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Civil and Commercial Litigation

Civil litigation is the process used to resolve legal disputes between individuals, businesses, partnerships and other organisations. It can involve recovering money, enforcing contractual rights, defending a claim, protecting property or obtaining compensation for loss.

A litigation solicitor can assess the strengths and weaknesses of a case, explain the likely costs and risks, negotiate with the opposing party and represent a client throughout court proceedings.

Many disputes are resolved without a trial. A solicitor may help the parties reach an agreement through correspondence, negotiation, mediation or another form of alternative dispute resolution. Where settlement is not possible, court proceedings may be necessary.

This guide principally covers civil and commercial litigation in England and Wales. Different procedures apply in Scotland and Northern Ireland.

Assessing a Civil Claim

Before starting or defending proceedings, a solicitor will usually investigate:

• the relevant facts and chronology;
• the legal basis of the claim or defence;
• the terms of any contract;
• the available documents and other evidence;
• the identity and financial position of the parties;
• the value of the claim;
• applicable limitation periods;
• whether expert evidence is required;
• the likely legal costs;
• the possibility of recovering costs from the opponent;
• whether a judgment could be enforced; and
• the prospects of settlement.

A successful court judgment may have limited practical value if the defendant has no money or assets against which it can be enforced. The commercial objective should therefore be considered alongside the legal merits.

Time Limits for Bringing a Claim

Civil claims are subject to limitation periods. If proceedings are started too late, the defendant may have a complete defence even where the underlying complaint would otherwise have been valid.

The applicable period depends on the type of claim. For example, many ordinary contractual and negligence claims are subject to a six-year limitation period, but shorter or longer periods may apply in other cases.

The date from which time begins to run can also be disputed. It may depend on when a contract was breached, when loss occurred, when damage was discovered or when the claimant obtained relevant knowledge.

Entering negotiations or sending a letter of claim does not normally stop the limitation period. Proceedings may need to be issued, or a formal standstill agreement reached to preserve the claim.

Pre-Action Conduct

Letters of Claim and Responses

Before court proceedings are initiated, the parties are generally expected to exchange sufficient information to understand each other's positions and to attempt to resolve the dispute.

A letter of claim will usually explain:

• the parties involved;
• the relevant facts;
• the legal complaint;
• the loss or remedy claimed;
• the principal supporting documents;
• what the recipient is required to do; and
• the period allowed for a response.

The defendant should provide a reasoned response stating which allegations are admitted or denied and identifying any alternative account, defence or counterclaim.

Pre-Action Protocols

Specific pre-action protocols apply to certain types of dispute, including debt claims, professional negligence, construction and engineering disputes, housing conditions claims, personal injury and clinical negligence.

Where no specific protocol applies, the parties should follow the general rules on pre-action conduct. The aim is to identify the issues, exchange proportionate information, consider settlement and avoid unnecessary proceedings.

A failure to follow the appropriate procedure can affect case management, interest and legal costs, even where the non-compliant party ultimately wins the case.

Alternative Dispute Resolution

The parties are expected to consider whether the dispute can be resolved without a trial. Alternative dispute resolution may include:

• direct negotiation;
• mediation;
• arbitration;
• expert determination;
• early neutral evaluation; and
• adjudication in qualifying construction disputes.

Mediation

Mediation is a confidential process in which an independent mediator helps the parties negotiate. The mediator does not normally impose a decision. Any settlement becomes binding when it is recorded in an agreed written settlement.

Mediation can allow the parties to agree on outcomes that a court could not order, such as revised commercial terms, future working arrangements, staged payments, confidentiality or an agreed apology.

The court may take a party's conduct concerning alternative dispute resolution into account when deciding costs. A refusal to participate should therefore be based on proper reasons rather than on the assumption that settlement discussions indicate weakness.

Mandatory Small-Claims Mediation

Defended money claims of £10,000 or less are generally referred to the court's free small-claims mediation service. The parties are expected to participate in the appointment before the claim proceeds towards a final hearing.

Starting Court Proceedings

Most ordinary civil proceedings are started by issuing a claim form. The claimant must identify the remedy sought and provide particulars setting out the facts and legal basis of the claim.

The appropriate court and procedure depend on the nature, value and complexity of the dispute. Many money claims are issued through an online service or the Civil National Business Centre before being transferred or, where necessary, allocated.

The claimant must pay a court fee. Additional fees may become payable for applications, hearings and enforcement.

Serving the Claim

The claim form and particulars of claim must be served in accordance with strict procedural rules. Different rules may apply where the defendant is an individual, company, partnership or party outside England and Wales.

