It's not unusual for clients to ask me - "When is the best time to try and settle this dispute?" "Should we try early or wait until after the discovery and evidential stages of litigation"? "Will we look weak if we offer to resolve the dispute early?"

My experience suggests that the answers to these questions really depend upon the importance a company places on its relationship with its opponent, the value it places on preserving its reputation in the marketplace, the anticipated costs of protracted litigation, the so called 'prospects of success' at final hearing and most importantly the ability to break down what John Lande has termed the 'prison of fear'.1

All too often we see disputes settled on the "steps of the court" or in the hallway of the courthouse. The conventional belief (propagated by some litigators whose interests are not always conducive to finding a early settlement) is that by withholding settlement discussions until the last moment we appear strong in the eyes of our adversary and thus achieve leverage in final negotiations. It's also indoctrinated into us that by delaying discussions until after the discovery process we will have a better understanding of the legal strength of our opponent. Where the relationship is strained we sometimes doubt that our opponent would negotiate honestly. All of this leads us to sometimes become afraid to even explore settlement thus causing us to fall into the 'prison of fear'.

How many of those that are settled on the steps of the court could have been settled much earlier with less cost to the disputants' relationship, reputation and financial bottom line but for the prison of fear? Could a superior settlement solution been achieved had the parties taken an earlier interest-based approach to resolving their dispute rather than a hurried hectic position based approach on the steps of the court?

Disputants who wish to break down the 'prison of fear' and offer their opponent negotiation, mediation or conciliation early in the dispute can:

  1. Avoid looking weak by advising your opponent that you routinely consider negotiation, mediation and conciliation whenever it might be appropriate;
  2. Advise your opponent that you are prepared to litigate vigorously, if necessary, all the while negotiating forcefully and powerfully;
  3. Overcome concerns your opponent might not provide frank disclosure and act with honest intentions by ensuring it legally commits to do doing so. This can be achieved by the insertion of a carefully drafted clause in the negotiation protocols or in mediation/ conciliation agreement that compels all parties to act in good faith and bona fide;
  4. Avoid " giving away too much" to your opponent by limiting your disclosure at first instance to legally discoverable information that the other side would eventually get anyway and hold off disclosing any sensitive information (such as your interests and priorities) until later in the process, after you have had a chance to assess your opponent's motives and trustworthiness;2
  5. Remember that the discovery process in litigation is a two edged sword in that whilst it might enable you to better assess your opponent's legal position it also enables it to better assess the weakness of your position; and
  6. Remember the words of the late great US Supreme Court Judge Oliver Wendell Holmes who once famously said: " It's a rare litigant who recognises his case once it gets to court".


1 John Lande - Lawyering with Planned Early Negotiation. American Bar Association 2011 page 5

2 Pts 1 - 4 ibid pages 6-7

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