Why Settling Out of Court is Often Better Than Litigation: Key Insights (Full Transcript)

Speaker 1: Hello, my name is Adrian Lifely. I've worked as a Commercial Dispute Solicitor in London for 30 years and I'm an accredited mediator. In this video, I will answer a question I have been asked many times over the years. It goes like this. My client says to me, I've got a strong case, so why should I settle out of court for less than 100% of my claim? I'll explain why it's actually in the interest of both sides to a dispute to settle out of court, not just the party more likely to lose the case. There are three very good reasons for saying this. The first point, and a reality you can't get away from, is that litigation carries risk. Even if you think you have a strong case, there's always some risk that you'll lose or not do as well as you hope. The odds of winning can reduce or even reverse on account of new evidence coming to light, especially true with the proliferation of emails today. Or the law can change. This can happen where litigation takes one to two years to proceed. Therefore, you can never be sure you will win at litigation. Secondly, litigation is expensive. I hear clients say, well that's okay because I'm going to win and the other side will have to pay my costs. But that's not the end of it. First of all, litigation costs will hit your cash flow. You'll have to pay your lawyer's bills every month, but your opponent will only reimburse you after the litigation has finished. What's more, you won't get all of your costs from your opponent. Typically, the courts will only award about 60 or 70% of the successful party's costs. What this means of course is that even if you win the case, you'll end up bearing a significant portion of the legal costs. It's sensible therefore to try and settle out of court to avoid this liability. Three, litigation means hassle. It's not like outsourcing. It's more like having your company's books audited, only with the audit lasting one to two years. You'll have to work very closely with your litigation lawyers to prepare your case, sometimes quite intensively. You'll have to open up your company's email system so that your lawyer can search for evidence and give disclosure of documents to your opponent. This hassle factor is often missed when it comes to weighing up whether to try to settle or whether to litigate. So that explains why it's preferable to settle. So why do cases still end up going to court? The reason is simply that just as it takes two to tango, it takes two parties to reach a settlement. And unfortunately, you sometimes come across an opponent who will not recognise these problems with litigation and will refuse to try to negotiate a settlement. Please take legal advice about your specific situation before you take any decisions.