Disputes come from two directions. Either a claim form or a letter
threatening legal action lands on your desk, or you discover that
you have a potential legal claim against a third party. When this
happens, what are the most important areas to concentrate on?
1. Identify the issues
- If the dispute relates to a contract, locate the key agreements.
What are the important provisions?
- Start establishing a factual chronology of what has happened.
Update as more detail emerges.
- Work out who you need to contact to obtain more factual
information on what has happened. Set up interviews. Is anyone
with important information about to leave the organisation?
If so, speak to them before they go and ask them whether
they will still be happy to assist in future. Include appropriate
wording to this effect in any compromise agreement.
1. Identify key contracts.
2. Pull your core team together.
3. Check all relevant dispute resolution provisions.
4. Identify who needs to be informed of what has happened, internally and externally.
5. Locate insurance policies and notify insurers if necessary.
6. Diarise key dates and act fast if you need to.
7. Halt routine document destruction.
8. Control the creation of new documents.
9. Think strategically. Ask yourself what you are seeking to achieve. As the case develops, re-visit your objectives.
10. Carry out a cost/benefit analysis.
If you think the dispute might be covered by insurance, locate the
policy and check it carefully.
- More than one policy may be relevant, either because the
dispute covers different policy years or because it is unclear
which type of insurance is engaged.
- You may well need to notify insurers. Check how you go about
this. What are the time limits for doing so? Which entity has
the benefit of the policy? Follow notice provisions to the letter
or you may invalidate a claim.
- Does the claim actually fall within the cover at all? Are
there any obvious exclusions? Seek advice - don’t jump to
- Check what rights insurers have. Do you need their consent
to incur legal costs? Enter into settlement discussions? Start
- Check what policy limits and excess apply.
3. Dispute resolution process
- Check dispute resolution clauses. If there are no governing
law or jurisdiction clauses in the agreement, the chosen
law or jurisdiction is unfamiliar or the clauses appear to be
contradictory, a legal analysis will be needed at an early stage.
- If you have a choice about whether to arbitrate or litigate,
or where to litigate, think carefully about the advantages and
disadvantages of the processes and/or jurisdictions. look
ahead to where you might want to enforce a judgment or
- Is there an escalation process that needs to be followed before
formal legal proceedings begin? Some dispute resolution clauses
will require parties to a dispute to hold discussions between
key individuals in the business, or even a full mediation, before
starting legal proceedings.
- Check whether the claim actually falls within a different dispute
resolution process altogether. Some technical disputes for
example may have to be resolved by expert determination.
- Might an early settlement be the most cost-effective outcome?
4. Time limits
If you have been served with a formal court or arbitration
document, there will be a time limit for responding. Establish what
the risks are if you fail to do so.
If you are the one bringing the claim, check statutory or
contractual time limits. Time limits for notifying and bringing a
warranty claim for example may be short. If you are about to be
time-barred, you will need to act fast. This may include issuing a
protective claim or agreeing a standstill agreement.
Documents may be critical to determining the outcome of the
dispute. In due course documents will almost certainly have to be
disclosed to the other side and to the court or tribunal.
- Issue a document preservation notice to ensure that all
documents that may be relevant are preserved.
- Explain to employees what disclosure obligations entail.
- Suspend any routine document destruction policy.
- Remember that potentially disclosable documents include hard
copy papers but also electronic data of any type.
- Involve the IT department, or an external forensic
IT consultant, at an early stage.
- Remind the other parties to the dispute in writing that they
also need to retain their documents and cease any routine
- You will not need to produce documents in disclosure that
are protected by legal professional privilege. Think carefully
now about how to maintain or create privilege in documents
- Identify who is going to lead communications with the other
side and within the internal and external team.
- Remind everyone to think before creating emails or any other
documents on sensitive issues.
- Think carefully about how to preserve privilege. In particular:
- Identify the 'client' at the outset for privilege purposes and
keep communication lines limited to the 'client' and the
- Do not assume that all communications with lawyers are
privileged. Are you seeking legal advice, which is privileged,
or pure commercial input, which is not?
- Don’t think that labelling a document 'privileged', 'confidential', 'without prejudice' or 'off the record' makes it privileged. The substance of the document is what
matters, not the header.
- If you start an internal investigation, consider before the
work begins whether any report generated will be privileged
or how it can achieve privileged status. Keep detailed notes
of the purpose of the investigation. Lawyers should lead the
investigation, collect information, conduct interviews and
prepare the report.
For more information on privilege, please contact us.
7. Risk, regulatory and reputational issues
Immediate action may be required to prevent further potential
damage arising (for example, a product recall).
Depending on the nature of the dispute, you may need to
inform the relevant regulatory authorities or plan for regulatory
If the dispute involves a jurisdictional issue, you may need to act
quickly in order to establish where the claim will be determined.
You may also need to seek immediate court intervention, for
example to obtain a freezing order if the other side is at risk of
dissipating assets, or a search order where important evidence
may be destroyed. Speed will be of the essence.
Internally, consider which parts of the business should be
consulted. Do you need to involve the board?
If adverse publicity is an issue, speak to your internal
communications team or instruct an external PR agency. Some
court documents will be accessible to the public, and court cases
are almost always heard in public.
8. Costs / benefit analysis
If you are the likely claimant, consider the following:
- How much is the dispute worth?
- Can the other party afford to pay?
- Where are the other side’s assets? If they are abroad, it may be
difficult to enforce a court judgment. Seek legal advice.
- Is there a commercial relationship that you want to maintain?
- If you are contemplating a warranty claim, check financial caps
on liability. Have the financial caps already been met?
- Don’t forget that the other side may have a counter-claim.
Consult lawyers and establish the likely cost of pursuing or
defending the claim – you are highly unlikely to recover all of your
legal costs, even if you are successful. A case budget will help
control costs. DLA Piper has its own budgeting tool. A range of
options may also be available to help fund the claim.
If you are on the receiving end of a claim, you probably have
little choice but to take appropriate action to defend it, but
consider counter-claims and remember that an early commercial
settlement might be in everyone’s interests.
9. Team selection
Consider when you need to involve external lawyers. Do you also
need to instruct lawyers overseas? An early assessment of the legal
merits of a claim can be key in developing an effective strategy.
DLA Piper has its own global litigation managed service.
Determine whether and when an expert should be instructed.
This will be important if the dispute involves a technical issue.