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The Commercial Litigation Process Explained

Author: Nicola Sharp  28 March 2024
7 min read

Litigation in England & Wales follows a set process, with sequential steps. Each case is different and a matter may come to an end at an early stage of the process through a negotiated settlement, or it may continue all the way to trial. 

The process can be summarised in three key stages:

  1. Pre-action.
  2. Case preparation.
  3. Trial and enforcement.

Depending on the complexity of the case, each of those stages can take weeks, months or even years for the most complicated matters.

 

Pre-action

  • Early investigation.
  • Letter of claim.
  • Correspondence.
  • Attempts to settle.

 

Case Preparation

  • Pleadings.
  • Case management conference.
  • Evidence gathering:
    • Disclosure.
    • Witness statements.
    • Expert evidence.

 

Trial and Enforcement

  • Trial preparation.
  • Trial.
  • Judgment.
  • Appeals.
  • Enforcement.

Civil Procedure Rules and Court Guides

The Civil Procedure Rules (CPR), also known as ‘The White Book’ are the overarching guide for litigation. Lawyers make sure that every step of the litigation adheres strictly to the processes and deadlines of the CPR, and failing to do so will have adverse consequences for the case. 

Each court also has its own Court Guide, with rules and regulations that must be followed in every case.

Strict adherence to the rules in litigation is very important for the success of the case. Missing deadlines or failing to follow a rule can lead to cost consequences, or in some serious cases of non-compliance (such as failing to file a defence on time), judgment could be awarded against the defaulting party.

Let’s take a look at the various stages in the commercial litigation process in more detail.

Letter Before Action

The Courts want all parties to consider litigation to be a last resort in resolving their dispute. With that goal in mind, there are pre-action protocols that must be followed in every case. 

The pre-action protocol will vary slightly depending on the type of case (there are different rules for personal injury matters for example), but the overarching purpose is the same: to give parties sufficient information to understand the case against them and attempt to settle the claim at an early stage.

The letter before action (sometimes called the letter of claim) is the first significant milestone in a litigious process. It sets out the claim against the defendant in as much detail as possible, and provides key evidential documents. 

The letter before action can take weeks or months to prepare if there are significant amounts of documents and evidence to review to build the case. 

Once the letter before action is sent to the other side, there is usually a period of correspondence between the parties. The defendants may seek clarification and request further information on certain points in the claim.

The defendant should respond substantively within 14 days in a straightforward case and within no more than three months in a very complex case. Their reply will confirm whether the claim is accepted, and if it is not accepted, the reasons why. 

Pleadings

The next stage is the exchange of pleadings, or ‘statements of case’. 

The Claimant prepares the Claim Form and Particulars of Claim, which set out the details of their complaint and argue the legal case in a compelling, logical way. 

The Defendant responds to every paragraph of the Particulars of Claim in their Defence. If any counterclaim exists, it is included in the same document as the Defence.  

The Claimant then prepares their Response and their defence to any counterclaim.

The parties have the opportunity to amend their pleadings during the course of the litigation, as new evidence comes to light.

Case Management Conference

The Case Management Conference (CMC) is often a short hearing at court to give the parties directions on the management of the case. That includes the timetable for the various stages until trial, how any preliminary issues will be dealt with, and the dates for the trial window.

At the CMC, the parties will agree their approach to disclosure and each party’s costs budget will be closely scrutinised. Costs in litigation should be proportionate and the judge has the power to amend costs budgets to a value that they deem reasonable.

Disclosure

Disclosure is the process through which the parties review their own documentary evidence, share it with the other side, and inspect the documents in the other side’s possession.

There are now five ‘Models’ for disclosure, and the parties agree which model is most suitable for the case and the issues in dispute. The models range from Model A, the narrowest investigation of documents, to Model E, which is the most expansive.

Model B is often agreed as the most appropriate model, which is the disclosure of (i) key documents on which a party relies, (ii) key document which are necessary to enable other parties to understand that party’s case (iii) known adverse documents.

Gathering and reviewing documentary evidence through disclosure is a crucial part of the litigation process. With that being so, parties must stop any routine destruction of documents and take steps to preserve their documents as soon as litigation is a possibility. 

Witness statements

Witness statements are an opportunity to clarify facts in the case, based on a person’s recollection of what happened. They are a summary of a person’s knowledge of facts that are relevant to the case.

