Back to basics briefing

Long-standing business partnerships and friendships are sadly falling apart. ‘Claims hats’ are replacing hard hats as the UK returns to the days of tendering low and claiming high.

In the event of a dispute, the first rule is to avoid litigation if you can.

It is a time-consuming, ego-bruising and unhappy route. Even if you win you can find yourself with irrecoverable legal costs. If you lose, the horrors are even worse: both sides’ legal costs, bad publicity and a truckload of internal strife.

So try to negotiate first. Negotiations can range from a chat between managing directors to a more formal process such as mediation, when a skilled professional attempts to broker a deal through a structured, without-prejudice discussion.

If negotiations don’t work and you’re still considering litigation then don’t forget to check the contract. There’s no point in going to court if the contract contains an arbitration clause.

If the contract contains no arbitration clause, then you can choose between ‘quick and dirty’ adjudication or the certainty of litigation. The majority (perhaps 80%) of construction disputes are now settled by adjudications and can be resolved at lightning speed. Unlike litigation, however, costs are irrecoverable.

Last but not least consider ‘before the event’ legal expense insurance (insuring against certain legal and related expenses that might be incurred in the future) and ‘after the event’ insurance (protecting against substantial costs should litigation prove unsuccessful and taken out when or after a claimant becomes aware of the need to litigate). Both are becoming more and more worthwhile in helping with risk management by insuring your possible cost liabilities.