The old saying a bird in the hand is worth two in the bush has particular application when forced to decide on whether or not to compromise in legal disputes.
All too frequently the aggrieved parties – having lived and experienced the dispute – are adamant that their legal position is clear and obvious to all. They think that should the matter need to be decided by a judge they will be vindicated and they will ultimately be shown to be right.
As a result, one or both of the parties in a legal dispute will at one point or another need to perform a dispassionate cost benefit analysis of settling the matter early, or proceeding with legal action. Often this requires hard decisions as to the benefit of receiving (or providing) certain payments at an agreed date, rather than at an indeterminate point in the future if they proceed to court. This must be weighed against the inherent uncertainty of litigation.
While no two disputes are identical, and each has its own unique facts or causes, there are three key considerations that should be at the forefront of both parties’ minds when deciding on whether to compromise, and if so to what extent:
- How long will it take to resolve this matter if it does not settle?
- How much will it cost to continue and if necessary commence or continue legal action?
- What are the chances of the other party prevailing and the consequences?
While the above factors can apply to any settlement negotiation, they take on particular importance in circumstances where proceedings have been commenced.
In particular it is important to appreciate that court proceedings where contested and not settled early may take years to resolve. As a consequence of this, almost without exception, legal costs will continue to be incurred as the matter works its way through the various stages of litigation.
It may be that the above vindication is ultimately obtained in the form of a court judgment. Ordinarily costs will follow the event, meaning the unsuccessful party pays the successful parties costs; it is unlikely that such an order will cover all of the expenses the successful party has incurred.
Where the dispute concerns the repayment of outstanding monies, the risk of either liquidation or bankruptcy of the other party remains an ever present danger.
Ultimately, settling a matter is an exercise in trying to put a dollar value on chance. What is the likelihood of an adverse outcome to the litigation and what figures do you assign to that chance? This number is then weighed against the value assigned to concluding early.
At Streten Masons Lawyers we take a practical and commercial view to resolving disputes; we understand that in some instances litigation is the only way forward while in others negotiation will result in the best outcome for the client. We have experience in both proceeding to judgment and settling matters early and provide expert advice on the best course of action. If you are experiencing an issue and need litigation matters sorted, please email Jeremy at Jeremy@smslaw.com.au or call us at 07 3667 8966.
By Jeremy Streten
