Tuesday, 6 November 2012

10 Common Mistakes in Litigation

Unnecessary Delay
If you believe that you have a cause of action against another party then avoid unnecessary delay. If you have a monetary claim, you need to act fast in the current climate to get your money back. Otherwise the debtor might pay other parties in priority to you and ultimately go out of business. Delay makes it harder to put together the supporting evidence to win your case – documents get lost, witnesses move and lose touch.
If you are facing a claim, avoid putting off responding to any letters of claim in the hope that they go away. If you ignore a formal demand or solicitor’s letter this is likely to result in formal proceedings being issued which will become far more expensive with the addition of legal cost and  interest. It is better to try and avoid this by responding and negotiating.

Not knowing if a Debtor is Good for the Money before Taking Action
In claims of any notable value, it always makes sense to work out in advance if the debtor is good for the money. Otherwise you might spend time and money obtaining a Judgment which is essentially worthless.
We can help you do this. We can arrange for wealth assessments to be carried out and if necessary, personal visits to the debtor’s address. Simple checks can often save you throwing good money after bad.

Not Understanding your Long-term Aim
Litigation can have short-term benefits but the long-term consequences must be considered.  For example, is it worth issuing proceedings against an established customer for recovery of a debt which might in turn lead to the loss of that commercial relationship?
Is there another way you can recover the money without damaging your longer term interests? Is it a matter of principle which if you took a deep breath, could be resolved without a legal fight?

Are you Suing the Right Party?
It might sound odd, but it is surprising how often people don’t know the correct legal entity they have contracted with. For example, mistakes are commonly made with trading styles.
Suing the wrong party can be very bad indeed. Not only will you have wasted costs issuing proceedings against the wrong party, you will almost certainly be responsible for paying the innocent parties costs as part of discontinuing the proceedings. You will also have lost time recovering your money from the actual party who owes it.  Make sure you look at the contractual documentation carefully before issuing.  If you have any doubts, we can assist you.

Not Choosing the Best Litigation Route
In the case of genuinely undisputed debts, there are other options available to a Claimant other than commencing a traditional county court or high court claim. These measures can be far quicker and more effective. They can also mean that you recover your legal costs in claims under £5,000 – which would normally be irrecoverable in the small claims court even if you are successful.
We can advise you of the most hard-hitting, cost effective and speedy route appropriate to your claims.

Believing that Litigation is Always Expensive
We do not deny that litigation can be expensive but the risk can be minimised with proper advice. Choosing the right litigation route is vital. Understanding what products are in the market place to reduce your risk further is also important. Have you considered for example After The Event Insurance and whether that could be available. ATE cover can mean that even if you lose a claim at trial, the other parties legal fees are not recoverable from you, but from your insurer.
We can assist you in reducing your costs exposure as much as possible.

Not Considering Alternative Dispute Resolution
Alternative dispute resolution (ADR) is the use of arbitration, mediation or out of court dispute resolution methods. Sometimes a contract may contain a clause whereby the parties are obliged to follow a prescribed dispute resolution route in the event of a dispute. Failure to adhere to this can be a costly mistake.
Even if there is no contractual obligation, in certain claims, ADR is appropriate – especially if the two parties to the claim are in very entrenched positions. Over 80% of cases referred to some form of Mediation settle either on the day or shortly afterwards.  Even in those cases which do not, the issues are often narrowed considerably.
We can advise you whether ADR is appropriate and if so, the correct option to take (and when).

Believing you will always always get your Costs back if Successful
The general rule is that the wining party’s costs are paid by the losing party. However, there are exceptions to this general rule. 1)  Only the costs incurred after legal proceedings are issued are recoverable. 2) In reality, the Court will only order the losing party to pay around 70% of the winning party’s costs. 3) If the claim is for less than £5000 then the matter will be heard in the small claims court which is a costs free environment. 4) Failure to adhere to the appropriate Pre Action Protocol prior to issue can result in reduced (or no) costs being awarded, even if you are successful.
Care needs to be taken to maximise your chances of recovering your costs.

Failing to Collate all the Evidence Needed for the Claim
Make sure you get together your evidence before you start your claim. Too often, people acting in person will commence a claim without thinking through what is needed to obtain a successful result. Do you have all the relevant documents in your possession?  If not – where are they? Do you know the names and whereabouts of the witnesses needed to give evidence on your behalf? Do you actually know what evidence the court will want to see in order to win your claim?
If you don’t prepare properly in advance, you increase your chances of losing the claim and paying the costs of the other party.

Acting as a Litigant in Person
Whilst it is possible to run smaller claims to trial as a litigant in person, in claims over £5,000 which are outside the small claims court, the implications getting it wrong are far more serious – especially as you will be at risk of paying the other side’s costs in the event you are unsuccessful.  Equally, if your opponent does have a lawyer, they can take advantage of a lack of knowledge and experience of the legal system.  We appreciate that no one really wants to spend money on lawyers, but in litigation cases, it is often worth the investment.

For more information on any of the above, please feel free to contact Andy Wilks Partner, on 0207 841 0390.