The court process involves a series of steps which take you towards the final hearing. It is normal to try to sort out your dispute as the claim progresses and more information comes to light.

You can reach an agreement with the defendant about how to settle your case at any time, either before or after you begin court proceedings. This can be done through informal discussions either face to face or by phone or video call, attending mediation or another form of alternative dispute resolution, in writing, or a combination of all of these things.

Things to consider when trying to settle your dispute:

• What are your prospects of your claim succeeding at trial? How likely is it that you will lose?
• What is the value of the claim? What are you likely to be awarded if you go to trial?
• What would you be prepared to accept? This might be less than the value of the claim, if it means you save the expense and hassle of going to court.
• What might the defendant be prepared to pay? This might be more than they think the claim is worth if it means they save the expense and hassle of going to court.
• What would be the costs of going to court and losing? Would there be any other consequences of losing?
   

Even if you do plan on doing most of your case yourself, it will be helpful to seek some initial legal advice at an early stage, to help you find answers to these questions if you can afford it,. This will also help you to decide what you would be prepared to settle for, and help you to understand what your best arguments are, and therefore what you need to say to put pressure on the other side.

Without prejudice communications

All written communications about settlement should be marked “without prejudice” or “without prejudice save as to costs”. You should also agree with the other side that settlement discussions are “without prejudice” or “without prejudice save as to costs”. This means that if you do end up going to court, neither party will be allowed to tell the judge about “without prejudice” communications. So, anything said in these communications can be said openly and safely in the knowledge that it cannot form part of the other side’s case.

The judge is only allowed to know about “without prejudice save as to costs” communications at the end of a dispute, if they have been asked to consider who pays the costs. It can be useful at that stage to show the judge any “without prejudice save as to costs” communications to show that you have been acting reasonably. If you are making an offer to settle it should always be marked “without prejudice save as to costs”.

Settle a dispute using the rules in Part 36 of the Civil Procedure Rules

The court rules offer a formal way of trying to settle your claim which encourages the other side to accept a reasonable offer by providing financial incentives to do so. You will see this referred to as a ‘Part 36 offer to settle’ which gets its name from the court rule describing the procedure (Part 36 of the Civil Procedure Rules, or CPR).

A Part 36 offer to settle can be made:

• by the claimant or the defendant. So, if you are the claimant, you can consider making a Part 36 offer. You also need to be ready to deal with a Part 36 offer made by the defendant. To do either you will have to carefully and realistically value your case.
• in fast track, intermediate and multi-track claims only. You cannot use the Part 36 process in small claims. (In small claims, both sides can make offers to settle, and have “without prejudice” or “without prejudice save as to costs” communications, but the formal rules in Part 36 do not apply.)
• before or after the start of court proceedings, right up to near trial (special rules apply close to trial).
   

Just like informal offers made on a “without prejudice save as to costs” basis, if the attempt to settle formally using Part 36 is unsuccessful, the judge doesn’t get to know that the process has been attempted or what has been offered and rejected until after the trial. This means that they cannot be affected by the value of the Part 36 offer when giving judgment. It only becomes relevant after trial when the judge decides what to do about legal costs.

Tactical and financial advantages

Part 36 offers can be an incentive to settle because they can affect the amount of legal costs you may have to pay the other side.

The receiver of the Part 36 offer is called the 'offeree'.

The implications of the decision to make or accept an offer under the Part 36 procedure depend on:

1. which party makes the offer
2. whether or not the offer is accepted
3. if it is accepted, whether this was within or after expiry of the relevant period (see below)
4. if it is not accepted, what happens at trial.
    

If you turn down a Part 36 settlement sum, but don’t get a better result from the judge at the trial than what you have already been offered, you will have to pay all the other side’s legal costs from the end of what is known as the 'relevant period'. This is the period (usually 21 days from when the offer was made, it cannot be less) during which you can accept the offer. . The relevant period has to be set out in the offer

Example

Mark claims £12,600. The defendant, Joan, makes a Part 36 offer to pay Mark £11,000 on 1 February giving Mark a relevant period of 21 days to accept. Mark decides it’s not enough, and chooses to let the case go to trial.

