Focus on Manufacturing | Irwin Mitchell | Steps to Avoiding Litigation

In a year in which court fees have risen by as much as 622% and the Ministry of Justice is consulting on yet further fee hikes, there has been a long-overdue effort by lawyers to avoid court-based litigation, an endeavour which our own dispute resolution specialists have already enthusiastically supported with great success.

Our Commercial Litigation team has led the charge when it comes to the use of Alternative Dispute Resolution (ADR), recognising that the commercial considerations of our clients are very rarely such that protracted litigation is the best option for them. Aside from the length, cost and uncertainty of proceedings, litigation diverts management time away from the day-to-day business of our clients with a resultant impact on productivity which can be ill-afforded by the streamlined, highly-efficient manufacturing firms of today.

The key to avoiding litigation is to have it in mind at the outset. By ensuring contracts are robust and contain enforceable dispute resolution clauses, it is possible to at least inject into any future disputes a degree of certainty about how it will be resolved, be it through an arbitration or mediation process or the intervention of a technical expert in appropriate circumstances. We are often approached by clients who have entered into contracts without legal advice and find themselves forced to adopt either the counterparty’s terms and conditions or to work with a contract which is simply unfit for purpose. The value of seeking advice on the contract at the outset quickly becomes apparent once a dispute arises.

In an effort to avoid litigation, it also pays to be attuned to the circumstances of the companies with whom a contract is being entered into; to research their financial circumstances, be aware of any issues or disputes they have or may have had previously and even gauge their appetite for litigation or intransigence in the event of a dispute. This due diligence is something with which our team will be able to assist.

Recent examples of contracts which included problematic clauses included one which was to be governed by Finnish law, one which included no clause stipulating what would happen in the event of a dispute and one which contained no limitation of liability.

Each of these clauses introduced uncertainty into what was already a distressing time for both clients, and each could have been avoided if our clients had sought advice at the time of entering into the contract. Think of the contract as an insurance policy; contemplate the worst and protect against it through thoughtful and comprehensive drafting. Much like with insurance, the price to be paid for the certainty is almost always less than the cost of picking up the pieces.

By omitting a governing law clause, for instance, a client may find themselves embroiled in litigation in a foreign court with all the resultant cost, inconvenience and uncertainty. Likewise omitting a dispute resolution clause may kybosh any attempt to settle the dispute commercially and instead force the dispute down the road of court-based litigation. That being said, we know that there will still be times when, despite taking every precaution, a dispute will arise. Our team is renowned amongst manufacturing firms for providing pragmatic advice in such circumstances and adopting a strategic approach at the outset to how best to resolve a dispute. 

Even when litigation is unavoidable we continue to have our client’s commercial considerations at the forefront of our decision-making and consider with them the cost and inconvenience of litigation when looking at settling proceedings without recourse to a trial.Our vigilance and understanding means we can ensure our strategy reflects our client’s thought processes. 

Our Commercial Litigation team includes Dorrien Peters, praised on Legal 500 as having a ‘strong commercial acumen’ and who brings with him a wealth of experience as an engineer in the aerospace industry prior to working in law. Like the rest of our team, Dorrien has an acute awareness of the commercial considerations of our manufacturing clients and an unrivalled understanding of what drives our clients’ businesses.

We can help you take steps to avoid litigation and to deal with disputes which have already arisen. Please contact our specialist Commercial Litigation team to discuss your circumstances.

Key Contact

James Berry