By David Chase, Deputy Underwriting Manager.
With the upsurge in interest in Alternative Dispute Resolution (ADR) in recent years – has the time finally come for commercial litigators to pay closer attention to what it has to offer? David Chase shares his observations in seven practical tips; these are based on practical experience on how to make the ADR process smoother and more engaging for clients and practitioners alike, and the role that litigation insurance can play in that.
In the past 5 years there has been an upsurge in interest in ADR – arbitrations, mediations and negotiated settlements – but that is not the full picture. It has attracted headlines, but there are still a great many cases which have been litigated because both parties have not been able to reach a compromise in order for a settlement to be struck. Of course both parties have to give ground in a dispute in order to conclude a deal which could be the ‘least bad’ option for the parties. Saying “I want £x and no less” is unlikely to win friends or influence people, and would give concern to your ATE insurance provider.
1) Client awareness; the Civil Justice Council’s ADR working group released its final report in late 2018 on the use of ADR within the civil justice system of England & Wales. It concluded that ADR is under-utilised since there is a “chronic lack of public awareness and understanding of the legal system as a whole”. This is not surprising to me, since a lay person should not be expected to immediately grasp the finer points of ADR or get to grips with the legal system quickly. Nonetheless, a solicitor can help their lay clients by providing straightforward guidance as to which specific form of ADR would be particularly helpful for their case, and prepare them for the process thoroughly so that the opportunity to settle is not wasted when it comes along. The role of ATE/litigation insurance is often overlooked; your client will definitely appreciate the role it plays.
2) As a litigation insurer we like being involved; negotiated settlements and mediations can work well within successful litigation even if you are a defendant who is aiming to limit the damages payable to a claimant. At Temple Legal Protection we make ourselves available outside normal work hours to help bring a case to a successful conclusion. We find solicitors appreciate our commitment to your case and value our approach and insight. Ways to get us ‘on board’ effectively include flagging with us that the time for settlement talks is approaching and to agree with us some settlement parameters in advance. This will help to make the day itself go smoothly; don’t leave it to the last minute.
3) Timing is everything; solicitors deal with a variety of different clients, from impecunious clients to high net worth individuals and multi-national companies. Successful solicitors are those who have a realistic outlook, are good listeners and have an ability to appreciate their clients’ needs as well as the wishes of the other parties involved in the dispute. Clients generally like settling their cases to draw a line and end what may have been a costly, protracted dispute for them to endure. Only very brave clients will continue with their case without insurance and funding, after a failed settlement discussion. That said, clients have to be motivated to settle and the timing of the settlement talks is everything. Someone once said to me that there is a right time to settle every case, which might not be at the beginning or near the end, since each case has its own unique dynamic(s).
4) Maximise your case’s outcome; negotiated settlements put the outcome in the hands of clients and their advisors, not at the discretion of a third party such as an arbitrator or a judge. Here at Temple Legal Protection we encourage the use of ADR in the commercial cases we insure and fund, since there is no need to increase the length of the case or costs unnecessarily. However, we are here to support our Insureds so they can maximise the outcome of their cases. If you and Counsel advise that the merits remain sufficient after a failed settlement discussion/mediation and that the case should continue to trial, then we will in the vast majority of cases continue the insurance cover.
5) Narrow the issues; a mediation or settlement discussion for example can assist you in the pursuit of your client’s case without a settlement being reached. You may be able to resolve some issues and narrow the arguments which will reduce litigation costs – something I feel that clients and solicitors alike will agree is beneficial. Litigating in correspondence is always frowned upon by practitioners; try picking up the phone to your opposite number instead. This might surprise them and ultimately might further your client’s case.
6) The cost of underwriting ATE/litigation insurance for commercial cases continues to rise; all cases have some risk and therefore any appropriate use of ADR may produce a speedier and more cost-effective outcome. ADR can complement the use of ATE insurance and funding, and we welcome efforts to reduce the threat of a catastrophic loss, namely an unfavourable outcome at trial. Even a case which seems like a “slam dunk” or appears “too good to be true” more often than not does not turn out as expected.
7) Keep the communication going; our experience is that mediations in particular do not always result in settlement and sometimes can go quiet afterwards. In addition we often see mediation position statements prior to the mediation itself. Where it has not been possible to get the ideal result, please contact your underwriters and inform them of what occurred at the mediation and your new plans to settle the case. This will promote understanding of the remaining risks in the case and assist underwriters in taking an informed view of progress. More information rather than less in these situations is preferred. If you felt the mediation went fairly well and the case appears to be close to settlement but will take a few more days to bring the strands together, a short note to underwriters is much appreciated to put us in the picture.
In summary – from my perspective as an ATE insurance underwriter – I can see there has been increased interest in the use of ADR within insured and funded cases, as well as in the wider pool of commercial disputes. Clients arrive at their legal advisors offices in various states of distress and financial peril. With that in mind I believe we can really make a difference by supporting clients achieve the outcome they are content with (or at least can live with) and move on with their lives for the better, with ADR playing an increasingly relevant role in the settlement process.
You may also want to read
- Alternative Dispute Resolution and ATE insurance – link to https://www.temple-legal.co.uk/solicitors/alternative-dispute-resolution-adr/
- Can litigation and arbitration comfortably co-exist? We think so – link to https://www.temple-legal.co.uk/news/can-litigation-and-arbitration-comfortably-co-exist-we-think-so/