Going to court? Don't score an own goal

If you are looking to the law to resolve a dispute, plan each step with care

Litigation has much in common with horse-racing and the football pools, two other popular forms of gambling. The more you study the form, the greater the chances of success. As the protagonists in the Saatchi & Saatchi dispute have discovered, litigation can be costly, time-consuming and unpredictable. It need not necessarily be so.

The purpose of litigation is to resolve disputes. A writ is rarely served with a view to spending weeks in court. Often the main objective in beginning a court action is to put pressure on an opponent to come to a realistic settlement. Some cases do not advance much further than the issue and service of a writ; most settle before trial and the objective is achieved. However, many are caught in a procedural log-jam, and a satisfactory result is obtained only at great cost.

Potential litigants should consider some basic points before charging headlong into a courtroom battle.

Know your opponent. There is little point in pursuing an opponent who is unable to pay, although the recovery of money is not every litigant's objective. For some it is to protect the poaching of clients or employees. For others, it is the chance to clear their name in the light of a perceived slur or to protect an investment in a novel idea.

It is important to understand from the outset of litigation that parties have different strengths and weaknesses. A company's legal costs will be deductible for corporation tax purposes, whereas those of a private individual cannot be deducted for income tax purposes. A business can usually reclaim VAT, whereas an individual cannot. On the other hand, often the most significant asset of a business is its personnel. It may be expensive for it to commit management time to dealing with the litigation. A former employee with more time on his hands may try to exert pressure by taking up management time.

Acknowledge the potential of publicity. Details of claims made in the High Court and in an industrial tribunal can be found through a search of public records. The media regularly monitors these records. A case involving a household name or a newsworthy issue is often reported without either party generating the publicity. It is not always possible to prevent a private dispute becoming public. As a result, a threat to issue proceedings can bring a publicity-shy opponent to the negotiating table.

Recognise your own weaknesses. No claim is a certain winner. Many commercial causes succeed or fail on the basis of documentary evidence. Both parties must disclose the existence of all relevant material. The parties then have an opportunity to inspect that evidence. The result is that unhelpful documents could end up being shown to the opposition. Confidentiality will not prevent a document's disclosure. It is crucial to identify evidence that harms your case before it has to be disclosed to the opposition. Its effect on the prospects of success can then be measured. The consequences of failing to appreciate the damaging effect of your own documents can be a humiliating climbdown, as British Airways found to its cost in the dispute with Virgin.

Do not provide the opposition with ammunition. Disclosure is an ongoing obligation throughout the proceedings. Although evidence must not be destroyed, documents which will have to be disclosed should not be created unnecessarily. For example, care should be taken when circulating information about a case around a company or when discussing proceedings at board meetings as internal memoranda and board minutes are relevant documents. It is best to limit board discussions to a report on the stage reached in the action or a summary of legal advice received. If the meeting considers the merits of the claim or the implications of a lawyer's advice, the minutes may have to be disclosed, thereby giving one party an invaluable insight into the other's strategy and thinking.

You've started, so you should be prepared to finish. Litigants sometimes assume that having started proceedings they can always withdraw. That is generally true, but the penalty is that the party withdrawing has to pay the costs of the opponent, unless a compromise can be reached.

Like the Grand National or the Cup final, the result of litigation is never certain. However, with a little thought and planning, you can at least be backing an evens favourite rather than a rank outsider.

The writer is a solicitor and commercial litigation specialist with the City law firm Fox Williams.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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