A four-step approach to negotiating a settlement of a business dispute

Posted: Monday, 8 July 2013 @ 09:42

Step 1 – Know your strengths and your weaknesses

The key to this is to take a step back and appraise your situation calmly and objectively.

Look at the contract documents and, if you don’t have a formal contract, you will need to look at any correspondence and emails to show what you agreed with the other party. What do the documents say about the situation you’re in? Are there any exclusions or limitations in the contract? Does it cover the situation at all?

Contracts are legal documents and courts look at them in particular ways. If you’re not sure how your contract affects your dispute, it may well be worthwhile obtaining legal advice about this, even if you then want to negotiate a settlement yourself. Your whole stance in negotiations will depend on how strong (or otherwise) your case is.

Step 2 – Know what you want

Armed with the knowledge of your strengths and weaknesses, you now need to consider not only your ideal outcome but what you’d be prepared to accept.

All disputes are time consuming and take your focus away from the actual running of your business. They’ll probably involve you having to dig out and read through old documents that you had put away and thought you’d never have to look at again. They can also be emotionally taxing, especially when the other party deny what you know to be true and you can’t find any hard evidence to back up what you say.

Knowing your ideal outcome is relatively easy but it’s also important to consider what you’d be prepared to accept to get a quick solution without all the costs, time and hassle of a protracted dispute.

Step 3 – Know what the other side wants

Like you, they’ll have their ideal outcome and the outcome they’d be prepared to accept. They’ll readily tell you their ideal outcome but knowing what they’d be prepared to accept is more a matter of guesswork. The better you know them, the more accurate will be your guess.

It does no harm to point out to them the time and hassle that they’ll suffer if the dispute become prolonged. Maybe they haven’t fully considered this.

Step 4 – Consider how best to negotiate

Initial negotiations are likely to take place through correspondence or on the phone, or both. Use this time to set out the best points of your case and the weak points of theirs.

One thing to remember is that, if you’re going to concede any points or suggest a settlement offer that’s less than all you’re entitled to, then the negotiations should be held on a ‘without prejudice’ basis. This is a legal protection for you and means that what you say cannot be repeated in any later court proceedings. Simply write the words ‘without prejudice’ at the top of correspondence or, if you’re speaking to them on the phone or at a meeting, say at the outset that the conversation is being held on a ‘without prejudice’ basis and confirm that in writing.

Remember the hassle factor and use this to your advantage. For example, if you know they’re bad with paperwork, keep asking them for documents to support what they say. If they can’t easily find them, or don’t have them, they’re more likely to do a deal that’s more in your favour.

Consider a face-to-face meeting. This can be particularly advantageous when you’ve gone through the work of knowing your case and getting your paperwork in order as you’ll appear far more confident at the meeting and will be able to answer any points made. You’ll also be able to read their body language and it will be much harder for them to bluff their way through.

If initial steps don’t readily lead to a settlement, consider ‘going legal’ and instruct a solicitor. A solicitor’s letter will help focus the other side’s mind quickly and show you mean business. A solicitor will also be able to advise you on whether to take your case to court or to try some other form of dispute resolution such as mediation.

Gary Cousins
Dispute Resolution Solicitor

Blog by Gary Cousins
Gary has been providing legal advice to shareholders, directors and business owners for over 25 years. Specialising in dispute resolution Gary is based in Birmingham with clients throughout the UK and overseas. View profile
Call Gary on +44 (0)121 778 3212 or by email
This blog is not intended to constitute legal advice, nor is it intended to be a complete and authoritative statement of the law, and what we say might be out of date by the time you read it. You should always seek legal advice to confirm whether or how any information in this article applies to your particular situation. We offer a free telephone consultation to discuss your particular circumstances.

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