settlement.  Take into account the costs to take a matter to trial and the potential for a cost award to be made by the court in favour of the successful party.  Subject to an assessment on the merits, a successful settlement often leaves both parties feeling a little bruised.

5.     Document the terms of settlement – once you have agreed the terms of any settlement ensure these are documented and signed by both parties on the same day that they have been agreed.  This approach removes the possibility of either party changing their mind or there being any confusion about the terms on which the dispute has settled.  It also presents an opportunity to deal with the consequences of non-compliance with those settlement terms e.g. if one monthly repayment is missed does the entire outstanding sum become payable?  Is interest payable? etc.  You should mark all settlement correspondence including the settlement agreement “Without Prejudice” which should prevent either party being able to disclose its existence to the court before liability is determined if matters were to progress to court.