Why dispute resolution isn’t just litigation

When a dispute arises, litigation is often seen as the default option. In practice, deciding how best to resolve a dispute involves wider commercial considerations and court proceedings are only one of several available tools.

Before issuing proceedings, a party will consider many factors. Perhaps most importantly is the prospect of success, as a party will want confidence that they’re likely to succeed before embarking on proceedings.

However, a good prospect of success isn’t the only relevant factor when deciding whether to issue a court claim.

Even if a party has a good chance of winning in court, they will want to be sure that any award can be recovered. A claimant with an unpaid judgment may be in a worse financial position than one who never litigated, having incurred costs without any return. Ensuring that a defendant has sufficient assets to satisfy a judgment is therefore a key consideration.

Secondly, understanding how legal costs will apply to a claim is also essential when deciding whether to litigate. In recent years, the imposition of fixed recoverable costs has increased, to the extent that many proceedings with a value of under £100,000 are now subject to them. This is relevant to a potential litigant because if the costs are likely to exceed the likely recovery, it may not be commercially viable to continue with the litigation.

Thirdly, it may be important to preserve a commercial relationship, despite the current disagreement.

What are the alternatives to litigation in dispute resolution?

For these reasons, the most commercial approach may be to try, where possible, to deal with the matter pragmatically. The dispute resolution process offers several tools for parties seeking a commercial solution, which can be deployed alongside the pre-action process.

‘Without prejudice’ offers

The first is a ‘without prejudice’ offer. A letter given ‘without prejudice’ protection can’t be shown to the court until costs are considered, allowing parties to attempt settlement while preserving their position should proceedings become necessary.

Although fixed recoverable costs regimes have reduced the use of without prejudice correspondence in costs determinations, it remains an effective tool for resolving disputes out of court.

Alternative dispute resolution

The second available tool is alternative dispute resolution (ADR). The concept of ADR has been around for a long time, but what isn’t widely known is that since October 2024, the courts have had the power to mandate parties to engage in ADR at any stage.

ADR encompasses any forum for resolving a dispute outside formal court proceedings — from informal meetings to adjudication or arbitration, where skilled experts replace the judge in reaching a decision.

ADR offers several benefits, including subject-specific expertise in decision-making, more flexible resolution methods and the potential to be quicker and cheaper than trial. In most cases, if ADR doesn’t resolve the matter, parties can still litigate.

Resolving disputes earlier

Resolving a commercial dispute is rarely straightforward and may, at times, require litigation. However, by approaching a dispute pragmatically, commercially and practically, it’s normally possible to make a realistic attempt to resolve matters in a way both parties can accept long before reaching the courtroom.

Understanding all your options for resolving a potential claim as early as possible in a dispute can often be the key to achieving a commercially viable solution.

HCR Law takes a commercially focused approach to dispute resolution, considering legal rights alongside commercial and other relevant interests when seeking to resolve disputes.