Improper or late service can result in a claim being stayed, dismissed or becoming statute-barred. Advice should be obtained before relying on email or another informal method of service.

Responding to a Court Claim

A defendant receiving a claim should act immediately. Depending on the procedure used, the defendant may be able to:

• admit the whole claim;
• admit part and dispute part;
• file a defence;
• make a counterclaim;
• challenge the court's jurisdiction;
• apply to strike out the claim;
• seek summary judgment; or
• request additional time where the rules allow.

Ignoring proceedings can result in judgment being entered in default. Once entered, a default judgment can affect the defendant's credit position and may be enforced against income, bank accounts, property or other assets.

Defences and Counterclaims

A defence must respond properly to the allegations. It is not normally sufficient simply to state that the claim is denied.

The defendant should identify which facts are admitted, denied or cannot be admitted and explain the reasons for any denial. A counterclaim may be brought when the defendant has a claim against the claimant.

Case Allocation

Defended civil claims are managed through different court tracks according to their value and complexity.

The Small Claims Track

The small claims track is normally used for less complex claims worth no more than £10,000. Lower financial limits apply to certain personal injury and housing-disrepair claims.

The small claims procedure is designed to be relatively accessible, and many parties represent themselves. The recovery of legal costs is restricted, although court fees, certain expenses, and costs incurred due to unreasonable conduct may be recoverable.

The Fast Track

The fast track is generally used for claims worth more than £10,000 but no more than £25,000 where the trial is expected to last no longer than one day, and the issues are suitable for the procedure.

The Intermediate Track

The intermediate track is intended for suitable, less complex claims worth more than £25,000 but no more than £100,000. Cases are assigned to a complexity band that affects the fixed costs potentially recoverable.

The Multi-Track

The multi-track is generally used for higher-value or complex cases that are unsuitable for the other tracks. The court has greater flexibility to set directions appropriate to the dispute.

Value alone does not determine allocation. The court may also consider complexity, the number of parties, the likely length of the trial, the evidence required and the importance of the case.

Case Management

Once a claim is defended, the court will normally give directions setting out how the case must be prepared. These may deal with:

• disclosure of documents;
• witness statements;
• expert evidence;
• costs budgets;
• applications;
• settlement or mediation;
• trial preparation; and
• the date or estimated period of the trial.

The parties must comply with court orders and procedural deadlines. A failure may result in evidence being excluded, the claim or defence being struck out, costs penalties or judgment being entered against the defaulting party.

Disclosure of Documents

Disclosure is the process through which parties identify and provide relevant documents. A document may include:

• contracts and letters;
• emails and text messages;
• photographs and recordings;
• financial records;
• meeting notes;
• electronic files and metadata;
• social-media messages; and
• documents held in cloud storage or archived systems.

A party may have to disclose documents that damage its own case as well as those that support it. Relevant documents must be preserved once litigation is contemplated.

Documents protected by legal professional privilege may not have to be shown to the opponent. However, the existence of a document and the right to withhold it may still need to be identified.

Witness Evidence

Witness statements typically contain the factual evidence each witness will present at trial. They must be accurate, based on the witness's own evidence, and verified by a statement of truth.

A witness may be cross-examined about their statement, memory, documents and conduct. Deliberately making a false statement verified by a statement of truth can have serious consequences, including contempt proceedings.

Expert Evidence

Expert evidence may be required where the court needs specialist assistance on matters such as valuation, accountancy, construction, surveying, technology, engineering or professional standards.

An expert's overriding duty is to assist the court rather than act as an advocate for the party paying them. Expert evidence usually requires the court's permission.

In lower-value cases, the court may direct the parties to use a single joint expert to reduce cost and duplication.

Settlement Offers

A dispute can be settled at any stage. Settlement discussions may take place openly or on a without-prejudice basis.

Part 36 of the Civil Procedure Rules provides a formal system of settlement offers carrying potential costs and interest consequences. A party that rejects an effective offer and then fails to achieve a better result at trial may face financial penalties.

Settlement terms should be recorded carefully and may address:

• the amount and timing of payment;
• legal costs;
• interest;
• confidentiality;
• release of claims;
• return of property or documents;
• future conduct; and
• what happens if the agreement is breached.

Interim Applications and Urgent Remedies

A party may need to apply to the court before trial for an order dealing with a specific issue.

Applications may include:

• an interim injunction;
• a freezing injunction;
• a search order;
• an order preserving property or evidence;
• security for costs;
• summary judgment;
• strike-out of all or part of a case;
• specific disclosure;
• relief from a procedural sanction; or
• an interim payment.