The witness statement is not the place to provide narrative, commentary or argument about the case. Those elements should be reserved for the pleadings.

Instead, the witness statement should be in the witness’s own words, and add factual evidence that cannot be gleaned from the documents alone.

Expert Reports

Expert witnesses clarify certain technical elements of the case. For example, a forensic accountant may be required to give their opinion on the counterfactual case for loss. Or a foreign lawyer may be required to give their advice on the application of aspects of foreign law.

Experts aren’t required in every case. Where experts are involved, their duty is to the court, and not to any of the instructing parties. Each party may appoint their own expert, or they agree to appoint a joint expert. The expert prepares a report and is cross-examined on his / her evidence during the trial.

Applications

During litigation, either party may need to make an application for the court. Some applications are fairly straightforward such as an extension of time to file statements of case. Others are more extensive such as applying for an interim payment, or disclosure of specific documents. 

Mediation

Mediation is available to the parties at any stage of the dispute, and the parties are encouraged to engage in mediation. In fact, a party that refuses to try mediation before the trial is likely to face cost sanctions against them for their refusal.

Negotiation and Settlement

At any point, the parties can try to negotiate a settlement. These discussions usually run alongside litigation, but they are kept out of sight of the judge. All discussions about settlement are ‘Without Prejudice Save As to Costs’. That means that the judge will be unaware of the settlement discussions, so neither party’s position in the litigation is compromised if they concede a point for the sake of settlement. 

The judge will only be able to see these communications after he or she has made their decision on who has won the case. The communications may be relevant to determine costs at this stage. 

Settlement offers are either made as ‘calderbank’ offers which are straightforward ‘without prejudice’ offers. Or a settlement offer can be made as a Part 36 offer. The Part 36 offers are particularly powerful tools because there are enhanced cost consequences if a party fails to accept an offer that is higher than the financial award that the judge decides is appropriate at trial.  

Trial Preparation

In the lead-up to trial, the parties’ representation will be busy preparing the bundles and their skeleton argument.

It is the Claimant’s responsibility to prepare the trial bundle, but the contents are usually agreed in advance with the Defendants’ representatives. Nowadays, most trial bundles are electronic, and depending on the complexity of the case, the bundle can comprise thousands of documents.

The advocates will direct the judge to certain pages of the bundle during the trial, as they seek to make their argument and prove their case.  

The skeleton arguments are a summary of each side’s case, which will be submitted to court before the first day of the trial.

Trial

There is usually a short pre-trial review ahead of the main trial to check that all the trial preparation is complete and find out if there are any outstanding case management issues. 

The trial itself begins with the opening submissions from each party’s advocate. The barristers present their case to the judge, directing him or her to key pieces of evidence in the bundle as appropriate. 

Then the witnesses are cross-examined. The final part of the trial is the closing submissions in which each party’s advocate summarises their case.

The trial is conducted in front of a judge, who makes the final decision on the outcome of the case. There is no jury in civil litigation cases, except very occasionally in cases of defamation. 

Judgment and Order

Written judgment is usually reserved, which means that the judge will retire to think about his / her decision and write up their judgment. Judgment is then ‘handed down’ to the parties and published publicly. 

The barristers help the judge to write the order, which carries out the findings from the judgment. That is usually an order for one party to pay a certain amount of damages and costs to the other side.

The general rule in litigation in England & Wales is that the losing party pays a proportion of the winning party’s costs. It is very unlikely that the losing party will be ordered to pay all of the costs of the winning party, with the highest payment likely to be around 75% of their total costs.

Enforcement

In most cases, the parties will comply with the order. However, if compliance is not forthcoming, the winning party may have to begin enforcement proceedings. This includes invoking powers to seize goods, or impose a charging order, a third party debt order or an attachment of earnings order. 

Appeals

It is possible to appeal a judgment. First the party needs permission to appeal either from the court that gave the judgment, or from a higher court. Appeals are permitted to challenge findings or fact or law, but in practice it is unusual to launch an appeal on the judge’s finding of facts. 

The appeal will be granted if the court decides that it has a real prospect of success, or there is some other compelling reason for the appeal to be heard.

Nicola Sharp C 09983

Nicola Sharp

Partner

nicola.sharp@rahmanravelli.co.uk
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Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.

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