Without prejudice discussions

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Introduction

Often individuals and companies, whether in business together or with any business or occupational relationship, enter commercial disputes.  From such small seeds, commercial disputes can grow into disagreements which deeply affect the business owners lives and the potential viability of their business. 

Often (but not always) this is exacerbated by the disputing parties’ personal relationships.

Early engagement always helps

If there is one thing we understand from our experience at Francis Wilks & Jones, is that you should deal with such disputes early.  Often, we are instructed on matters which have run a long and complex course of dispute resolution with steps not taken along that journey which could have either greatly resolved the dispute or greatly reduced the associated legal costs.

Not all claims need to end up with formal commercial litigation proceedings, although we can assist if disputes can only be settled by the Court.

But our aim is always to try and avoid legal proceedings.

• we want to help you save costs and time.
• early engagement is key. 

Alternate Dispute Resolution (“ADR”) is, as it says on the tin, a method of resolving such disputes in a non-contentious manner. The parties are required to engage in pre-action correspondence.

Let’s talk

It is unwise generally (in business) to conduct your affairs solely by word of mouth.  For many businesses, the advantage is the avoidance of committing anything to writing which the taxman, a disputing party or otherwise may later rely on.

However, when entering a dispute, it is likely that the absence of any such written correspondence will almost certainly prejudice your case – whether it is a claim or you are defending your position.

Talk may be cheap, but it can become a lot more expensive where you are trying to justify the decisions you made.

I was greatly impressed with the commercial, tactical and technical ability of the team at FWJ.

A company director

Pre-Action Correspondence

If a dispute then arises, the first thing a solicitor will encourage you to do is to write to the other side to either reject their arguments or correct them on the legal position.  Ultimately, if the dispute is eventually taken to Court (where no other resolution is possible) then the final decision reached may be affected (particularly in respect of who pays the legal costs) by the discussions the parties had pre-action.

• it is a compulsory term of Court proceedings that parties to a potential commercial dispute enter such written exchanges and consider other forms of alternate dispute resolution. 
• part of this correspondence may include an offer to settle a claim by one party to the other. 

But sometimes the discussion requires that, in attempting to best leverage your position, you want to say something which you do not wish to later see come back and haunt you in litigation proceedings at Court, but which needs to be said to persuade the other party not to proceed or settle.

There is a method of doing this, under “Without Prejudice” correspondence.

What does “without prejudice” mean?

Correspondence and discussions between parties who are trying to settle a dispute are often marked “without prejudice”.

By marking the communication in this way is saying that whilst you are genuinely trying to reach a settlement you are not admitting nor conceding any part of the case and are setting out an offer, facts or information purely for the purpose of resolving the dispute but also with the implication that such information cannot be used against you in any future legal/litigation proceedings. 

• often the correspondence (which is usually by email) is open, meaning that there are no protections to it and the emails are just standard exchanges. 
• there is often a good tactical reason to keep such correspondence open, so that you can later rely on it in bringing or defending a claim. 

However, it may be that you want to accept a point or a wrong but seek to explore whether this supports or undermines your/their case.  Even after you have instructed lawyers, it can be risky to make such statements openly and so you may prefer to enclose them under cover of without prejudice correspondence to ensure they cannot be later disclosed to a Court.

Sometimes, the “Without Prejudice” heading is attached to offers to settle – which can be made in various ways. 

Can “Without Prejudice” be limited only to correspondence?

The use of Without Prejudice terms is mainly used in correspondence – at the top of emails or letters.  However, it applies to all communications.

A telephone or person-to-person conversation can be without prejudice, provided

• you always notify the other individual(s) you are talking to that the conversation is without prejudice; and
• they agree and accept this qualification.

However, in real life, parties to such conversations often have faded memories of such exchanges and it is wise to keep a record of the fact that the conversation was without prejudice, what was said and that this term was agreed.

Without Prejudice offers

Where you are looking to make an offer, whether that is to avoid the costs of litigation (which can outweigh the claim itself) or as an attempt to resolve the amount disputed, then a written offer to settle a claim marked “Without Prejudice” cannot later be referred to in court proceedings to undermine a claim or defence.

For example,

• a claim could be issued for damages but there is a risk as to a large component of the sum claimed.  If an open offer was made for a much smaller amount, then the defendant could disclose this in proceedings as part of their evidence to undermine the claim.
• in the alternate, and more common, example, a defendant making an open offer could have the offer disclosed, virtually wiping out any prospect of successfully defending the claim and limiting the dispute just to how much the judgment will be.

Offers to settle should always be without prejudice and may protect you from the legal costs of any subsequently issued Court proceedings.

Risks of without prejudice correspondence

You do have to be careful with putting Without Prejudice on correspondence.

• if you discuss something you later wish to rely on, if it was without prejudice, you cannot. 
• if you have correspondence (being emails or hard copy letters) where you mark without prejudice later in the conversation, by including it in the previously open thread you risk losing this protection.

Similarly, not everything is without prejudice.  If you have a dispute and constantly mark your exchanges without prejudice, aside from the fact that this potentially prevents you from rely on the contents of these exchanges there is also the risk that your opponent could obtain legal advice and just submit them to the Court on the basis that they are not without prejudice exchanges.

For this reason, it is recommended you seek advice and assistance on disputes early.

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At Francis Wilks & Jones whatever side of a dispute our client is on we will be looking to help settle the dispute on the most favourable terms possible. We give advice in relation to making and receiving offers and settlement tactics to achieve this.

I was greatly impressed with FWJ. Their commercial approach combined with specialist knowledge and tactical expertise was pivotal in the claim being dropped and costs recovered in full.

A client we successfully defended