Separate money already spent from the cost of continuing a dispute
Distinguish sunk dispute expenditure from forward-looking costs when preparing a settlement position with an adviser.
Corporate Recovery Partners
01 / 06
Past spending can become a target to recover
Before a settlement meeting, you add every dollar already spent to the amount you want. Those costs matter to the business, but the next decision also needs a forward-looking comparison. What would continuing require from this point, and what realistic outcomes remain? Ask your adviser to distinguish commercial expectations from any legal entitlement to recover costs.
Prepare one list of costs already incurred and another of likely additional costs under the options being considered. Include fees, time away from operations and practical expenses where they can be estimated sensibly. Label uncertainties. Do not add a speculative future cost to an already-paid item or count the same staff time in several different categories.
Business.gov.au's dispute guidance notes that court processes can be expensive and time-consuming. Ask the lawyer for advice specific to the next stages in your matter. Generic statements about litigation costs cannot tell you what your own alternative will require. Clarify the scope of any estimate, what it excludes and which developments could change it.
Imagine a hypothetical business that has already spent $12,000 on a dispute. It now faces a settlement offer and a possible further $8,000 of professional work, subject to advice. The earlier spending cannot be undone by refusing the offer. This does not mean settlement is necessarily preferable; it means the future choice needs more than a desire to justify the past expenditure.
Ask what costs might be recoverable, from whom and under what circumstances, without treating a favourable outcome as guaranteed. Consider collection risk as well as the result of the dispute itself. Do not substitute a homemade probability for qualified advice on prospects. Your commercial comparison should make uncertainty visible rather than hiding it inside a single confident number.
Discuss the forward-looking figures with the authorised decision-maker before the meeting. Record which assumptions would change the settlement range and which issues require further advice. The aim is to make a considered choice at the present point in the dispute, with past spending acknowledged but not allowed to dictate every future dollar the business commits.
