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Litigation strategy: Planning for mediation or settlement discussions

by Chris Crowe on 17 Mar 2014

litigation strategy: mediation and settlement discussion
Ukraine’s Prime Minister Arseny Yatseniuk pleaded for Russia to remove its armed forces from the Crimea this week and participate in international mediation. The stony faced Russian President Vladimir Putin may be painted as an aggressor in some quarters, but he would surely prefer a peaceful resolution to the unrest. Protecting Russia’s interests with acquiescence from the West should be his ultimate objective.

Today most geopolitical tensions are resolved through dialogue and not through full-scale military conflict. The current efforts by politicians and diplomats over Ukraine has an odour of brinkmanship, but the subtext to these discussions is about a non-violent resolution that all interested parties can live with.

It is a similar scenario in litigation with few disputes reaching court. Lawyers expect to settle the case at some point before court proceedings are commenced, but how do they identify the right time and place to achieve this?

Leading dispute resolution lawyers have become master tacticians in pinpointing the right environment for a viable settlement.

Justin Williams, the head of Akin Gump’s London international disputes practice, says that the best way of achieving a satisfactory settlement is to have some early strategic planning. He suggests that strategies should be implemented at the start of the dispute or even at the contractual stage such as in a commercial transaction: ‘If the intent is to optimise the likelihood of an early resolution, structuring up front is very important. There are various ways and devices that can be taken into account.’ Edward Poulton, a dispute resolution partner in Baker & McKenzie’s London office agrees: ‘From the very beginning you are having to carry out the cost/benefit analysis for the client. Once you establish where a reasonable settlement might lie, then the more tactical aspects come in. You need to consider when and how to make an approach to the other side, whether directly through the principals, through the lawyers or perhaps through mediation.’

Williams accepts that much still depends on the opposition’s willingness to compromise and also the merits of their case, but there are classic routes to follow if a settlement is genuinely desired. He suggests an escalation mechanism can be used to identify suitable moments for settlement discussions or a mediation: ‘One stage might be where a notice of the dispute is to be served, and then attempts to negotiate a resolution at one level and then 30 days thereafter it might be escalated to senior management in the company.’ Typically a disputant seeking a mediation or settlement discussion will want to do so from a position of strength or perhaps when it senses that the opponent is weakening. Another obvious moment to push for mediation or a settlement conversation would be when both sides are about to embark on a costly phase of the dispute. With minds focused on mounting expenses, settlement discussions and mediations can take on a greater sense of urgency and meaning.

Poulton believes that when senior management are brought into the heart of the dispute, it can create a genuine willingness to seek a settlement. He says that clients should never solely consider the cash cost of a dispute, but also the amount of management time given to it and whether there would be more commercial value in bringing the case to a swift end. ‘When you sit down with a senior manager for a day to take their evidence and make them aware that this is going to be the first of many such meetings, it often leads to a phone call to the legal team to ask “what are we doing?” he explains. ‘If they have never been involved in a big litigation or arbitration, they don’t quite comprehend how all encompassing it can be. It is often the unspoken cost of litigation or arbitration.’

Of course the English courts provide a number of incentives for disputants to settle early. The pre-action protocols as part of the Civil Procedure Rules (CPR) and cost sanctions applied when parties fail to properly engage with a mediation or settlement options, certainly induces disputants to avoid a litigation at all costs mentality.

Williams is adamant that the modern dispute resolution lawyer must be alert to a multitude of factors and opportunities for settlement: ‘The litmus test here is the quality of the legal advisers who should be looking proactively and imaginatively at how to resolve the dispute at every single stage. Some disputes just can’t be resolved, but actually those disputes are not that common.’

It’s a similar situation with armed conflict. Recent events in the Middle East and North Africa have taught us that military interventions rarely create a platform for peace. Diplomacy and dialogue must always take centre stage throughout the crisis.

This post was written by Chris Crowe who is a freelance journalist. He can be contacted at chris@crowemedia.co.uk

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Topics: Mediation

Chris Crowe

Written by Chris Crowe