How do you turn an £12,000 debt into a £40,000 one? How not to handle a business dispute

At Escalate we often encounter litigation cases that initially appear straightforward, but end up escalating (pardon the pun) beyond all expectations. This particular business dispute serves as an excellent example.

A land surveying consultancy approached us last year about a legal dispute they were embroiled in with a former client. The ex-client was challenging the quality and extent of the work done and was now refusing to pay the £12,000 due.

The Surveyors had already attempted to settle the issue internally, but the ex-client had completely cut off all communication and instructed them to take the matter to court. So far, so predictable.

This is where Escalate stepped in, and they tried to play the same game. We warned the Defendant that by compelling the Surveyors to issue legal proceedings without first attempting to resolve matters, they would not only have to pay all indebtedness but also incur a substantial legal costs award.

Despite this, the Defendant remained steadfast that they wanted their day in court, and rejected all settlement proposals. And so, we ended up in court, with a 1-day hearing where the Court sided with the Surveyors, granting a Judgment of £40,000. An astonishing 233% or so increase in case value, or roughly 3.3 times the original amount.

As the claim had been dragged out by the Defendant, they ended up with indemnity costs against them, plus a considerable amount of interest along with the original debt itself.

The Defendant’s refusal to engage proved costly and drastically escalated the case value.

In summary, we witnessed a full house of ‘how not to handle a business dispute’ bingo: 

• Cease all contact
• Refuse attempts to settle matters pre-litigation
• Ignore warnings about repercussions in court for not attempting to settle beforehand
• Reject settlement offers made 
• Drag out the claim
• Insist on their day in court

The important lesson here? If the Defendant had sought legal counsel, any decent lawyer would have advised them not to prolong the case, and to settle before it ever reached court. Reaching an amicable agreement at the start of the process when they were initially dissatisfied with the work provided would have led to a much better conclusion to the story for them. This is why terms and conditions, contracts and complaints procedures exist. 

Seeking legal advice early on or heeding ours could have averted the need for a court battle.

It’s a well-known fact that Courts do not take kindly to litigants who refuse to engage or mediate with third party lawyers or pre-hearing settlement offers. This is one of the reasons why we always strive to resolve matters through ADR (Alternative Dispute Resolution), before resorting to legal proceedings as a last resort. 

It’s also the fastest way to resolve a business dispute and put an end to months of upheaval for our client, especially in low-value, clear-cut cases where a Judge’s involvement should be unnecessary.

Finally, legal disputes like these also tarnish the reputation of the legal profession. From the headline, you could assume that the 233% increase in settlement is entirely due to legal fees, which isn’t the case. 

Some cases we handle evolve in unexpected ways, developing wings that transform them beyond recognition from their original form. Accepting the reality of your situation if you’re in the wrong, stepping back if you’re emotionally involved and working towards a practical, commercially viable resolution is always the best course of action in these situations.

This article originally appeared as a LinkedIn article written by Escalate Co-founder Nick Harvey. If you’d like to find out more about how we can help to resolve your dispute, please get in touch with us.