Steps to handling business disputes

Posted: Wednesday, 17 March 2010 @ 10:54
It’s a sad fact of modern business life that we often find ourselves in dispute with a customer, a supplierguide to solving business disputes, a competitor or some form of regulatory body. In all cases, it is important to face the dispute head on as soon as possible and to decide on goals and strategy.

This involves taking an objective look at the nature of the dispute, the paperwork, your strengths and weaknesses, the likely outcomes and what resources you have available to deal with the problem.

Step 1 - Ascertain your position


The first thing to do is to find out just how strong or weak your case is, as the best way to deal with the dispute will vary depending on the strength (or otherwise) of your position.

This starts with looking at exactly what has happened and then examining all the documents between you and the person or organisation you are in dispute with. Next, consideration must be given to your legal position.

Do you have a written contract? Does it cover this dispute? If not, it may be that you discussed this eventuality in some initial letters or emails.

Sometimes there simply aren’t any documents that deal with the situation. In this case, it might be that the law implies some contractual term that covers the situation.

Many cases are won and lost on what is said in documents and so, when a dispute first arises, you should always consider how a judge would view any email or letter before you send it.

Step 2 - Consider what result you want


Once you know just how strong your position is, it’s time to consider what your objectives are.

Do you want to win? Of course you do but what does a “win” mean to you in a particular case.

It might be that your position is strong and you want to make an example to stop others from raising such disputes in the future. In such a case, you might be willing to pull out all the stops and fight the case all the way through the courts. However, such an approach may be expensive.

At the other end of the scale, you might want to continue what has generally been a good commercial relationship with your opponent. You want to resolve the dispute as quickly as possible so you can continue to work with them.

It might be that you look at the dispute in a commercial way to maximise your recovery or minimise your loss (taking into account risks, time, and costs).

Step 3 - Know your opponent


As well as knowing what you want, it is important to have a good idea of what your opponent wants. Do they want to fight the case? Do they have the money and time to do so?

It might be that you have a 50% chance of success but you know that your opponent could not afford to pay the costs it would take to fight you. If so, this puts you in a strong negotiating position to get a favourable outcome.

Alternatively, it might be that you could spend a lot of money, time, and effort and win your case but your opponent doesn’t have the money to pay you and is simply forced into liquidation.

Step 4 - Costs and benefits


You will need to know what the likely outcomes are in your case and how much it is going to cost. What is the likely timescale of various options? Only then, can you really make a decision on strategy.

It is important to undertake a cost/benefit analysis. You might, for example, have a good case for taking your case to court and recovering £50,000 but, if it’s going to cost you £40,000 to get that outcome and you only have, say, a 70% chance of success, you might want to consider other options too.

Step 5 - Plan your campaign


Once you have gathered all the above information and taken legal advice on it, it is now time to plan your campaign. What tactics would be best to achieve the outcome you want? What methods do you want to use?

A dispute doesn’t always have to be resolved in a courtroom. There are other methods of resolving disputes, such as mediation (using a neutral 3rd party to try and broker a compromise between you), expert determination (getting an expert in your field to decide on the dispute), adjudication or arbitration (having a 3rd party decide on the dispute outside the court procedure) or by direct negotiation (either in a meeting or by correspondence). Even if your case starts off in court, it is highly unlikely that it will end in a trial. Over 95% of cases are resolved well before this stage.

No two disputes are the same and the best way to get out of a dispute to your best advantage will largely depend on a careful and early analysis of the situation and planning a strategy. There really is no substitute to taking legal advice as soon as possible.

For advice on any business dispute you are involved with contact Gary Cousins on 0121 778 3212 or email Gary here.


Contact Cousins Business Law for advice on this topic.
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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