Settlement of Money Claims

If you can settle a dispute by agreement rather than risking starting (or continuing) litigation, that is generally a good thing. In most cases a dispute can be formally settled without needing the court's/tribunal's approval. In some types of cases you might still need the court/tribunal to make an order but, even then, if all known affected parties reach agreement, that makes the court/tribunal process much easier and less expensive.



Introduction


Even if court/tribunal proceedings have already started it is not too late for a settlement to be agreed. If the parties can agree on a settlement at any time before (or even during) the trial, the case is essentially halted (although in some cases the court/tribunal may need to make a formal order “by consent”). A settlement can be on any terms which the parties are able to agree on. That might mean agreeing a settlement in which the Claimant gets most (but not all) of what they are seeking, or a settlement which means that the Claimant gets very much less than they are seeking, or the parties might meet roughly in the middle.

Nobody can be forced to settle: everyone is entitled to have their disputes decided by a judge, but it is worth considering what (if anything) you might be prepared to settle for. Generally the advantage of settlement is that whilst you might not have exactly the outcome you want, you have certainty rather than proceeding to trial and running the risk (whether a large risk or a small risk) of the judge finding against you.

So the first thing to consider is whether there are any terms on which you might be prepared to settle or whether nothing less than a complete win will do. Most people who are claiming money would be prepared to settle for, say, 90% of what they are claiming in order to have certainty rather than take the risk of getting less or even losing completely at trial, as nothing is absolutely certain in litigation and even what seem like the strongest cases do sometimes fail for various reasons. But there may be some situations where people feel that only a complete win will do and they are not prepared to compromise. This might be the case where you want to avoid setting a precedent. For example, if you are a business and you have provided perfectly good services or goods, you may want to resist an opportunistic claim by a customer – rather than make even a small offer – so as not to encourage future opportunistic claims.   

If, however, you are willing to consider a settlement in principle – providing the terms are right - then there are two main ways of attempting to reach a settlement

  • Mediation
  • A formal written offer

Consider mediation

A Mediation is a meeting attended by the parties and their barristers, and conducted by a professional mediator whose fees are split between the parties. Most mediations last a full day and in any case involving land, where a site visit will need to be part of the mediation, the mediation will be a full day. You can suggest a mediation to the other side at any time and, if they agree, you can jointly appoint a mediator. Because of the cost of the mediation it would not be worthwhile unless both parties are prepared to consider compromise, and if you propose a mediation, and the other side agree and proceed with it, that almost certainly means they are serious about trying to reach a settlement. Mediations generally have a high success rate - much higher than "round table" meetings where the parties and their lawyers meet without any mediator. If the parties are going to have to pay their lawyers to attend for a day then having a professional mediator there as well increases the chances of success by a much higher percentage than the increase in cost - each party only pays half the mediator's fee. 

If the other side make the first move in proposing mediation that could mean that they are serious about trying to reach a settlement or it could be simply a tactical move to try to cause delay (they may propose, or be intending to propose, a delay to the proceedings giving the fact that mediation is to take place as an excuse) and when deciding whether to agree to mediation one factor on your mind with be trying to assess whether or not the other side's proposal is a just a delaying tactic. If proceedings have been underway for some time and some important event is coming up, such as a (non-routine) hearing or a deadline for disclosure of documents or exchange of witness statements, then you might suspect that the proposal by the other side is just a delaying tactic. If, on the whole, you are willing to engage in a mediation, as long as the other side is serious, but you suspect (albeit you cannot be sure) that it is just a delaying tactic, you might consider replying agreeing to the mediation but at the same time politely raising your concerns and making clear that you will not agree to any delay in the normal timetable - e.g. "I am concerned that your proposal coming, as it does, so late in the day may simply be a delaying tactic, but I hope I am wrong and I confirm that I am willing to have a mediation and, to move things on without delay, I propose that the mediator should be one of the following three and I look forward to hearing from you by return with your selection of the mediator. I should add, however, that I will not agree to any extension of the deadline for exchange of witness statements."                

When a mediation takes place, everything said in the mediation is "without prejudice". If the mediation does not result in settlement, so that the matter proceeds to trial, the trial judge can be informed that there has been a mediation but the judge cannot be told anything about what happened at the mediation itself nor about any offers made during the mediation. However after an unsuccessful mediation, there is nothing to stop you, if you wish, asking a barrister to draft a without prejudice except as to costs offer simply repeating the last offer you made in the mediation (or any other offer you wish to make) and that offer can then be seen by the judge when considering costs orders after trial, in the usual way (as explained below under the role of formal written "without prejudice except as to costs" offers).

