In professional liability claims, costs strategy is often about timing: knowing when to hold the line, when to apply pressure and when to make the offer count.
Why the offer matters
Professional liability claims against professionals often involve significant costs exposure that can quickly exceed the value of the claim itself. In these cases, settlement offers should not be viewed simply as part of the negotiation process. They should also be viewed as an important costs-management tool.
A well-timed offer can put pressure on an inflated claim, demonstrate that the defendant and its insurer have taken a reasonable approach and help protect the defence position if the claimant refuses to engage.
Costs protection is not automatic. Unlike the position under Part 36 in England and Wales, the Irish courts retain a broad discretion when dealing with costs. They will look at when the offer was made, what it said, whether it was realistic and whether it gave the claimant a proper chance to resolve the dispute.
For insurers, the exposure in a professional liability claim is rarely limited to the amount claimed. Defence costs, claimant’s costs, expert fees and procedural costs can quickly become disproportionate, particularly where the claim is weak, inflated or poorly supported. This is especially true where relatively modest claims become heavily contested, requiring extensive expert evidence, discovery, interlocutory applications or lengthy trial preparation.
A well-pitched offer gives the claimant a fair opportunity to settle. If that offer is refused and the claimant ultimately fails to do better, the defendant may have a stronger basis for seeking favourable costs orders, although the court will always consider all of the circumstances.
The Irish position: no direct Part 36 equivalent
Ireland does not have an equivalent to the Part 36 regime as England and Wales. A rejected offer does not automatically trigger costs consequences. The usual options are Calderbank offers, made on a “without prejudice save as to costs” basis, and, in appropriate cases, tenders or lodgements.
The key point is that the court retains discretion. It will look beyond the label attached to the offer and ask whether the offer was clear, fair, properly timed and realistic.
Calderbank offers: the flexible tool
A Calderbank offer, named after the English case Calderbank v Calderbank, is a settlement offer made on a without prejudice save as to costs basis. The offer remains privileged while the parties try to settle, but may be shown to the court later when costs are being decided.
In practical terms, it allows the defendant or insurer to say:
We made a sensible offer at the right time. The claimant chose not to accept it. If the claimant failed to obtain a better result, the court’s costs decision should reflect that.
A Calderbank offer should do more than simply state a figure. The offer needs to be properly explained. It should be linked to the real issues in dispute, including liability, causation, quantum, expert evidence and proportionality. Where appropriate, it should explain the assumptions and evidence on which the offer is based.
An unreasonably low offer with little or no explanation may appear purely tactical. By contrast, a clear, reasoned offer demonstrates why a particular figure was put forward and gives the court a firmer basis for considering costs at the conclusion of the case.
Tenders / lodgements: when a formal offer may be better
A lodgement involves money being paid into court. A tender is a formal offer made under the applicable procedural rules and does not involve paying money into court. A qualifying party, including an insurer acting as an indemnifier, can make a tender where the rules allow it.
These mechanisms work particularly well in straightforward quantum claims. In more complex professional liability claims, however, where liability, causation, expert evidence or apportionment are disputed, a reasoned Calderbank offer may provide greater flexibility.
Timing is key
Timing is critical. An offer should be made early enough to have meaningful costs value, but not so early that it is unsupported by available evidence.
In many professional liability claims, the most effective time to make an offer is after the defence position and key expert evidence have been assessed, before the parties incur significant further costs through discovery, mediation, expert meetings or trial preparation.
Offers should also be kept under review and revisited as the evidence develops. An offer that was reasonable six months ago may lose force if the risk profile has moved.
What should a good offer include?
A good costs-protective offer should generally:
- identify the parties and proceedings;
- state the amount offered;
- say whether the sum includes costs, VAT and interest;
- make clear if it is without admission of liability;
- give a clear deadline for acceptance;
- reserve the right to rely on the offer when costs are determined;
- explain why the figure is reasonable;
- where appropriate, identify the evidence or assumptions supporting the offer, and
- be capable of acceptance.
The costs wording is particularly important. A bare offer on damages alone may not provide the same level of protection as a carefully structured and properly reasoned proposal.
A practical example: overstated claims and jurisdiction
The Irish courts have repeatedly demonstrated their willingness to consider settlement conduct when exercising their discretion on costs.
One example is McKeown v Crosby & Vocella [2021] IECA 139, where the plaintiff’s award was reduced on appeal to a figure within the Circuit Court jurisdiction. The defendants had made a Calderbank offer which the plaintiff did not accept. The Court of Appeal awarded the defendants the costs of the appeal and limited the plaintiff to Circuit Court costs.
For insurers, the lesson is a practical one. Where a claim is overstated or being run at an unnecessary level, a well-pitched offer may assist later arguments on proportionality, jurisdiction and costs.
Final takeaway
Settlement behaviour matters, but costs protection is never automatic. For insurers and defendants, an effective offer must do more than name a figure. It should be made at the right time, supported by the available evidence and directed at the real strengths and weaknesses of the claim.
A well-pitched offer gives the claimant a genuine opportunity to settle the dispute. If that opportunity is refused and the claimant ultimately fails to achieve a better outcome, the defendant may be in a significantly stronger position when the court comes to consider costs.
A good offer is not just about settlement; it is a costs argument written before the dispute is over.
