By Gary Pettit
PBC
HOW many readers can remember the Monty Python sketch where a client wants an argument? The provider says that will cost £10. The client pays the fee only for the provider to say that will cost £10 please. Enraged, the client says he had just paid, only for the provider to deny receipt and so the debate goes on.
While that sketch is highly amusing, the cost of a real dispute can be far from funny. Some key points with litigation include:
Actual cost
In a recent mediation, the claimant was seeking damages of £200,000. When I asked the claimant’s solicitor about the costs to date, together with the potential adverse costs his client could face I was told the figure had been put at somewhere in the region of £250,000. It is not the first time this scenario has occurred as all too often the red mist prevails over commerciality or, simply the litigating parties are so far down the dispute path they feel they must now see it through to the end.
‘Hidden’ cost
Many litigating parties get embroiled in dispute with part of their focus on actual cost, together with the risk of adverse costs awards. However, how many consider the hidden costs? This will include your time dealing with the case itself, reading/approving witness statements, endless correspondence, gathering the evidence or having to look back into original agreements. All of this before even attending court where a trial could last for several days. Litigation can become a distraction from your daily business operations and be a drain on you generally.
Uncertainty
Outside of costs there is the uncertainties that come with litigation. Your solicitor will prepare you and your argument in a concise and professional manner that best presents your position. Naturally, litigating parties both believe their argument represents the facts that should prevail. However, a judge is not emotionally attached to either side and will generally look at the arguments on a legal, reasonable and practical basis. This will also include the general conduct of both parties as this could sway decisions, both on the principal argument and cost implications.
Mediation
There is clear guidance coming from the courts that a litigating party who unreasonably refuses to consider Alternative Dispute Resolution, such as mediation, runs a significant risk to an adverse costs award. In one case I heard about the claimant won £10,000 but, because they were so certain of winning, they refused mediation citing it was pointless because they had a ‘cast iron’ case where there can be no point of negotiation. While they were awarded the full amount of their claim that refusal to mediate cost them £30,000 in adverse costs! A harsh lesson indeed.
Gary Pettit, a CEDR accredited mediator at PBC, said: “All too often the warring parties are guilty of not seeing the wood for the trees. In those cases where I have acted as mediator (whether it is an insolvency-related or general commercial disputes) it has been proven the reality of their situation had been lost. It is the task of the mediator to bring that reality back onto the table as part of facilitating a settlement.”
Should you have an insolvency-related issue or a corporate dispute then contact Gary Pettit at PBC Business Recovery & Insolvency on 01604 212150 (Northampton office) or 01234 834886 (Bedford office). Alternatively, you may send an email to or access our website at www.pbcbusinessrecovery.co.uk
