Five points for employers and pension trustees to consider before entering into litigation

Try as you might, it is unfortunately, not always possible to resolve a dispute involving an occupational pension scheme without having to issue proceedings in the Courts. This is common in circumstances where the negligence of one of the scheme’s advisors has resulted in loss to the scheme. So when litigation is contemplated there are 5 things that the sponsoring employer and the trustees should make sure they consider.

1. Are there any insurance policies or other funding options available to cover legal costs? Of particular importance is considering the fact that if you are unsuccessful in your claim the order that is usually made by the Court is that you pay the other side’s costs; how will these and your own costs be paid?

2. What documentary evidence in support of your claim is available? A search should be carried out for both electronic and paper documents. This should be done at an early stage so the strength of your claim can be assessed and important evidence can be preserved. You may wish to consider taking and keeping a copy of servers and should make sure that any electronic devices that hold documents potentially disclosable to the other side are kept safe.

3. Pre-Action Protocols in the Civil Procedure Rules set out the steps that must be followed before proceedings are issued. The main requirement being that a letter of claim is sent to the Defendant setting out the details of the claim and that the Defendant is allowed a reasonable time to respond. In a negligence claim against a professional that period is 3 months.

4. Whether an actuary should be instructed at an early stage to provide evidence on the loss to the scheme. This evidence will assist in formulating the strategy for the litigation and in any settlement discussions with the Defendant.

5. At every stage of the proceedings it should be considered whether an offer in settlement of the claim should be made or indeed accepted and also if there should be formal or informal settlement discussions with the Defendant. Just because proceedings have been issued does not mean a trial is the only resolution of the dispute and the Court will encourage parties to engage in alternative forms of dispute resolution.

The most important thing to do as soon as you become aware of an issue that could give rise to a claim, is to contact an expert pensions litigation solicitor.