Negotiation, Settlement and Alternative Dispute Resolution
This domain tests negotiation method, the legal rules that govern settlement communications, and your grasp of ADR processes and their consequences. Questions often combine a tactical problem with a costs question: for example, what happens if a reasonable offer is refused and the case then loses.
Frameworks
- Distinguish positional bargaining from interest-based negotiation; most disputes reward the latter once positions are mapped.
- Establish the client's BATNA (the outcome if negotiation fails) before the first offer. The BATNA, not the claim value, defines the reservation point.
- The zone of possible agreement is the overlap between the parties' reservation points; if there is none, stop and change the structure - timing, scope, non-monetary terms.
- Concessions should be conditional, decreasing, and traded rather than given.
Legal framework
- Without-prejudice protection attaches to genuine settlement negotiations. The court looks at substance, not the label; exceptions include unambiguous impropriety and misrepresentation.
- Settlement offers carry costs consequences; a party who refuses a reasonable offer and does worse at trial may bear costs from the date of the offer, with interest implications.
- ADR processes: mediation, conciliation, arbitration and expert determination. Know which produce enforceable awards and which produce a settlement that must be recorded as a consent order or a binding agreement.
Worked example
Your client claims 100,000, is strong on liability and weak on quantum. Trial BATNA is roughly 55,000 with adverse costs risk, so the reservation point is 45,000. Open at 85,000 coupled with confidentiality and staged payment. Move in decreasing increments, and require a term in exchange for each move. Record the client's written mandate before the session, including the authority ceiling. The reasoning shown: interest-based framing, BATNA-driven reserve, conditional concessions, documented authority.
Traps that cost marks
- Negotiating without a written mandate and authority limit.
- Labelling every letter without prejudice, including pure assertions of right.
- Settlement terms silent on costs, default, acceleration and confidentiality.
- Failing to record that the client was advised about ADR and refused.
- Assuming a mediated agreement is self-enforcing.
Practice Management and Client Care
This domain tests whether you can run a compliant, well-documented practice while delivering the service the client actually needs. Scenarios typically involve scope creep, fee disputes, conflicts, money-laundering red flags or a vulnerable client, and the marks go to the documentary steps you would take and when.
Client care
- A written engagement setting out scope, the person responsible, the basis of fees and an estimate, the complaints route, and what is excluded.
- Costs information updated as the matter develops; clients must be told promptly when an estimate will be exceeded.
- Agreed communication method and frequency, with instructions confirmed in writing after key meetings.
- Special handling for vulnerable clients, questions of capacity, and interpreters or intermediaries.
Practice management
- File opening with conflict checks, identity and source-of-funds verification, and a signed retainer before substantive work.
- Confidentiality and data security in storage, transmission and destruction; a defined retention period.
- Undertakings register so that personal promises are tracked and discharged.
- Supervision and delegation proportionate to competence; a system for escalating difficult matters.
- Business continuity, professional indemnity cover, and a complaints and claims-handling process.
Anti-money-laundering and financial integrity
Customer due diligence at the outset, scrutiny of third-party payments and unexplained urgency, and a suspicious activity report where the thresholds are met - never a tip-off to the client.
Worked example
A client retained on a fixed fee for a transaction now asks you to handle the appeal. Proper handling: write confirming that the appeal falls outside the original scope, issue a revised fee estimate and a new engagement letter before doing the work, discuss the alternatives including a limited-scope retainer, and record the advice and the client's decision on file. The reasoning: unbilled scope creep becomes a fee dispute, and an oral variation creates an evidential void if the bill is challenged later. The documentation protects both the client and the practice.
Traps that cost marks
- No letter of engagement, or one that omits scope exclusions.
- Oral fee variations and unsigned attendance notes.
- Accepting third-party funds without source verification.
- Storing or destroying files without regard to retention obligations.
- Letting a conflict check happen after work has begun.