Is Risk the Best War Game Strategy? All Forms of Dispute Resolution Carry Risks; Understanding Those Risks Is Key, Says Diane Bennett, Partner in Evershed's Commercial Dispute Resolution Group

Article excerpt

Byline: Paul Bennett

It is without doubt that the number of disputes going through the courts has declined following the reforms to court procedure introduced by Lord Woolf in 1998. Those changes included the introduction of the overriding objective (under which the courts can encourage the use of Alternative Dispute Resolution ("ADR")) and preaction protocols, which aim to encourage parties to settle their disputes without the need to start a court claim. This, together with use of adjudication in construction disputes, has created a climate in which cases which previously would have gone to court are being resolved through ADR. The costs consequences of failing to comply with the overriding objective and pre-action protocols can be substantial, so parties ignore these at their peril.

However, there are far greater benefits to the early investigation and analysis of a case than avoiding costs penalties that may be imposed by a court. A thorough case analysis and risk assessment is required so that clear advice can be provided as to the dispute resolution options available and their suitability to the matter and to ensure that opportunities are not missed.

A recent Court of Appeal decision has reinforced the message that solicitors must fully investigate the merits of a client's case before giving robust advice on strategy. In that case a claimant brought an action against its former lawyers who advised it that its prospects of success in a case it was pursuing were "not less than 70 per cent" and consequently it rejected an offer to settle. It later transpired that the claimant's prospects of success were much less positive and a subsequent much lower offer to settle was accepted. The claimant alleged that the advice it had originally received (which informed its decision to reject the first offer) had caused it a loss (the difference between the two offers). …