A mediator should not be confused with an arbitrator. An arbitrator looks at the documents, hears witnesses, and makes a binding decision as to who wins according to the law (in much the same way as a judge). A mediator does not do this. Rather the mediator tries to facilitate a pragmatic settlement which both parties can live with. The mediator will normally ask to see the key legal documents but this is not in order to decide independently who is legally right but rather for pragmatic reasons to understand where each side "is coming from". It is usual for each party to be accompanied to the mediation by their barrister so that the barrister can advise them about making or accepting particular offers during the mediation. If the mediation is successful, the barristers can draft and agree the detailed wording of the formal legal agreement to give effect to the settlement terms which, when signed by both parties, are legally binding. 

Making the arrangements for a mediation 

Most mediators are independent self-employed individuals on the books of one or more mediation companies, which handle bookings and the practical arrangements, such as www.clerksroom.com/mediation. You can select a shortlist of three mediators and then write to the other side proposing mediation.  

It is generally best, when proposing mediation, to keep the letter/email proposing mediation simple, avoiding the temptation to say anything which could be taken as imposing pre-conditions or as excluding in advance anything from discussion. Generally you should not refer, in the initial letter/email proposing mediation, to any without prejudice except as to costs offers which have been made by either side (even if such offers are what prompts you to suggest mediation) because if mediation is refused by the other side you might, at some stage, want to show the court/tribunal that you proposed mediation so this initial/email should not contain things which make you unable to use it. In fact, because of the possibility of the other side wasting your time and "playing along" with the possibility of mediation when in fact they have no intention of having a mediation, you should generally not make any proposals as to practical arrangements such as date, location, and duration of the mediation, in your initial email/letter, but just confine yourself to asking them, if they agree to mediation, to select a mediator. If you, in addition, suggest a date they may write back suggesting a different date and not choosing a mediator whereas if the only thing you ask them to do is to pick a mediator from a list you propose then it is difficult for them not to do so without it being obvious that they do not in fact wish to participate in a mediation. If they don't wish to participate then the sooner that becomes clear the better. So your email can simply say "I would like to propose mediation to try to come to a mutually acceptable solution to our dispute. If you are agreeable to mediation, please select one of the following three mediators..." and then just give the names and contact details of three mediators. Leave it at that - don't say any more.

Once a mediator has been agreed, practical arrangements need to be made for the mediation. A date for the mediation needs to be arranged when the mediator, the parties, and their barristers, are available. Three rooms need to be arranged for the mediation, one of them large enough to accommodate a joint session with everyone (both parties, barristers, and the mediator) present. In large cities there are companies which specialise in providing rooms specifically for mediation but in most civil disputes the mediation can take place at any convenient neutral location where three rooms are available. If you had a solicitor, the solicitor would liaise with the other side, and the mediator, with a view to making the practical arrangements, but as you do not have a solicitor it is best to ask the mediator/mediation company to talk to the other side about the practical arrangements rather than you communicating direct with the other side about this. If you try to make detailed arrangements with a solicitor on the other side they may indulge in gamesmanship trying to use the opportunity to get you to make some concession about the case, or trying to convince you that you are bound to lose, or trying to wear you down by being difficult about practical arrangements, so ask the mediator/mediation company to deal with all the practical arrangements. 


Don’t count your chickens before they are hatched

You should, of course, unless and until there actually is a mediation ending with a binding settlement agreement signed by both parties, carry on, in parallel, with the normal litigation stages at the normal pace. It is a mistake to delay matters assuming that the mediation will be successful as doing so may prejudice your case. Indeed if the other side appears to be delaying arrangements for the mediation that may be a deliberate tactic to try to get you to delay the normal progress of litigation in order to prejudice your case, and showing that you will not delay the normal litigation timetable will generally be more likely to bring them to the negotiating table. 

You may find that your opponent proposes mediation, not long before the deadline for exchange of witness statements, and asks you to agree to an extension of time (in some courts and tribunals the parties have a limited power to extend a deadline set by the court/tribunal without needing the court's/tribunal's approval) while the settlement proceeds. It is usually a bad idea to agree to an extension in these circumstances because the reason why your opponent has done this is probably that they have a weak case (which will become apparent when you see their witness statements) and they are probably just trying to drag things out and not serious about settling. If they do happen to be serious about settlement, then a looming deadline for exchange of witness statements (when the weakness of their case may be apparent) should encourage them to be realistic and, in any event, there is nothing to prevent any settlement process continuing after exchange of witness statements. You may come under sustained pressure to agree to extend the deadline for exchange of witness statements. For example the other side may say that they will only consider settlement if you first agree to an extension, or they may have made a non-binding offer 'in principle' which seems acceptable in principle and it may seem churlish to refuse to agree to an extension, but generally (assuming you yourself are ready to exchange witness statements) you should not agree any extension before a binding settlement is signed.     


