Although litigation should always be conducted in a cost-effective manner, in periods of economic downturn this becomes increasingly more important. A party may not be able to afford to fund the litigation unless it can be concluded quickly and successfully.

Consider the following to ensure that any litigation is conducted cost effectively.

Be pragmatic about the prospects of success. Whether claimant or defendant, be realistic about the chances of success and the risks of failure. Weigh up from the outset whether the litigation is worth pursuing. Consideration should be given to the:

  • likely cost of the litigation including the amount of irrecoverable costs (even if successful)
  • chances of success and the likely amount recoverable, particularly if a defendant appears to be in financial difficulty
  • time it is likely to take to reach a conclusion (in which you will have to fund the litigation) and
  • amount of management time you will need to expend on the matter

Draft your claim carefully. There is always a balance to be struck between keeping litigation cost effective and maximising your chances of a favourable settlement. However, from a costs perspective you should avoid exaggerating your claim or including issues which are unlikely to be successful. Time will be wasted in pursuing them and you may be ordered to bear both yours and the other side's costs of dealing with them. Make sure you can substantiate all your claims.

Make an offer of settlement. If you unreasonably refuse to make an offer of settlement or negotiate, you are at risk of being penalised in costs. If it is likely that you will be making a payment to your opponent, make an offer to settle the entire proceedings, not just part of them. Ensure that you keep all offers of settlement, made and received, under review. Be proactive in relation to any change of circumstances during the proceedings, such as a decision by the court on preliminary issues or following exchange of experts' reports. If you have made an offer, does it need to be revised or withdrawn? If you have received one, should you accept it before it is withdrawn?

Consider the best method of settlement. Settlement could be explored, for example, through making a written offer, a without prejudice settlement meeting or mediation, depending upon the circumstances of the case. Making a written without prejudice offer, rather than one under Part 36 of the Civil Procedure Rules (CPR), may be advisable if you:

  • want to settle matters outside the proceedings, or future claims
  • want to make an offer inclusive of costs
  • are a defendant with an arguable counterclaim and don't want to have to pay the claimant's costs
  • are a defendant and can't pay within 14 days (as is required by Part 36 CPR) or want to make staged payments or have more complicated terms of settlement
  • are concerned that the defendant may not be financially secure and you want to make the offer conditional on receiving payment

For more on Part 36, see the forthcoming part 13 of our survival guide.

Respond to any offers of settlement received. Failure to accept a reasonable offer of settlement (or to enter into settlement discussions when such an offer is received) can lead to an adverse costs order, even if you are ultimately successful, if the court believes the litigation was capable of being settled at that time. All offers, but especially offers made under Part 36, must be kept under review. If at any time you believe you are unlikely to obtain a more advantageous judgment than the offer made, bearing in mind all the circumstances including costs, you should accept the offer.

Conduct the litigation expeditiously. Comply with all court orders and progress the litigation expeditiously. Work with your opponent to ensure the claim is conducted justly and in a manner proportionate to the amount in issue. The court may penalise you in costs if it thinks your conduct of the case can be criticised.