Five ways to settle a legal dispute without taking it to court

If you’ve found yourself in a legal dispute, it can be easy to get caught up in the emotion and the ‘principle’ of the situation. This is what often leads people to pursue a dispute — until they realise how much stress, money and time that principle is likely to cost them.

If a dispute makes it all the way to trial, it is likely to take about 18-24 months. In a Magistrates Court matter, a cost of $40,000 to $70,000 — depending on the complexity — to take it to trial is a reasonable estimate. To take a matter to trial in the Supreme or District Court, legal costs are likely to be in the range of $120,000 to $200,000 depending on the case.

So if you’re fighting with someone over a $10,000 debt, you may want to think twice about how hard you want to pursue it.

Here are five ways to keep a dispute out of court, to save you time, money and stress.

1. Do your research

Do your research before entering into any sort of contract. The searches you should do will depend on what type of contract is involved. For example, you may need to do different searches before buying a business, compared to the searches you would do before leasing a premises to a tenant. Here are some examples of searches you may want to do as part of your due diligence process before entering into a contract:

Five ways to do your due dilligence

1. Obtain financial statements of the other party (and have an accountant look over them for you)

2. An ASIC search (if you’re dealing with a company)

3. A bankruptcy search (if you’re dealing with an individual or a partnership)

4. Title searches of any real property involved

5. PPSR searches of any personal property involved

2. Good drafting

A well drafted legal document can greatly reduce the chance of a dispute arising.

Well drafted contracts are a bit like insurance; you don’t want a dispute to arise, but if it does, the contract (when drafted correctly) will provide a roadmap detailing how to resolve the dispute.

A little bit of money upfront put towards well drafted legal documents has the potential to save you a significant amount of money down the track.

3. Undertake negotiations

If a dispute does arise, the first thing you should do is engage in negotiations with the other side to see if you can reach an agreement without the need to commence court proceedings. Often this is a very successful process, but it can settle a dispute without having to set foot in court.

If your case is particularly strong and the other side is not agreeing to any offer that you consider reasonable, your lawyer may advise you to commence court proceedings. On the other hand, if your lawyer doesn’t think you have a very strong case, they may advise you to accept a settlement offer from the other side.

A lawyer who specialises in dispute resolution will be able to provide you with advice about what your chances are likely to be in court, and about the reasonableness of any offer presented by the other side.

4. Hold an informal conference

An informal conference is just another way of describing a meeting between the parties and their legal representatives. If letters between the parties don’t seem to be getting anywhere, it could be a good idea to arrange for everyone to get together in one room and try to reach a resolution. This can often be a good way to get everyone on the same page without the formalities, money and stress that can sometimes be associated with court.

5. Consider alternative dispute resolution

Mediation is similar to an informal conference, except it involves an independent third-party mediator, whose role it is to help facilitate the discussion between the parties. Mediation provides an opportunity for the parties to explain their side of the story, in a confidential setting. It should be agreed before mediation that it is conducted on a ‘without prejudice’ basis, being that nothing said in mediation can be brought up later in court, if the dispute gets to that stage.

Arbitration is another process that involves the parties and their legal representatives meeting together to discuss the dispute. Much like mediation, in an arbitration, an independent third-party is appointed to assist the parties. However, unlike mediation, an arbitrator has the authority to make a decision about the dispute.