04 Sep 2013

Mediation versus litigation

Is any time a good time for mediation? Theo Solley of London law firm Davenport Lyons considers mediation in the post Jackson climate.

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I am about to propose mediation as a way of resolving a substantial dispute in which I act for a claimant. Mediation is, and has been for some time, a key aspect of any litigation. It is a process which should be an integral part of any litigator’s vocabulary and one  that is constantly encouraged by the courts as one of the best ways to resolve disputes.

Mediation is an entirely voluntary and confidential form of dispute resolution. It provides an informal and speedy solution to what can often be an otherwise potentially cost prohibitive conflict and offers a safe environment for the parties to find their own solutions to the problem. Disputes need resolving rapidly by mediation or arbitration rather than via the courts. The court then becomes more of ‘a last resort’ making it a far more efficient process.

Mediation and the Jackson reforms

Mediators, unlike judges, do not make judgments or determine outcomes. They ask questions, listen to the answers and then explain them, in clear terms, to the other side. They help the parties understand the issues between them by clarifying the options for resolving the conflict between them, and then take ownership of the solutions. Therefore, a key aspect of this process is knowing your client’s case back to front – more about that later.

It also seems to be the case that mediation is one of the areas that will benefit from the Jackson reforms. It’s not that it didn’t before, but it certainly ought to be encouraged now more so than ever. With the introduction of cost management into civil procedure, parties will no doubt embrace the opportunity to settle a dispute once and for all with the ability to agree costs between themselves. This is an additional incentive in any dispute where a party can maintain some control over the outcome.

Mediation should be compulsory

There are strong grounds for suggesting that mediation should be made compulsory with costs penalties flowing from a refusal to accept a mediator’s recommendations. That is perhaps a step too far for some, but I believe its effect would be a positive one. I have found in mediation that the parties tend to get to the ‘nub of things’ far sooner than in any court proceedings.

Precedent H, the multi track costs budget imposed by Jackson’s costs reforms, requests the details of the costs of ADR/settlement discussions. Does this create a presumption that the costs of a failed or aborted mediation form part of the standard recoverable costs? Not necessarily, but the general advice seems to be to put the costs in there to see what you can get.

The costs factor

It is of course advisable that lawyers explain to their clients, in no uncertain terms, about the costs of mediation and whether those costs should be split with the other side or treated as ‘costs in the case’. In my experience, most parties tend to split the cost of mediation with the fee for the mediator being paid up front. This allows the parties to attend mediation on an equal footing with neither adopting a position of power. But this does not prevent them being treated, if necessary, as costs in the case. Indeed, many ADR institutions are increasingly providing for the recoverability of costs in their standard agreement term (see the CEDR model mediation agreement). It will of course be difficult for a costs judge to rule whether mediation costs should be recoverable given the without prejudice privileges attached to mediation.

The pitfalls

Mediation has its own pitfalls. Both solicitors and counsel can be professionally negligent to their client if they breach their duty to properly advise a client on the merits of their parties’ position in mediation (see Hickman v Blake Lapthorn [2006] EWHC 12 (QB)). Preparation and a proper understating of the strengths and weaknesses of your client’s case are vital ingredients to achieving the best possible outcome.

The clear advantage of mediation is that it can be held at any point in the litigation. In the mediation I am about to propose, I do hope we can achieve settlement. It is by far in the client’s best interest that litigation be avoided. That does not mean I have underestimated my client’s prospects should it go to trial. As a solicitor, I am committed to the core principal of mediation, which is getting the two parties in a room, discussing the dispute with a genuine view to settlement.

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