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How to defend a claim made against your business

Being provided with court documents that signify that a claim is being brought against you is known in legal terms as being ‘served with proceedings.’ We realise that receiving these types of documents can be alarming and stressful, so we’ve put together this guide to help you navigate what to do and to highlight the most important factors you need to consider.

What’s the first thing you should do when threatened with court proceedings?

When a claim is first brought to your attention one of the first things you should do is preserve documentation relevant to the dispute. This is a requirement of the Civil Procedure Rules (commonly referred to as the ‘CPR’), and it’s important in terms of the parties being transparent about what evidence they have in relation to the proceedings.

Will you be given advance warning before proceedings are formally served?

Before a claim is formally issued, another requirement of the CPR is that the individual or business raising the dispute (known as the claimant) must send out what’s called a pre-action protocol letter, which should have been received by you prior to any court papers being served. It’s advisable to seek legal advice at that point in time.

By taking early legal advice, you can often save yourself time and money in the long run as the protocol procedures prescribed by the CPR provides the parties with an opportunity to exchange information – this is to help both parties avoid official court proceedings.

How long will you have to respond to the pre-action protocol letter?

The protocol letter will require a response within 14 days – potentially a longer period for a substantive response and depending on the precise nature of the legal issue. It will be made clear on the face of the letter exactly how long you have to respond to it.

Are there any alternative ways to resolve the problem without going to court?

It’s worth highlighting at this point that the parties are under an obligation to consider alternative dispute resolution (ADR). That might be in the form of a ‘without prejudice’ (off the record) meeting, where you and the other side meet with or without legal representatives to see if you can settle the issue on an informal basis.

Another option that falls under the umbrella of ADR is that you can choose to have a formal mediation, where an independent mediator will see if there is common ground to settle the dispute. If you take early legal advice, it’s possible to adopt all of those procedures before court proceedings are issued and are timetabled for trial.

The sooner you alert your lawyer, the more time it gives them to review the information needed to respond to any potential claim.

What are the timings when served with court proceedings?

If ADR fails and proceedings are served upon you, there are strict time limits from the receipt of those proceedings to when you must act. You will have 14 days from the date of service to file an acknowledgement of service – this is a document that you file with the court which sets out whether you:

  • admit the claim;
  • intend to defend all of the claim or part of the claim; or
  • contest jurisdiction.

It’s worth noting that you can only contest jurisdiction when you believe there is a reason why the courts do not have the appropriate powers and permissions to deal with it.

When the acknowledgement of service has been filed, it’s necessary to file a defence within 28 days from the proceedings having been served upon you if you are defending all or part of the claim. It is very important to file an acknowledgement of service, because if you don’t file it within the 14-day period the claimant is likely to apply to the courts for judgment by default, which means they get judgement without having to go to trial. If the claimant is awarded the default judgment, they can then take enforcement action to get the money they say you owe them relating to the claim.

Sometimes, individuals and businesses only contact a lawyer once judgment has been granted and it is often too late to do anything about it at that point. You can technically apply to set the judgment aside, but this incurs costs which could have been avoided if action had been taken promptly; it’s also risky because there are only a limited number of grounds prescribed by the CPR that gives the court the power to set a judgment aside.

What should you consider when instructing a business disputes lawyer?

When you first instruct a specialist business disputes lawyer it’s advisable that you provide them with a written summary of the dispute and, where possible, provide all relevant documentation relating to it. Ideally, you would provide this information before your first meeting with them as it allows your lawyer to focus on an important piece of information and save time (and in many cases money) as they will already have the initial background information on the claim.

Do you need to report court proceedings to your insurer?

If your business has professional indemnity insurance or product liability insurance then you may need to report the threat of legal action to the insurer early on – it’s always a good idea to do this as soon as possible because sometimes, insurance policies will cover the cost of claims brought against companies. An insurance provider may instruct a solicitor on your behalf and it’s also important to note that many insurers have strict time limits for lodging a claim.

Further information

There may be a temptation to try and deal with a claim yourself, however, there is always a risk that by doing so. For example, you may unwittingly say things which could ultimately damage your chances of successfully defending the claim.

Our team of  dispute resolution solicitors can review a claim made against you and help you draft a response to a court proceedings letter. We can also assist with alternative dispute resolution options and dispute the claim in court if necessary.

For further information about business disputes, including how to avoid disputes arising through to preparing for a commercial court case, please see our related Knowledge Hub articles and guides.


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