Whether your dispute is with a customer, supplier, employee or third party, there are a number of important things you need to think about from the outset.

Be clear about your objective



When thinking about your objectives, keep three things in mind:

(1) disputes are unpredictable,

(2) everyone involved will suffer some cost, and

(3) most disputes are resolved through compromise.

Therefore, even if you have a watertight case, when formulating your objectives it is better to think in terms of a range of possible outcomes than one fixed outcome.  Work out what your business can and cannot afford in terms of time and money, which problems it can and cannot tolerate, and make sure they are all accommodated. If the demands of your business do not fall within the range of realistic outcomes then you should probably rethink your approach to the dispute entirely.

Develop a strategy 



Take time to think about any aspects that you might be able to turn to your advantage. For example, some opponents will be sensitive to costs, delays or media exposure, whilst others might be dependent on an ongoing relationship with you or one of your allies. Others may be weak on the evidence because they do not maintain proper records, or because their witnesses are unreliable or  hostile. There an endless possibilities. Think about what applies to your particular case and work them into an overall strategy.  And don’t forget to think about what can be used against you. 

Be realistic about the cost

The decision to involve your business in a dispute should always be commercially driven. In other words, only get involved if the likely result is that you will be in a better position financially than if you don’t. It’s therefore essential to work out at the outset what the full cost to your business is likely to be. That’s not always easy. Apart from legal costs and the risk of having to pay your opponent if you lose, there are usually other, less visible costs to consider such as lost revenue (caused by employee downtime and other drains on resources), increased future costs (e.g. higher insurance premiums) and indirect losses caused by, for example, damage to your reputation. Some of these are difficult to identify and value. Make sure you think it through carefully.

Appoint someone to manage it

Having a case manager can save time and money. Don’t assume senior staff are best for the job: they may be able to give instructions and make decisions but they usually don’t have time to get to grips with the details, stay abreast of developments and they are not always available when required.

When deciding who to appoint, consider whether the candidate:

- has the necessary skills (e.g. good communicator, able to deal with voluminous documents)
- understands the issues (important in technical disputes)


- has some legal knowledge (not essential but helpful)
- has sufficient authority and respect within the business 
- has a suitable relationships with others involved (the less they know each other the better)
- will be available day-to-day and for the duration of the dispute.

Strengthen your position 



The steps you take immediately after a dispute arises can influence or even determine the outcome. For example:

Where two parties simultaneously accuse each other of breaching a contract, how you respond and whether or not you continue to perform the contract can have profound legal consequences.

Where there is doubt about how or where a dispute will be fought, being the first to act (e.g. by commencing proceedings in a preferred jurisdiction) can give you an advantage.

How documents are managed and created once a dispute has arisen can determine whether or not they will be admissible as evidence at trial.

Getting these matters right can also improve your negotiating position. However, they can be tricky to handle correctly as complex legal rules apply so it’s best to seek professional assistance, particularly if there is a lot at stake.

Decide how you are going to pay for it

Disputes can be very expensive and not everyone will be able to fund them from their own resources.  First, check whether you are entitled to be funded by someone else under pre-existing arrangements (e.g. insurance policies or other contractual indemnities). If not, there are a few other options to consider.

After The Event (ATE) insurance can help you manage the risk of having to pay your opponent’s costs if you lose the case.
Third Party Funding can be useful if you are unable to pay your own legal costs, but you will have to be prepared to share the proceeds if you win.

Conditional Fee Agreements are offered by some law firms, where they charge less than normal if you lose the case and more than normal if you win. 

Be aware, however, these options are only available in limited circumstances: usually to claimants with strong, high value claims against wealthy defendants. Whether they will actually benefit you is not always obvious so professional guidance should be obtained. 

Keep an eye on settlement

Disputes are risky, expensive and unpredictable. They are also stressful and distract you from your proper business. In many cases, the sooner you end the dispute the better it will be for you and your business - provided the terms are acceptable. New possibilities for settlement tend to open up as a dispute develops.

A commercially savvy litigant will always have one eye on settlement and will favour a reasonable, timely settlement over a risky day in court.

Roderick Dykins is a Senior Associate at Fox Williams LLP

http://www.foxwilliams.com