Some injunctions can be sought urgently and, in exceptional circumstances, without initially notifying the other party. Applicants must provide full and frank disclosure and may be required to give an undertaking to compensate the respondent if the order is later found to have been wrongly granted.

The Trial

If the dispute is not settled or otherwise determined, it will proceed to a final hearing or trial. The court may consider documents, witness evidence, expert reports and legal submissions.

The judge will decide the relevant facts, apply the law and make an order. The court may award damages, declare theparties'’ rights, order payment of a debt, grant an injunction, require contractual performance or dismiss the claim.

Some hearings are conducted in person, while others may be dealt with remotely or on the papers.

Legal Costs

Litigation can be expensive. A solicitor should explain the likely costs, funding options and potential exposure to the opponent's costs.

Outside the small claims track, the general rule is that the unsuccessful party will be ordered to pay the successful party's costs, although the court has discretion to make a different order.

A costs order does not necessarily reimburse every pound spent. Recoverable costs must normally be reasonable and proportionate. Different fixed-cost or assessed-cost regimes may apply.

The court may consider:

• which party succeeded;
• whether success was complete or partial;
• the parties' conduct;
• compliance with protocols and orders;
• settlement offers;
• whether allegations were exaggerated; and
• whether costs were reasonably incurred and proportionate.

Funding Civil Litigation

Depending on the case and solicitor, possible funding arrangements may include:

• payment at hourly rates;
• fixed or staged fees;
• a conditional fee agreement;
• a damages-based agreement;
• legal-expenses insurance;
• after-the-event insurance;
• third-party litigation funding; or
• funding through a trade association or membership organisation.

Not every arrangement is suitable for every case. The solicitor will consider the merits, likely recovery, enforcement risk and proportionality of the costs.

Enforcing a Judgment

Winning a claim does not guarantee voluntary payment. If the judgment debtor fails to comply, enforcement action may be required.

Possible methods include:

• using enforcement agents to take control of goods;
• an attachment of earnings order;
• a third-party debt order against money held by another person, commonly a bank;
• a charging order over property or investments;
• an order requiring the debtor to provide financial information;
• insolvency proceedings where appropriate; and
• other specialist enforcement procedures.

The best method depends on the debtor's assets, employment, property ownership, banking arrangements and solvency.

Commercial Contract Disputes

Commercial disputes often concern the meaning, performance or termination of a contract.

A litigation solicitor may advise on:

• failure to supply goods or services;
• defective performance;
• non-payment;
• termination rights;
• exclusion and limitation clauses;
• warranties and indemnities;
• misrepresentation;
• breach of confidentiality;
• force majeure;
• franchise and distribution agreements; and
• disputes over oral or informal agreements.

The remedy may include damages, repayment, an injunction, a declaration, termination, rescission or an order requiring performance of the agreement.

Misrepresentation Claims

Misrepresentation occurs where a false statement of fact or law induces another party to enter into a contract.

The available remedy may depend on whether the misrepresentation was fraudulent, negligent or innocent. A claimant may seek to set the contract aside, claim damages or pursue both remedies where the law permits.

Disputes often concern precisely what was said, whether it was relied upon, whether contractual wording limits the claim and whether the parties affirmed the contract after discovering the truth.

Debt Recovery

A litigation solicitor can assist businesses and individuals with recovering unpaid invoices, loans, rent and other debts.

The process may include:

• reviewing the contract and evidence;
• checking whether the debt is disputed;
• sending a compliant letter before action;
• negotiating payment terms;
• issuing a court claim;
• obtaining default or summary judgment;
• defending a counterclaim; and
• enforcing the judgment.

Where a business is claiming a debt from an individual or sole trader, the Pre-Action Protocol for Debt Claims may apply. It requires specific information and documents to be provided and gives the debtor time to respond.

Insolvency procedures should not be used merely as a substitute for ordinary debt proceedings where the debt is genuinely disputed on substantial grounds.

Partnership and LLP Disputes

Disputes can arise between partners or members of a limited liability partnership concerning:

• profit shares;
• management decisions;
• drawings and remuneration;
• breach of duty;
• access to accounts and records;
• expulsion or retirement;
• misuse of partnership property;
• competition with the business;
• valuation of an outgoing interest; and
• dissolution of the partnership.

The position will depend on the partnership or members' agreement and the relevant legislation. Where no detailed written agreement exists, statutory default rules may produce an outcome the parties did not expect.