At the trial on 10 July he wins. The court awards him £10,900. This award doesn’t beat the Part 36 offer to settle made by Joan. Mark will therefore be very likely to have to pay all Joan’s legal costs from 22 February to 10 July including the costs of the trial, plus interest. Mark needed to be awarded £11,000.01 or more to avoid being ordered to pay any of Joan’s legal costs from the end of the relevant period.

If Joan is a litigant in person, Mark will have to pay her costs of preparation, (if a proper record of this preparation have been kept), possibly up to £19 per hour. If Joan is legally represented, he will have to pay her solicitor and barrister’s costs, which could run to many thousands of pounds.

Because Mark was the claimant and won the case, Joan still has to pay his legal costs up to 22nd February (the end of the relevant period).

The tactical advantage of making a Part 36 offer is that it forces the other side to pause and think very hard about the strengths and weaknesses and value of their case.

Receiving a Part 36 offer

It’s more common to get a Part 36 offer if the defendant has a solicitor. You need a good idea of what your claim is worth, and what you are prepared to accept. Your ideas about this may change as more evidence comes your way, for example the defendant’s witness statements or expert reports.

You must take any Part 36 offer made to you very seriously. You will usually only get 21 days to accept. Most reasonable defendants will extend that time for a few days if you have a good reason, but you will need to ask – don’t just ignore the deadline!

A Part 36 offer can be accepted after the relevant period unless it has been withdrawn. However, if it is accepted after the relevant period, the person accepting the offer will have to pay the other side's legal costs from the end of the relevent period to the date they accepted the offer.

It is often very difficult to assess whether an offer is good or reasonable, and a defendant isn’t obliged to explain how they came to the amount. If you can, get legal advice to help you decide, although you will need to find someone who can help within the relevant period you have to accept, which might be difficult, particularly if you are looking for free advice. Needing a short period of extra time to consider the offer with a solicitor would be a reasonable reason to ask the other side to agree to extend the relevant period.

One big factor in many cases is that if the defendant says you are partly at fault, and the judge agrees, you are at risk of losing a proportion of the value of your claim. For example,  if you are found to be one third to blame, you will lose one third of the value of your claim. This is often known as 'contributory fault' or 'contributory negligence'.

Example 1

You slipped on a wet floor at work and fell, injuring your leg. You were off work and lost earnings, and had other losses and expenses. You used the Judicial College Guidelines for the Assessment of General Damages in Personal injury Cases and valued your leg injury at £6,000 and your loss of earnings and other losses and expenses at £5,000, totalling £11,000. The defendant said despite the floor being wet (which was their fault), you were 50% at fault for running and not looking where you were going, that your leg injury was less serious, and that you were off work longer than you medically needed to be. They offered £4,800 to settle. You didn't agree, and have issued proceedings. They have now made a Part 36 offer of £7,000.

If the judge decides the defendant was at fault, and you were reasonably off work, you could get the full £11,000. However,  if the defendant is successful in what they say about you at trial, you might end up, for example, with:

• as little as £5,000 if the judge decides you were 50% to blame, and that you should have been back at work sooner, or
• £7,260 if the judge accepts the amounts you have claimed, but decides you were one third to blame, or
• just under £7,000 if the judge decides you were one third to blame, but slightly reduces your losses and expenses claim (for example deciding you could have been back at work a few weeks earlier). This award fails to beat the Part 36 offer.
   

Any award that does not beat the £7,000 Part 36 offer will be very likely to result in you paying the other side's legal costs and interest on those costs, from the end of the relevant period. How confident are you about the amounts you have claimed? And about a judge agreeing or disagreeing about the accident being partly your fault and the level of deduction that might follow on from that?

Some claims are simpler to assess, as they don't involve any possible contributory fault, and are simply a matter of value.

Example 2

Your caravan was smashed when parked in your driveway by your neighbour's builder's digger. You have claimed £15,000. The builder's insurers have made a Part 36 offer of £14,000. Are you prepared to accept less than the value of your claim to put an end to all the risks involved in going to trial? How confident are you that you will get the full £15,000? Any award that does not beat the £14,000 Part 36 offer will result in you paying the other side's legal costs and interest from the end of the relevant period.

