Settle Out of Court

NEGOTIATE A SETTLEMENT

Not only is it sensible to try and reach a settlement directly with your opponent, it is a requirement of the court in most cases. Court rules require judges to encourage the parties to a dispute to resolve the issues between them by alternative methods to court proceedings. If you issue proceedings, these steps are likely to be forced upon you, and it, therefore, makes sense to attempt them before filing a claim.

There can be a deep psychological barrier to talking to someone you are annoyed with and with whom you may well have already exchanged angry words. That has to be overcome. The insurmountable dispute may well be surmountable if you are prepared to sit down and talk calmly with the person on the other side. You should not think that showing a willingness to talk things over is a sign of weakness.

Remember also that any offers you make to settle need not be binding. You should always make clear that discussions and any offers made are ‘without prejudice’ and can therefore not be brought to the court’s attention, should the negotiations not succeed. If you therefore offer a discount on a debt for immediate payment, you will still be able to sue for the full amount if the offer is rejected.

Money is not always the cause of the dispute. Sometimes it will be possible to offer a ‘sweetener’ to reach an agreement. For example, in a dispute between two businesses, it may well be able to seal a settlement by agreeing to put the matter in issue behind you both and continue to work together, and for neither to badmouth the other.

Do not rush into making an offer to settle. Just make clear that you are willing to discuss and negotiate. When you do make an offer, it has to be sensible and you should not be in a hurry to move from it. Do not change your position quickly. If you do so, it should be by small increments. By so doing, it is likely that your opponent will further move their offer towards what you will accept.

Offering to split the difference is not usually a good idea. It is far better to increase your offer in small increments towards what your opponent would consider as a ‘split the difference’ figure.

Your starting point should be looking at what a compromise settlement is worth to you. If you are the claimant, take into account the time and aggravation of taking your claim through the courts. What is your time worth? How important is it to have money in your pocket now rather than at the end of a lengthy court process? What are your prospects of winning at court? However good your claim, there can never be certainty and you may not be awarded the full amount you think you are owed. Just as important is whether, even if you get a judgement, it will be paid by an opponent with whom you will by then be on extremely bad terms.

If you are the potential defendant and have to accept that the claimant has a good claim, you may well start negotiations by offering half of the amount sought. This should be enough to get negotiations underway and wet the claimant’s appetite to obtain an early settlement. Do not concede too much too soon. If you start low and stress the time and trouble of going to court, you may well end up with an agreement following only a small number of increases on your first offer. If your offer is rejected, do not increase it straight away but give the claimant time to think it over, and then go back with an offer of a slightly increased amount.

If you are the person making the claim, you should probably not offer to accept a reduction in the amount you are owed of more than 20%. Any less than this is unlikely to be sufficiently tempting, and any more would be giving away too much too soon.

If you manage to reach an agreement, write it down. The effect of this will be that you have evidence of a legally binding agreement which can be enforced if necessary. Oral agreements between two people who have lost confidence in each other are an invitation to further problems. Get what you have agreed in writing.

It is not yet time to go running to court even where all attempts to bring the other party to the negotiating table have failed, or where they have adopted an entrenched position which has scuppered your attempts to reach a settlement. If your attempts to negotiate a settlement have failed, it is not necessarily the end of the road. It could just be that you need professional help in trying to make the other person acted reasonably. That is not only available but likely to be pressed upon you. It is known as mediation.