10th June 2013

Out-of-court settlement – the best way forward?

Anyone who instructs a solicitor about a civil matter should do so knowing that the issue may conclude with a court appearance – and without any guarantee of success.

In civil disputes the court is the ultimate arbiter.  Yes, courts are costly to operate and to the untrained eye might seem cumbersome and even somewhat eccentric. But they are absolutely necessary to the survival of a civilised society, otherwise we would return to the Middle Ages when personal disputes were settled by the sword and battle-axe.

However, the fact that our courts are busier than ever disguises the fact that most civil legal disputes are settled before the matter goes to trial, or ‘proof’ to use the correct term in Scotland.

On occasions, going to court will be the only option for one or both parties in a dispute and there are people who – against the advice of their solicitors – are hell bent on having their day in court even when a reasonable offer from the other party is on the table.  But for the individual seeking redress, rather than trying to prove a point of principle, an out of court settlement is the most likely outcome.

From time to time every lawyer is presented with a case that seems to be so clearly winnable that, short of the other side agreeing to all one’s demands, going to court is the best option.  But conversely, lawyers are often presented with cases which, from the outset, appear to have little chance of success and the best course of action is to enter into negotiations immediately.

The law, however, is an art form rather than an exact science, and most actions fit somewhere in between these two extremes, with ultimate success in a court of law far from clear-cut.  It is on these occasions that offering a settlement, or being receptive to one if made by the other party, begins to make sense.

To some litigants, achieving total victory over the other side is the only acceptable way forward but the majority of people are receptive – or eventually become receptive – to a deal that gives them some, if not total, satisfaction.

There are two basic reasons why people veer towards an out of court settlement – cost and a reluctance to be cross-examined by a hostile lawyer acting for the other party. Indeed, we have had clients who, despite having a good and honest case in law, have preferred to settle for something less than originally intended because they feel uncomfortable about a court appearance.

Much more pertinent, however, is the issue of cost and expectations.  Most cases have no guarantee of success and people must weigh up what could be achievable in court with what can be gained from a pre-proof settlement.   Also, some ‘victories’ turn out to be pyrrhic – i.e. the amount of damages awarded is greatly diluted, or even extinguished, by costs.

Private litigants who are not on legal aid should also be aware that one’s assets (in most cases the family home with considerable equity but also savings and share-holdings) might be at risk should they lose an action or even if they win their case without being awarded legal expenses.

One other advantage of a pre-proof settlement is that an acceptable deal can be struck without either side admitting that they were in the wrong.

On average about 70 per cent of raised civil actions are settled before proceeding to proof and of the remainder a further 30pc are settled during hushed conversations between the respective lawyers representing both parties outside the court at the eleventh hour – one of those rare aspects of TV legal drama that does mirror real life.

Statistically this does mean that some cases do go the whole distance because, for at least one of the parties, there is simply no alternative. In such an eventuality, we at Blackadders are experienced court practitioners, and will represent our clients diligently should an action proceed to proof.

Richard Godden
Partner – Dispute Resolution



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