Sometimes settling a claim before it appears at court is the best strategy a legal team can take. Teams play a vital role in knowing when it’s best to cut their losses before it goes too far, but knowing when this move should be made is crucial.

This discussion was at the centre of The Lawyer’s latest roundtable led by Stephenson Harwood partners Adam Culy and Richard Garcia. Here are the key points.

Drawing the line

Adam Culy

Participants in the room were very vocal about how they deal with their non-legal stakeholders. They noted that some people in companies are unaware of how costly a claim can be, as well as the challenges in proceeding to the next stage. One attendee noted that you often need to spend a lot of money to even determine if the claim is worth it.

“It’s generally the lawyers in the room who are the most experienced to tell companies how difficult a case can be,” said one attendee. Others highlighted that progressing with a claim can cause business disruption, which is a drain on clients. “Very senior people don’t realise how intense it can be,” someone stressed.

If a claim goes ahead, how will witnesses then handle themselves on the stand? “We have to think of the types of concession they might make, especially with witnesses who are not legally trained,” a lawyer explained.

There was an informed discussion of a new technique that has been getting more “airtime recently” that is known as early-neutral evaluation. This is where a judge or an expert will take a look at both cases and bring the parties together to give an early view on the prospects.

“If you think the case can be dealt with quite quickly and that you have the merits on your side, then maybe you can convince your opponent early on that they are not on a good footing through this process” a lawyer explained.

The discussion then moved towards how mediation can be used to help clients. “If you’re thinking of getting authorisation from the board for example, then on a big piece of potential litigation it’s entirely usual to give best- and worst-case analyses in terms of merits and costs consequences,” one respondent said.

It was noted by another that it is sometimes surprising ahead of mediation that “the other side has not grasped the full cost-benefit analyses and the range of potential options”.

Digital helpline

Richard Garcia

Similar to the majority of sectors, there is now an emphasis on using some sort of digital tool in order to add additional value or save on time and money. This is also the case within the legal sector, with data analytics forming part of the discussion.

Digital tools like data analytics can help lawyers to decide how a case may compare to similar matters. This tool may not only save time for a potentially busy legal department, but it may also be of benefit when deciding whether to settle a case.

The main tool that was featured was analytics of court data, for example using the Solomonic system. It is worth pointing out that the majority of attendees didn’t know about this type of tool before the conversation. This is possible because it was noted by one lawyer that this type of tool “is relatively new”. One of the main uses of the tool is to monitor litigation – such as who issued the claims, who are the lawyers, what stage it’s at; data based on public information.

“If you are involved in litigation, it looks at the facts that are relevant to your case and how they are mirrored in other cases,” a person explained.

It was noted by one that the tool may be very useful for experts. “It’s very helpful to plug an expert’s name into a search engine and find every case they have been involved with and every judicial comment on their performance,” this person stressed.

They added that “this could be absolutely critical” regarding experts for foreign law. Their example was if you have a foreign law expert, they are repeatedly not being accepted by the courts. “That is someone you don’t want to go near,” they pointed out.

However, another questioned how good the data was considering how much the “courts are in such a complete disarray”.

Tech solutions, as well as more of an understanding from clients of what litigation involves, are just a few of the components of the decision-making process of parties and their advisers in proposing the settlement option. Should companies decide to go all the way, claims can become costly, time-consuming and a drain on resources.

Stephenson Harwood commentary

The two excellent roundtable discussions brought home to Richard and Adam how diverse the in-house community’s dispute practice was and that clearly no “one – size fits all”.  As they have each experienced in their own practices (Richard – financial services commercial litigation often with regulatory aspects and Adam – professional liability litigation and regulatory enforcement), a high degree of sector expertise, together with experience, is being deployed across the range of industries and jurisdictions represented at the roundtables to achieve the best outcomes in settlement discussions.  Any settlement strategy can only be a framework into which are thrown a huge array of variables that may affect the outcome.  These variables include the points discussed in the roundtables:

  • Each party’s own assessment of the key considerations driving their settlement strategy (merits, costs, reputation, time, commercial relationships, collateral damage, etc).
  • The robustness of the methods used by each side to assess their prospects (including data analytics alongside traditional merits considerations)
  • A kaleidoscope of negotiation styles and techniques
  • How likely any settlement is to be publicised (almost inevitably with a regulatory breach but possibly not depending on the settlement terms in a civil case)

Richard and Adam found that, understandably, each participant’s own experiences with the different settlement processes discussed shaped their views on their effectiveness – some preferred the flexibility of traditional negotiation, others the better finality of a mediation, with arbitration, expert determination and early neutral evaluation being less common unless imposed by the relevant contract or court.

A key message Richard and Adam have taken back to their respective practices is the need for sector knowledge and flexibility – there is no one route to a successful outcome and keeping an open-mind about the range of techniques and platforms to achieve these is essential. In all cases, clients’ in-house expertise and experience should properly shape the settlement strategy, with their role as advocates and lawyers providing a guiding hand.