This article was first published in North West Legal News Oct/Nov 2007
There are increasing pressures on lawyers to, at the very least consider mediation and other forms of alternative dispute resolution. It comes from the CPR, the new Solicitors’ Code of Conduct and from judicial statements on the costs consequences of failing to attempt mediation. You only have to read as far as Rule 1.4 of the CPR to discover that the use of alternative dispute resolution is part of the court’s duty to manage cases. That active case management includes at Part 1.4 (e) “encouraging the parties to use an alternative dispute resolution procedure if the court considers that appropriate and facilitating the use of such procedure.”
Paragraph 4.7 of the Pre-Action Protocols Practice Direction states “The parties should consider whether some form of alternative dispute resolution procedure would be more suitable than litigation, and if so, endeavour to agree which form to adopt. Both the Claimant and Defendant may be required by the Court to provide evidence that alternative means of resolving their dispute were considered. The Courts take the view that litigation should be a last resort, and that claims should not be issued prematurely when a settlement is still actively being explored. Parties are warned that if this paragraph is not followed then the court must have regard to such conduct when determining costs;”
The first point to note is that litigation should be a last resort. If it is unavoidable then there is a continuing obligation to consider mediation throughout the process, both by the court in its management of the claim and by the lawyers.
The Solicitors’ Code of Conduct 2007 provides in rule 2.02(1)(b) (Client Care) an obligation on solicitors to “give the client a clear explanation of the issues involved and the options available to the client;” Guidance is given in the notes to rule 2 at paragraph 15 “When considering the options available to the client, if the matter relates to a dispute between your client and a third party, you should discuss whether mediation or some other alternative dispute resolution (ADR) procedure may be more appropriate than litigation, arbitration or other formal processes. There may be costs sanctions if a party refuses ADR – see Halsey v Milton Keynes NHS Trust and Steel and Joy [2004] EWCA (Civ) 576.
The guidance brings us to the final pressure to at least consider mediation, namely that of costs sanctions against parties who refuse to mediate. The refusing party did not in fact face any costs penalties in that case because on the facts it was reasonable not to attempt to mediate. The judgment sets out clear guidance on this and should be read carefully before an offer to mediate is turned down. In his judgment in that case Dyson LJ says “The value and importance of ADR have been established within a remarkably short time. All members of the legal profession who conduct litigation should now routinely consider with their clients whether their disputes are suitable for ADR.”
Dyson LJ goes on to say that the courts will not compel parties to mediate. Mediation is and should always remain a voluntary process which is very much part of its success.
It is apparent then that there is considerable pressure from different sources to lead parties to mediation. Lawyers may well be sceptical of the reasons for this. The Ministry of Justice is no doubt keen to reduce court costs and the backlog of cases. The lawyer’s first consideration however will be his or her client. How, if it all, can mediation benefit them?
The proponents of mediation point to a number of factors in answer to this question. Cost is the first consideration. A mediation which takes place very shortly before a trial may not in fact produce a great saving in legal costs unless a lengthy trial is anticipated. Conversely the earlier in the proceedings the mediation takes place the greater the potential saving and the costs saving can be substantial. Legal costs are not the only costs clients incur. Time away from running a business or from a job is a cost to a client. If witnesses from the same company are needed then their time is a further cost. Early settlement of a claim, however achieved, will reduce this burden and create a huge saving in management and personnel time.
Mediations can be arranged at short notice once the parties have agreed to go ahead. They very rarely last more than one day. The mediation itself is often said to provide the parties, particularly claimants, their equivalent to a day in court and the opportunity for them to see their lawyer acting on there behalf at first hand. The range of solutions to a dispute available at a mediation are far wider than solutions that a court can impose. From a simple apology to an agreement dealing with the future trading relationship of the parties. A mediation can restore a previously mutually beneficial trading relationship which for both parties may well be more important than the issue in dispute. The range of solutions is only limited by the imaginations and wishes of the parties.
One important task of the mediator is to educate the parties about each others’ case. That is to say the mediator can help to clarify the case that lies behind the pleadings, or simply clarify the pleadings. Apparent weaknesses in an opponent’s case may not be weakness once there is a clear understanding of that case. This may be from an explanation of a document, further disclosure or just seeing at first hand the quality of witness an opponent would be in court.
Any solution will not have been imposed. It will be joint solution to a joint problem worked out and agreed by the parties. The mediator does not provide the answers. He or she assists the parties to solve their dispute in their own way. Brooke LJ put it this way in Dunnett v Railtrack plc [2002] EWCA Civ 303:
“Skilled mediators are now able to achieve results satisfactory to both parties in many cases which are quite beyond the power of lawyers and courts to achieve. This court has knowledge of cases where intense feelings have arisen, for instance in relation to clinical negligence claims. But when the parties are brought together on neutral soil with a skilled mediator to help them resolve their differences, it may very well be that the mediator is able to achieve a result by which the parties shake hands at the end and feel that they have gone away having settled the dispute on terms with which they are happy to live. A mediator may be able to provide solutions which are beyond the powers of the court to provide.”
Most mediations follow a similar pattern. The parties meet together in a joint room where the mediator will explain the procedure and then give each side the opportunity to make a short statement about the case. The mediator will insist that this uninterrupted. After these preliminaries the parties will retire to separate private rooms where they will be visited in turn by the mediator. Anything they say in those rooms is treated with the strictest confidence by the mediator which allows a full and frank examination of the case and an opportunity to explore all the possible solutions to the problem. The mediator will only pass on information to the other side when authority has been given and the mediator considers that passing on this information will assist the parties in reaching an agreement.
The ultimate aim of course is to achieve a settlement that both parties are prepared to agree to in writing. The lawyers will be responsible for drafting that agreement once the principles and details have been agreed. Mediation, entered into freely by both parties, does have a high success rate. Different providers will quote different figures but the range is usually between 70% and 80%. Many mediations which do not provide a result on the day often help to narrow issues and this frequently leads to a settlement following shortly afterwards.
ADR processes including mediation do not offer a panacea to all disputes and a large number of cases will be unsuitable for mediation but there is clearly now an obligation on lawyers to at least consider alternatives to litigation as a matter of routine and there may be severe consequences for failing to do so.
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