Lesley Purveur, of Larken & Co writes about top tips for avoiding the high cost of litigation

Sadly, as unwelcome as they are, disputes in business are inevitable for the majority of businesses at some point.

The cost of pursuing formal court litigation can be eye watering, running into many thousands of pounds so it is really important to consider the risk, stress, and expense, both in respect of time and legal costs in embarking on that path as soon as a dispute unfolds.

Also bear in mind that the courts have made it clear litigation should only really be a last resort and, in fact, avoided where possible.

These days, the courts have the power to order parties to engage in mediation, or another form of alternative dispute resolution (ADR).

In an already over-burdened legal system, where we are experiencing a heavy backlog of cases which, of course, contributes to delays in the judicial system, promoting alternative methods of resolving disputes can help reduce that burden and promote innovation and economic growth.

There are a number of practical and simple tips that businesses would be advised to follow to try and minimise the risk of disputes arising in the first instance.

Keep written records – All forms of communication are necessary to be successful in business, but it is important that any agreements or discussions that take place in meetings or over the telephone are confirmed in writing.

Keeping a good paper trail can often be the key to unlocking a dispute in your favour, and a contemporaneous written document is always more compelling and persuasive evidence than a witness’s recollection of events that took place many months or years prior.

Due diligence – In today’s digital world there is no excuse for not carrying out checks in relation to other businesses that you deal with. Information in respect of all limited companies, including the latest filed accounts, is available free of charge via Companies House website

https://www.gov.uk/government/organisations/companies-house where you can also make enquiries of company and director insolvency status.

Keeping your terms and conditions of business under review – It is good practice to review your terms and conditions of business every 6 months to ensure that you remain compliant with all necessary rules and regulations relevant to your business sector, and to also ensure that you are protected in the event of future disputes.

If your terms and conditions include a dispute resolution procedure, this should be followed.

The small print – Although time consuming, there is no excuse for signing a document without reading it first. Be aware of what agreements you have entered into and your continuing obligations so that no breaches arise.

Internal processes – Most successful businesses operate on a number of underlying processes and procedures. Again, it is important that these are reviewed regularly and followed.

They are important for identifying risks and dealing with cash flow.

Don’t delay – If it seems a dispute is likely and you are unsure as to your position, it is sensible to obtain professional advice and a plan of action at an early stage. Although this may incur an element of expense, that is often outweighed by the benefit which a party can derive by acting straightaway as early advice can lead to time and costs being saved further down the line, as well as the stress and upset of litigation. Disputes can escalate rapidly and can soon become disproportionate to the sums involved, so it is useful to get as clear an appreciation of your position, and know what options are available to you.

Principles cost money – It may appear admirable to pursue a matter out of principle, but litigation frequently teaches us that principles can be expensive. Litigating based on principle should always be very carefully weighed up – there is very little to be achieved by throwing good money after bad. Always consider facts in a rational manner as this will enable you to stand a better chance of formulating a good case. Sensible dispute resolution can save time, encourage healthy interactions between parties and, importantly, keep costs down.

For further information on dispute resolution, or advice generally, please contact: Lesley Purveur on 01636 703333 or email lesley.purveur@larken.co.uk