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Does making a settlement offer weaken your case? And a look at ‘Part 36’ Offers

June 20, 2017
Business Litigation

Making settlement offers can be a tactical way of ‘getting what you want’. However, persuading someone to say yes, instead of no, can be tricky.

Everyone has participated in negotiations at some point in their life, some more than others. This could vary from persuading your children to eat their vegetables and as a ‘reward’ they can have pudding, or negotiating a pay rise at work and in return you’ll increase your target for the next year. 

Whatever the dispute, each person has their own side and opinion, and each will have to make a compromise to reach a middle ground. Perhaps you reach an agreement, perhaps you don’t.

How to settle it will depend on the type of dispute. For example, a big family disagreement might benefit from engaging in mediation, as one party may just be looking for a simple apology. This method however may not be suitable for a multi-million pound corporate dispute, where the issue is purely about money. In that situation, the parties could engage in written negotiations, aiming to limit the areas of dispute, and then consider making tactical offers under Part 36 of the Civil Procedure Rules…sorry stepping into some legal speak. 

To explain, a Part 36 offer is an offer to settle the claim which complies with the requirements set out in the rules which all lawyers and courts follow, the Civil Procedure Rules. This rule provides for specific cost consequences where there has been a Part 36 offer that was not accepted and the party to whom the offer was made then fails to achieve a better result at trial. Part 36 offers are tactical because they can put pressure on the other side to settle, but also protect you with regard exposure to costs. As with the rest of the Civil Procedure Rules there are strict requirements that you must comply with if you intend your offer to have the consequences of Part 36. These are outlined in detail in the Rules, for example, the offer must clearly state that it is made under Part 36 of the Civil Procedure Rules. There may be times where a Part 36 offer may not be suitable for your case, or perhaps you are not yet in a position to make a Part 36 offer. There are other types of offers you can make. For example, simple ‘without prejudice save as to costs’ offers, otherwise known as ‘Calderbank offers’. 

My clients often ask me whether it will weaken their case if they make a settlement offer. The short answer is no, providing it is made without prejudice. This means, that if the matter did escalate to court, all without prejudice correspondence and negotiations are kept private from the judge, so the judge’s decision is not swayed either way. It is common ground between lawyers and judges that court action should be a last resort. You could face cost penalties if you took a matter to court and refused to engage in some form of alternative dispute resolution, such as mediation or written negotiations. If you mark your settlement letters ‘without prejudice save as to costs’ you can bring that letter to the judges attention, once judgment has been given, so any offers can be considered when it comes down to the question of who pays what costs. Our litigation team at stevensdrake can advise you on which methods of settlement are appropriate for your case, and give you advice as to when the best tactical time will be to make settlement offers. 

We can liaise with the other side, and attack their merits, rather than attack them. Depending on your goal, stevensdrake can work towards a suitable process for dealing with any differences you may have with the other side and find comfortable methods of settlement for you. Sometimes settlement does not work. Sometimes the other side might be stubborn and not give in at all. In those situations, stevensdrake will advise you on the best methods of settlement negotiations, which may not result in a settlement, but may protect you when it comes down to costs. The art is to encourage the other side to agree with what you want, while making them believe they are getting a good deal.

If you have a dispute, or would like advice on settling disputes, then please contact us

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