Business Law & Compliance
Can you fight a business dispute without breaking the bank?
7 min read
09 March 2015
With court fees increasing in April by as much as a staggering 600 per cent, it will now be even more expensive for businesses to settle a dispute in court. Yet Louis Young, managing director of Augusta Ventures, says that businesses can still get justice without breaking the bank.
For smaller businesses, the cost of pursuing a dispute can often be prohibitive: legal advice does not come cheap, plus there’s the risk of having to pay your opponent’s legal fees should you lose the claim. But, in many instances, it makes absolute commercial sense to pursue a claim, as the amount you stand to recover will far outweigh your costs. Your claim could actually be a valuable business asset.
Both lawyers and specialist financiers have recognised the obstacles of pursuing a case and now offer businesses a chance to undertake their litigation without breaking the bank.
If you have a claim, here are some steps you should consider:
1. Remember this is a commercial decision
Disputes by their very nature can be emotionally fraught. But by sticking to the facts, being clear about the likely outcome, knowing how long the claim is likely to take and when it’s commercially sensible to settle, you can remove some of the emotion from the equation.
A litigation claim should ultimately be seen as a commercial asset. The approach is then to protect that asset as you would any other asset you own, by working alongside people that you trust to protect and realise its true value.
Read more about litigation:
- FTSE 100 banks make up “lion’s share of big company litigation”
- Litigation: Things businesses should consider
- Legal fees scare SMEs off litigation
2. Be clear about what you are getting into
In order to make your decision, gather the facts – don’t be afraid to grill your advisers on:
- How likely am I to win? A good lawyer will tell you at the outset what your likely chances of success are;
- How long is the case likely to take? Again, a good lawyer, who understands that smaller business claims need to proceed with speed to keep costs to a minimum, will be able to provide a realistic view of the time your claim will take and the costs involved. Litigation funders will also have an interest in a quick resolution to be able to release funds for further investment;
- Can I protect my costs? Yes. Your advisers should advise you on, and in some cases offer, competitive insurance options that cover the cost of your opponent’s legal fees should the claim be unsuccessful, as well as protect up to 90 per cent of your total financial contribution to the case;
- What funding options are open to me? Your lawyer is obliged to lay out your funding options to you. These will include you financing the claim yourself to having a lawyer and a third-party funder share the funding of your claim.
3. Get the best possible advice
Sounds obvious, but, seek advice from lawyers that have experience of pursuing similar smaller claims. Ask to see testimonials and case studies from previous clients that demonstrate a history of success. Litigation funders should, of course, be well capitalised. But, most importantly, they should have a rigorous due diligence process, a sound knowledge of litigation law and excellent financial modelling skills so that you are in no doubt as to if, or when, you should settle.
Perhaps not so obvious, is that you like, as well as trust, your advisers. If they are sympathetic to your case, understand your time is precious, that to a small business cash flow is king, and keep you regularly informed, you can be more confident that they have your interests at heart and will endeavour to resolve your claim as quickly as possible. A good litigation funder will also be transparent about how the proceeds are distributed, and be able to prove that they are paid in a timely way.
4. Share the risk
Alongside likeability, trust and expertise, it’s vital that you feel your advisers act like business partners. And what better way to make that happen than ensuring each party takes a stake in funding your claim.
Of course, a claimant will need to pay some of the legal fees upfront, but your lawyer should be willing to work under a partial ‘no win, no fee’ agreement, and the litigation funder should be willing to put up the money to cover the cost of the case from the outset so that the lawyers are able to get to work right away.
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- SMEs need to be robust on intellectual property
5. Understand when it’s best to settle
No one wants to continue to pursue a claim if it means paying out more in costs than you receive in compensation. But when is it a good time to settle?
This is where a litigation funder can come into their own; a funder should be able to model the expected outcomes of your particular case to identify the point at which your investment will outweigh your return. It’s important for you to know if it’s right to settle at six months and go for less than the full amount to come out on top.
At the end of the day, removing the financial obstacle to pursing litigation, is a sensible, strategic move. Not doing so could mean leaving good money on the table.
Louis Young is managing director of Augusta Ventures.