Getting it right - Controlling the risk of litigation

When you face the risk of major litigation you need to control the process and get it right.  The two key elements to this are effective management of the dispute and the funding of the case.

There is risk in any dispute.  Risk to the business relationship and the risk that you may lose.  It is therefore essential that there is an early and thorough review of the merits of your case and the effect of a dispute on the business relationship with those involved.

You need to undertake a detailed cost risk benefit analysis and if you decide to proceed, be prepared to fund the case through to trial.

There are ways in which you can look to contain the cost and offset the risk through:

- Mediation

- After the Event (ATE) Insurance

- Third Party Funding

Mediation is a voluntary process involving a settlement meeting in which a qualified commercial mediator facilitates negotiation and helps you to achieve a solution.  85% of mediations settle cases on the day.  The process is not as destructive as legal proceedings and can help to protect and maintain the commercial relationship.

ATE insurance allows you to insure against the risk of losing the case.  The policy can cover the other party's legal costs and your own.  The premium often equates to 30% - 40% of those costs but it can be possible to take out a policy to insure against the possibility of losing and having to pay the premium on the ATE policy.  Premiums can often be deferred in whole or part, or paid in stages.

Third Party Funding allows you to use the potential proceeds of your claim as a source of funding the costs of the claim.  The Third Party normally assumes the obligations of paying your lawyer's costs and any adverse order to pay the other party's costs in exchange for a percentage of what you recover, if you recover.  Usually the percentage share is between 20% - 50%. 

If you are in dispute and need advice then we can help.

If in doubt please do not hesitate to contact us...

Mark Whittell

0845 165 5252

mark.whittell@cobbetts.com

                      
Nick Carr

0845 404 1520

nick.carr@cobbetts.com

Keith Mills

0845 404 2426

keith.mills@cobbetts.com

The content of this briefing note is for information only and should not be relied upon as a substitute for legal advice.  Copyright 2009 Cobbetts LLP - All rights reserved - February 2009