When legal disputes arise, the conversation often turns to whether the matter will be resolved through negotiation or litigation. But in reality, these are not mutually exclusive paths. Negotiation and litigation are more accurately viewed as overlapping stages in the broader dispute resolution process.
Two Sides of the Same Coin
While it’s possible to resolve a dispute solely through negotiation without resorting to litigation, and vice versa, this is uncommon. In most cases, negotiation is the first step. It’s the phase where parties attempt to find common ground before the considerable cost, time, and stress of litigation are incurred. Often, it is the threat of litigation that brings the opposing party to the negotiation table in the first place.
However, the power of negotiation has its limits. Unlike litigation, where parties are compelled by law to participate, or face potential consequences, negotiation is voluntary. If the opposing party refuses to engage or does not take the threat of litigation seriously, negotiation can stall entirely. Without leverage or enforceability, negotiations can become one-sided or unproductive.
Why Most Disputes Start with Negotiation
Negotiation is appealing because it’s relatively informal, flexible, and cost-effective. Parties can explore creative solutions, preserve relationships, and avoid the procedural complexity of court proceedings. Since it does not require the preparation and filing of court documents such as statements of claim or defence, it often serves as a practical starting point.
But when one party is uncooperative or dismissive, negotiation loses its effectiveness. This is when litigation steps in, not necessarily because it’s preferable, but because it may be necessary to continue the pursuit of a resolution.
Litigation: The Compulsory Process
Litigation is inherently adversarial, but it has one distinct advantage: it forces parties to participate or face default judgment. Once a claim is issued, the defendant is legally obligated to respond or risk a default judgment. For this reason, even the early stages of litigation often serve as a renewed opportunity for settlement discussions. Most cases settle during litigation, sometimes only days before a trial is scheduled to begin.
Despite its strategic value, litigation comes at a price, both financially and emotionally. It is a lengthy, highly structured process that is likely to take months if not years. Legal fees accumulate, and the stress of prolonged conflict can take its toll on everyone involved. This is why settlement is usually encouraged at every stage of a legal proceeding.
Choosing the Right Approach
In assessing whether to negotiate, litigate, or both, the key question is often: What is your goal? If your objective is to obtain a specific result and the other party is not engaging in good faith, litigation may be the only viable path forward, even though there’s never a guarantee of outcome. Conversely, if both parties are willing to engage in meaningful dialogue, negotiation can resolve matters swiftly and with less accumulated costs.
Final Thoughts
Rather than thinking of negotiation and litigation as alternatives, it’s more accurate to see them as phases within a dispute resolution process. Most disputes move between the two as circumstances evolve. An effective legal strategy is one that knows when to talk, and when to act.
