Civil Litigation

The Power of a Part 36 Settlement

Most people believe that if they engage a solicitor in a dispute they will end up in court. Fortunately, both in terms of time, stress and your bank balance, this is not the case. In fact, very few people who begin litigation ever see the inside of a courtroom. This is because most cases are settled before their day in court arrives.

The legal system in England and Wales is designed to encourage early settlement.  Not only is this usually better for the parties involved, it also prevents the court system becoming overburdened with relatively small claims that could be settled by the parties themselves with the help of a solicitor.

What is the law governing early settlement?

Part 36 of the Civil Procedure Rules provides that a party to a litigation can make a settlement offer prior to the date set for trial.  If the offer is not accepted and the opposing party fails to beat the offer at trial, the Court has the power to impose severe costs and/or interest penalties.

This makes Part 36 offers a powerful negotiating tool that solicitors can engage to encourage early settlement.

In what circumstances does Part 36 offer an advantageous negotiating tactic?

After examining your case, if your solicitor believes you have a strong chance of winning in court, then they can make a well-pitched offer to the other side.  When considering the part 36 offer to settle the case for a certain amount of money or outcome, the other side must weigh up the chances of the judge ruling for a better deal.  If the Court ruling fails to match the offer, then the other party could be forced to pay enormous costs on top of any damages awarded.

Is the Court aware that an offer has been made and rejected?

In most cases, a Part 36 offer is made ‘without prejudice’, meaning that the trial judge will be unaware an offer has been put on the table until after the trail has concluded.  However, the judge will become aware of the offer before a decision on costs is made.

When can a Part 36 offer be made?

A Part 36 offer can be made at any time, even after the trial has commenced.

Are Part 36 offers available for smaller claims?

Part 36 offers are not available for claims being dealt with on the small claims track (generally less than £10,000).

What is the process of making a Part 36 offer? 

A Part 36 offer must be in writing, state that it is intended to have the consequences of Part 36, state whether the offer is made to settle the whole claim or only part of it (and if so which part) and whether it takes into account any counterclaim.

If the Part 36 offer is made 21 days or more before the trial is due to start, it must also specify a period (the “Relevant Period”) of not less than 21 days within which the defendant will be liable for the claimant’s costs if the offer is accepted.

If the defendant is making the Part 36 offer and it is accepted, then they must pay the sum in full (not in instalments) and within 14 days of the acceptance.

To find out more about Part 36 offers, search for a civil litigation solicitor using Solicitors Guru today.

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