The role of formal written "without prejudice except as to costs" offers

Separately from any mediation, it is possible for either side to make a written offer which will not be seen by the trial judge until after the judge has given judgment (i.e. announced who wins). Legal rules allow this because the courts and tribunals want to encourage settlement and do not want a party to be put off making a realistic offer for fear that that might subconsciously influence the judge's decision about who wins. After judgment the offer can be seen by the judge and may affect the costs order the judge subsequently makes. In many (not all) court and tribunal cases the judge normally orders the loser to pay most of the legal costs of the winner but a without prejudice except as to costs offer can affect the normal costs order. 

Example: You start a court case, claiming £100,000, in January. In early February the other party makes a without prejudice except as to costs offer of £95,000. You do not accept that offer. At the trial in November, you win, but not completely, and the judge decides you are owed £93,000. The judge might then order the other party to pay your legal costs but only up to February, and order you to pay your opponent's costs incurred from February to November, on the basis that you ought to have accepted the £95,000 offer in February because it is more than you eventually got at trial.

Because without prejudice except as to costs offers are immediately binding if accepted, and also because if not accepted they may (eventually) be seen by the judge, it is important to ask a barrister to draft them so that they are correctly worded (as well as asking the barrister to advise on what might be a reasonable settlement amount).       
       
Note about terminology: A without prejudice except as to costs offer is sometimes called a without prejudice save as to costs offer or occasionally it may be called a Calderbank offer. In court cases subject to the Civil Procedure Rules, offers are normally in the form of Part 36 offers. A Part 36 offer is a particular type of without prejudice except as to costs offer.
 
Usually there are only one or two strategic without prejudice except as to costs offers made during the course of a case. This is because the party's rationale for most such offers is to try to provide some costs protection in the event that the party does less well at trial than they hope (if the offer is actually accepted that is of course welcome but the possibility of acceptance is only part of the rationale for making the offer). Also if you were to make frequent without prejudice except as to costs offers you would run the risk of creating a mindset on the other side whereby they always assume that a better offer will come along and so do not seriously consider your offer (there may be multiple offers in a mediation but that is different because it is in the context of a process which will come to an end at the end of the day). 

One or two strategic without prejudice except as to costs offers have their own value in terms of costs protection, but it is a mediation which is most likely to actually achieve a settlement.    
 

Be careful how you make offers - get advice

As explained above, many offers are in a form which, if accepted, is immediately and irrevocably binding on the parties. If you want to make such an offer, get a barrister to draft it. This is because

1. It is important to get a barrister to make sure the offer is correctly worded and watertight and deals with costs in the appropriate way (e.g. are you offering to pay the other side's legal costs, are you expecting them to pay your costs, or is each side to bear its own costs, and what happens if the offer is accepted at some time in the future when costs have increased)If an offer which is not correctly worded is sent and accepted you might end up bound by terms which you had not intended, or there may be a dispute about precisely what the terms of agreement mean which could lead to another court case! The offer which you want to make might seem simple but it is still worth getting legal advice on the wording. After all if it really is simple then it will not take a barrister long to make sure it is correctly worded and so advice on the wording should not cost very much.

2. As well as ensuring the technical wording of an offer is right, a barrister can give you an opinion about the likelihood of success at trial and, in the light of that, advise about the kind of offer it is reasonable to make. For example, if the likelihood of complete success at trial is high it might be appropriate to offer to settle on terms quite close to complete success, whereas, if there is a very real risk of losing, more of a compromise offer might be made, though ultimately it is the client's choice, not least because different people have different attitudes to risk. 

Be careful how you respond to offers - get advice

If you want to accept an offer you receive from the other side, get advice from a barrister before replying.

You can ask a barrister to give you an opinion about the likelihood of success at trial, and, in the light of that, advise about whether it might be reasonable to accept the offer. For example, if the likelihood of complete success at trial is high it might be appropriate not to accept unless the offer gives you most of what you are seeking, whereas if there is a very real risk of losing, it might be appropriate to consider even offers which are rather less attractive, though ultimately it is the client's choice, not least because different people have different attitudes to risk. 

Even if you feel sure you want to accept an offer, and do not want to pay a barrister to give you an opinion about chances of success at trial and about how good the offer is in the light of that, it is still important to ask a barrister to advise you about the wording of the offer. Is it correctly worded and watertight and does it deal with costs in the appropriate way (e.g. does it offer to pay your legal costs, or are you expected to pay the other side's legal costs, or is each side to bear its own costs).