Shareholder and Director Disputes

A commercial litigation solicitor may act for companies, directors or shareholders in disputes concerning:

• breach of directors' duties;
• misuse of company money or property;
• exclusion from management;
• minority shareholder oppression;
• unfairly prejudicial conduct;
• dividend disputes;
• share ownership and valuation;
• breach of a shareholders' agreement;
• deadlock between owners;
• derivative claims; and
• removal of directors.

Possible outcomes include the purchase of one shareholder's shares, regulation of the company's affairs, an injunction, compensation or, in exceptional cases, winding up on just and equitable grounds.

Professional Negligence

Professional negligence claims may be brought where a professional fails to exercise the standard of skill and care reasonably expected, causing financial loss.

Claims may involve:

• solicitors;
• accountants;
• surveyors and valuers;
• architects;
• engineers;
• financial advisers;
• insurance brokers;
• technology consultants; and
• other professional service providers.

The claimant must normally establish a duty of care, breach, causation and recoverable loss. It is not enough merely to show that the professional made an error; the claimant must usually show that the error caused a worse financial outcome.

A specialist pre-action protocol applies to many professional negligence disputes. Expert evidence may be required to establish the appropriate professional standard and whether it was breached.

Property Litigation

Property litigation concerns disputes about land, buildings, ownership and occupation. It is distinct from ordinary conveyancing, which deals principally with non-contentious property transactions.

A property litigation solicitor may advise on:

• boundary and ownership disputes;
• rights of way and easements;
• restrictive covenants;
• trespass;
• adverse possession;
• co-ownership disputes;
• residential possession claims;
• commercial lease disputes;
• forfeiture and lease renewal;
• service charges and disrepair;
• nuisance;
• party-wall disputes; and
• misrepresentation in property transactions.

Urgent advice may be needed where building works are about to begin, access is being obstructed, land is being occupied without permission or a limitation deadline is approaching.

Insolvency-Related Litigation

Litigation and insolvency law can overlap where an individual or company cannot pay its debts.

A solicitor may advise creditors, debtors, directors, shareholders and insolvency practitioners on:

• statutory demands;
• applications to set aside statutory demands;
• bankruptcy petitions;
• winding-up petitions;
• applications to restrain presentation or advertisement of a petition;
• company voluntary arrangements;
• transactions at an undervalue;
• preferences;
• misfeasance and breach of duty;
• wrongful or fraudulent trading;
• claims by liquidators or administrators; and
• disputed proofs of debt.

A statutory demand is a formal demand, not an ordinary debt-recovery letter. Ignoring one can lead to bankruptcy or winding-up proceedings.

Equally, presenting or threatening an insolvency petition in relation to a genuinely disputed debt can be an abuse of process. Specialist advice should be obtained before using an insolvency procedure as a recovery method.

Appeals

A party cannot normally appeal simply because it disagrees with the judge's conclusion. An appeal must usually identify an error of law, an unfair procedure or a decision that was not reasonably open to the court on the evidence.

Permission to appeal is commonly required, and short time limits apply. The appeal court will not ordinarily conduct a complete retrial or allow a party to present a different case that could have been advanced originally.

How a Litigation Solicitor Can Help

A civil or commercial litigation solicitor may assist with:

• assessing the merits and value of a claim;
• identifying limitation and procedural deadlines;
• pre-action correspondence;
• negotiation and mediation;
• issuing or defending court proceedings;
• interim injunctions and urgent applications;
• disclosure and witness evidence;
• instructing barristers and experts;
• settlement and Part 36 offers;
• representation at hearings and trial;
• costs disputes;
• appeals; and
• enforcement of judgments.

Making a Small Claim

The small claims track provides a more proportionate procedure for many lower-value disputes, but a claimant must still prove the legal basis of the claim and provide supporting evidence.

Before issuing proceedings, consider whether the claim is within the relevant limitation period, whether the correct defendant has been identified and whether that person or business is likely to be able to pay a judgment.

Read our guide to making a small claim through the courts for further information about letters before action, issuing a claim, mediation, preparing evidence and attending a hearing.

Finding a Litigation Solicitor

Court proceedings involve financial risk, procedural deadlines and uncertainty. Obtaining advice at an early stage may help preserve evidence, avoid limitation problems and increase the prospects of resolving the dispute without a trial.

Use the search facility at the top of this page to find a civil or commercial litigation solicitor who can assess your position and advise on the most appropriate course of action.

This guide provides general information about civil litigation in England and Wales. It does not constitute legal advice and should not be relied upon as a substitute for advice about a particular claim or dispute.