Making a Part 36 offer

Either side can make a Part 36 offer to encourage the other side to agree to a settlement. Again, the impact on who has to pay legal costs depends on whether or not the other side accepts and, if so, when.

Whether the claimant has made the offer, if the defendent accepts they will very likely have to pay the claimant's costs.

If the defendent does not accept the offer, it goes to trial, and the claimant is awarded an amount equal to or higher than the offer, the court will order (unless it unjust to do so):

• Interest on the sum awarded
• Interest on the costs (or an uplift of 35% to costs where the Fixed costs regime applies)
• An additional sum, calculate as a percentage of the amount awarded by the court, up to a maximum of £75,000.
   

TABLE

You need to tell them you accpet the offer in writing, and also send a copy to the court. The easiest thing is to use the 'notice of acceptance' form at the end of the N242A form. You can just write a letter but if you do, you run the risk of not including all the relevant information required by court rules. Your letter must include the claim number and title (if court proceedings have been started) and refer to the offer.

How long do I have to accept or refuse a Part 36 offer to settle?

As long as it has not been withdrawn (and sometimes one side threatens this and then does it – again as a way of encouraging the other party to think hard about accepting their offer) then you can accept an offer at any time. However, if you accept it within the relevant period, the time limit allowed by the other party (which will be at least 21 days but may be more depending on what it says in the Notice of Offer to Settle) the impact on costs will be better for you. 

You can make a Part 36 offer to settle using the notice in Form N242A

You can accept an offer using the notice of acceptance at the back of Form N242A

Relevant Rule: Part 36 - Offers to settle

Additional rules: Practice direction 36 Offers to settle

Even if you have been unable to settle the dispute, the court expects you to have co-operated with the other side in trying to agree exactly what it is you don't agree on, and in providing each other with information. They also expect you to follow court rules, called civil procedure rules. In particular, before you formally start your claim, the court expects you to have followed any relevant pre-action conduct or, if none applies, the general rules for pre-action conduct - the procedure for communication and information exchange with the other side. Find more information about these rules in our guide to pre-action protocols.

Civil procedure rules – The court rules that you have to follow when you take someone to court.

Costs on an indemnity basis, or indemnity costs – Although this is not the norm, the judge can order that costs are assessed on an indemnity basis. This means that if there is a dispute about whether the costs were unreasonably high or unnecessary, the court is likely to decide in favour of the person who made the offer, and not the side that rejected the offer. This is likely to result in a higher overall costs bill than if costs are assessed on the standard basis.

Costs on a standard basis, or standard costs - The usual rule is that the successful party is entitled to their costs on the standard basis. This means that if there is any doubt about whether the costs were unreasonably high or unnecessary, the court is likely to decide in favour of the side that  has to pay.

Pre-action conduct – The name of the process the court expects you to follow before you start your claim if there isn’t a pre-action protocol that applies to your case. This refers to the way you behave and the steps you must take. See our guide to pre-action conduct and protocol.

Pre action protocol - The name of the process the court expects you to follow before you start your claim. There are specific pre-action protocols for many types of case. See our guide to pre-action protocols.

Relevant period - This is the period (usually 21 days from when a Part 36 offer was made) during which the offeree can accept the Part 36 offer and take advantage of the more favourable costs consequences. The relevant period has to be set out in the offer and cannot be less than 21 days.

Without prejudice - If you do end up going to court, neither side will be allowed to tell the judge about any communications with “without prejudice” written on them. So, anything said in these communications can be said openly and safely in the knowledge that it cannot form part of the other side’s case.

Without prejudice save to costs - Any communications labelled “without prejudice save as to costs” cannot be shown to the judge until after the trial, when they are deciding on the amount of costs the losing side has to pay.

Disclaimer

The information in this guide applies to England and Wales only. The law may be different if you live in Scotland or Northern Ireland. The law is complicated. We have simplified things in this guide. Please don’t rely on this guide as a complete statement of the law. We recommend you try and get advice from the sources we have suggested.

The cases we refer to are not always real but show a typical situation. We have included them to help you think about how to deal with your own situation.