Settling a professional negligence claim

27 September, 2016
by: Cripps Pemberton Greenish

 

The majority of claims settle before they get to a trial. If you are involved in a professional negligence claim there are many good reasons for trying to reach a settlement:

 

  • Cost – Legal proceedings can be very expensive. Your own costs could equal or even exceed the amount that you are trying to recover. If a defendant loses at trial, they may be liable not only for the value of the original claim, but their own legal costs and potentially the claimant’s costs also. Similarly, an unsuccessful claimant may have to pay some or all of the defendant’s costs as well as their own. A settlement can help to keep legal costs to a minimum.

 

  • Time – Legal proceedings can take months or even several years to conclude. Parties will have to work closely and extensively with their legal advisers, which will take up a lot of their time. Settling a claim will avoid further time being spent and a damages payment will be made earlier.

 

  • Stress – The expense, time and contentious nature of legal disputes can cause both parties a great deal of stress. Avoiding the stress of a claim can be valuable in itself.

 

  • Risk – No matter how strong any party may believe their case to be, litigation is inherently risky. You do not necessarily know what evidence will come to light, what an expert may say, how a witness will perform when cross-examined by a barrister, or how a judge will interpret the law and the facts. Settling a claim provides certainty and ‘a bird in the hand’.

 

Without Prejudice

Settlement offers, negotiations, and discussions are usually made on a ‘without prejudice’ basis. This means that neither party will be allowed to use them (particularly and concessions made) in the court proceedings as evidence of the other side’s true position or liability.

 

Settling Professional Negligence Claims

 

Part 36 Offers

The way that parties must act in legal proceedings in England and Wales is governed by the Civil Procedure Rules (‘CPR’). Part 36 of the CPR contains rules on a very specific type of settlement offer which, if not accepted, carries financial consequences (including potential penalties) later on.

The general principle is this: If the other party makes you a settlement offer which you decline, and which they go on to ‘beat’ at trial, you will have to pay more of their legal costs than normal.

For example, a claimant tells the defendant that they will accept £30,000 from them to settle the matter now. The defendant refuses to settle. At the trial the judge awards the claimant £40,000. As the claimant has beaten its earlier offer (which the defendant should, in hindsight, have accepted), the defendant will have to pay more of the claimant’s legal costs than it would have done had a Part 36 offer not been made.

A further example is a defendant who offers a claimant £12,000 to settle their claim. The claimant refuses the offer and is awarded £11,000 by a judge at trial. Although the claimant was successful they should have accepted the earlier, better offer. The claimant will then have to pay towards the defendant’s legal costs after the initial period that the offer was open for acceptance.

As can be seen from these examples, the purpose of Part 36 offers is to encourage parties to accept reasonable offers of settlement.

 

For more information, see Cripps Pemberton Greenish’s brief guide to professional negligence claims or contact one of our team.