When you’re asked to think about a form of Alternative Dispute Resolution (ADR), an option that is likely to spring to mind is mediation. There are good reasons for this: mediation is championed for having a high success rate, a flexible approach and for preserving commercial relationships.
A further option, which shares the above benefits, is a simple negotiation between parties (and/or their solicitors). The absence of a mediator also makes it a low cost option (although, as discussed in our previous blog post there are of course advantages to having a mediator on board).
But what should you do (or not do) to successfully negotiate a settlement? Here are some of our top tips…
- DO have an open mind and be prepared to be flexible. Remember that if everyone agreed with everything there wouldn’t be a dispute to settle. Work on finding some common ground and develop the negotiations from there.
- DO make sure that the negotiations are held on a “without prejudice and subject to contract” basis, either by heading correspondence appropriately or expressly stating this (and making a note that you have stated this) at the start of any meetings or telephone calls. For the reasons why, click here.
- DO keep careful records of all such correspondence, calls and meetings (which will all be appropriately headed after reading point 2!)…
- …but DON’T throw them away once a settlement has been reached, particularly if the settlement is structured in such a way that the parties have obligations to perform over a period of time (for example payment by way of instalments for a number of months). If there is a further dispute about the scope or meaning of the settlement further down the line, those records will be crucial evidence as to what was agreed.
- DO be clear about what it is that you are settling. Does your claim have lots of different elements to it? Are you settling part only and want to reserve the right to pursue the remainder, or is it being made in full and final settlement of the whole?
- DON’T skip the finer details. You’ve agreed the main heads of a settlement – that’s great – but don’t take your foot off the gas just yet! Taking a simple damages claim as an example, you’ve agreed an amount, but when should that be paid? Will the payment be a lump sum or in monthly instalments? Should they pay by bank transfer or in cash? Can you charge interest if the other side defaults? They may not feel like exciting points to discuss following a major breakthrough, but ironing them out now can save a lot of time and arguments in the future. The more detail you can include, the better.
- And finally, DON’T just rely on an oral agreement, write it down and sign it! Nothing pleases us lawyers more than a clear agreement containing as much detail and as little scope for argument as possible.
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