The vast majority of cases which come before the courts are settled before trial, and many disputes are resolved before proceedings are even issued. Resolution of a dispute by agreement can save legal costs, and settlement also allows the parties to focus again on their business.
The Civil Procedure Rules (CPR) provide the framework for litigation. They also oblige the courts, and place lawyers under a duty, to encourage the appropriate use of alternative dispute resolution (ADR) and make it easy to use. Parties are actively encouraged to consider resolving disputes and there are cost sanctions for those who do not or who withdraw from the process without good reason.
ADR is an integral part of dispute resolution. It is a generic term that describes a number of techniques that can be used to promote early and cost-effective settlement. Most of these rely on the imposition of a decision on the parties, through arbitration, mini-trial, expert determination or otherwise. Mediation is different - the outcome is consensual.
ADR clauses contained in contracts will be binding in most instances.
What is mediation?
Mediation is a voluntary and confidential process using the services of a mediator, who is a neutral third party who will attempt to facilitate negotiation of an agreed settlement. It can take place at the instigation of all or one of the parties or it can be initiated by a court order. Since agreement to participate in mediation is an essential part of the process it is not usually imposed by the courts, but they can influence by persuasion.
The mediator will not generally offer opinion on the issues or impose a decision if agreement cannot be reached. Ownership of the dispute remains with the parties, and it is up to them to settle or not as they choose. A party may leave the mediation if it wishes to.
Mediation can happen at any stage of a dispute and take anything from one hour to several days, although usually the process is completed after one day.
Mediation can be used for settling cross-border disputes and, following the implementation of the Mediation Directive across the EU by 21 May 2011, there is an embryonic framework for enforcement of settlements achieved in cross-border mediations.
Appointment of a mediator
There are a number of organisations which will provide the services from a panel of trained mediators, including the Centre for Effective Dispute Resolution and the ADR Group. Mediators can also be approached directly. They are often solicitors or barristers.
The provider will provide the names and profiles of two or three suitable mediators for the parties to choose from. Some parties and lawyers believe that a mediator should have a similar background to the dispute in question - for example, a surveyor should mediate in a surveyors' negligence dispute. Others believe that the professional background of the mediator is irrelevant and it is the individual qualities of the mediator that count. Your solicitor and the mediator provider can discuss this with you.
After the mediator has been appointed, the parties will enter into a mediation agreement with the mediator and each other which defines the rights, responsibilities and obligations of each to the other – including the procedure to be followed, confidentiality and fees.
Preparation for the mediation
Typically the parties will, in conjunction with their legal representatives, prepare a short summary of their case which will be exchanged with the other party and copied to the mediator in advance of the mediation.
Copies of important documents can also be provided to the mediator if the parties so wish. It may also be necessary to prepare a short chronology, guide to who is who in the dispute and a technical glossary if the dispute is complex. This will allow the mediator to read into the case. These documents should, however, be kept to a minimum. They can be provided to the mediator confidentially if a party so wishes.
At the mediation
On the day appointed for the mediation the parties and their lawyers will attend the agreed venue and will each have their own private room.
At an initial 'open' session involving all parties, the mediator will re-emphasise his impartiality and the voluntary and confidential nature of the mediation and to lay down any ground rules. Each party will be required to confirm that they have authority to settle the case, and make a short oral presentation of its case. The purpose of the open session is to bring the parties face to face before breaking off into the private sessions that the mediator will have with each party. The mediator may omit this open session if he believes it will serve no useful purpose.
After the open session, the parties will break off into private sessions. The mediator will meet with each party separately to discuss the background to the dispute and then begin a process of 'shuttle diplomacy' between the parties. The mediator will seek to:
- understand each party's position;
- discuss with each party what it wants out of any settlement;
- explore with each party what it actually needs from a settlement - for example, the continuation of a commercial relationship between the parties;
- seek out any hidden agendas and investigate the consequences for the party of not settling;
- gradually move the parties towards constructive negotiation and a settlement acceptable to all parties.
After the mediation
If settlement terms are agreed in principle then the parties will be encouraged to sign a formal settlement agreement at the end of the mediation. The mediator will be reluctant to leave this until another day.
If the case has not settled, the parties are of course at liberty to continue negotiations and more often than not a settlement will be reached shortly after the mediation.
Which cases are appropriate for mediation?
The vast majority of cases are appropriate for mediation – even fraud cases. Mediation should always be considered, but especially when:
- the cost of the litigation will be disproportionate to the claim;
- the parties are deadlocked in settlement negotiations;
- the complexities of law, fact or the relationship between the parties are likely to draw out proceedings;
- the parties wish to settle their dispute in private.
Mediation is probably not suitable when:
- there is an important point of law in dispute which should be tested by the courts, or a commercial or legal precedent needs to be set;
- summary judgement is available quickly and efficiently;
- the parties require emergency injunctive or protected relief - however, in these cases the underlying issues could be mediated later;
- settlement discussions are already underway and making progress;
- the attitude of one of the parties is such that a mediation has no realistic prospect of success.
What to do if participating in a mediation:
- ensure that you have full authority to settle on the day;
- know your case, its strengths and its weaknesses, thoroughly;
- know what you want and what you need – and be realistic;
- allow enough time to be patient – mediation is a process that should not be rushed.
Why does mediation work?
Mediation works because the mediator is able to change the dynamics of the traditional negotiating process away from positional bargaining with its hostile associations. It also strives to achieve a 'win/win' outcome, which is usually not possible in the traditional negotiating process and is certainly not possible at trial.
Parties to a mediation can also derive satisfaction from the opportunity to put their points across in a face to face encounter.
How much does a mediator cost?
The cost of a mediator for a one-day mediation with a day's preparation could be approximately £2,500-£3,000 in a reasonably straightforward case. Both parties will be jointly responsible for the mediator's fees unless stated otherwise. However, as it is not clear-cut that the legal costs of preparing for and attending mediation and the mediation fees are recoverable in the event that the mediation does not lead to a settlement, it is important to address this issue in advance. It is advisable for the parties to specifically record in the mediation agreement that the costs are to be recoverable as litigation costs.
Court-run mediation schemes are substantially cheaper, but there will be a limited amount of time - for example, three hours - set aside for the mediation. Some organisations also run fixed-fee mediations where the fee remains fixed irrespective of the time taken by the mediation.