If you accept an offer which is not correctly worded, you might end up bound by terms which you had not intended, or there may be a dispute about precisely what the terms of agreement mean which could lead to another court case! The offer which you are inclined to accept might seem simple but it is still worth getting legal advice on the wording. After all if it really is simple then it will not take a barrister long to make sure it is correctly worded and so advice on the wording should not cost very much. If there are technical problems in the wording of an offer which, in substance, you would like to accept, a barrister can draft a counter-offer for you to send which is in substance the same but properly worded.

If you receive an offer which seems obviously unacceptable, you might feel that there is no point in paying for advice from a barrister about it, and you may be right (although there could be some situations where some kind of response drafted by a barrister might be appropriate - e.g. pointing out that the other side has failed to provide information which makes it difficult to properly evaluate their offer). If you are tempted to compose a reply yourself (rather than ask a barrister) remember that your reply can be shown to the judge (after judgment if the correspondence is without prejudice except as to costs or equivalent) and what seems to you to be a commonsense innocuous response might be interpreted differently. Simply not replying to an offer you do not want to accept is not considered impolite. 

Don't be tempted to compose offer/acceptance correspondence yourself

Because there is a cost associated with asking a barrister to draft an offer or a response to an offer, you might be tempted to draft an offer, or a response to an offer, yourself. Don't! It might look simple but the consequences of becoming bound by an offer which has something wrong with it can be dire. And if the kind of offer being contemplated really is that simple it will not cost that much for a barrister to draft the offer or response.


Don’t count your chickens before they are hatched

Sometimes there are settlement negotiations actually on the day of the trial - something may happen part way through the trial which makes one or both parties keen to try to settle the matter. In this case it may be less than half an hour between deciding to try to settle and a binding settlement agreement being signed. But if settlement is being considered earlier on, well before the trial, it is usual for the settlement process to take some weeks. Even a mediation, which takes a single day, can take weeks to arrange, and If a written without prejudice save as to costs offer is sent by one party, the other party will need to take time to consider it and take advice. In fact in some courts/tribunals 21 days is considered a reasonable time for a party to take when considering a formal written offer.

So you can see that trying to agree a settlement is normally a process which can easily take several weeks. It is important that during those several weeks that a settlement is being pursued that you do not stop doing the normal things you need to do to complete each pre-trial step by the court/tribunal ordered deadline. Otherwise you may find that in the end there is no settlement after all and you have missed a deadline, or in order to meet a deadline you may have to cut corners which may reduce the prospects of success at trial. If the other party misses a deadline normally the court/tribunal expects you to bring that to the court’s/tribunal’s attention (e.g. by making an application) promptly - if you do not you may get little sympathy from the court/tribunal if the effect of the other side’s delay is to make it difficult for you to meet another deadline - so you should not delay just because you are in the middle of a settlement process. In fact if you do delay the normal work of carrying out each pre-trial step because you are in the middle of a settlement process, the other side, seeing that you are doing that, may take advantage of that by stringing things out so that you miss a deadline or have difficulty meeting a deadline, and then they may ask the court/tribunal to impose a sanction of you for missing the deadline! 

So treat the ordinary work of carrying out the pre-trial steps as separate from any settlement process and just carry on with it at the usual pace unless and until a binding settlement agreement is actually signed. 

You may find that your opponent proposes mediation, or some other settlement process, not long before the deadline for exchange of witness statements, and asks you to agree to an extension of time (in some courts and tribunals the parties have a limited power to extend a deadline set by the court/tribunal without needing the court's/tribunal's approval) while the settlement proceeds. It is usually a bad idea to agree to an extension in these circumstances because the reason why your opponent has done this is probably that they have a weak case (which will become apparent when you see their witness statements) and they are probably just trying to drag things out and not serious about settling. If they do happen to be serious about settlement, then a looming deadline for exchange of witness statements (when the weakness of their case may be apparent) should encourage them to be realistic and, in any event, there is nothing to prevent any settlement process continuing after exchange of witness statements. You may come under sustained pressure to agree to extend the deadline for exchange of witness statements. For example the other side may say that they will only consider settlement if you first agree to an extension, or they may have made a non-binding offer 'in principle' which you have agreed in principle and it may seem churlish to refuse to agree to an extension, but generally (assuming you yourself are ready to exchange witness statements) you should not agree any extension before a binding settlement is signed. 


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This information page is designed to be used only by clients of John Antell who have entered into an agreement for the provision of legal services. The information in it is necessarily of a general nature and is intended to be used only in conjunction with specific advice to the individual client about the individual case. This information page should not be used by, or relied on, by anyone else. 

This page was lasted updated in October 2019. Disclaimer