Mediation – The Benefits And Pitfalls

The vast majority of civil claims will end in settlement and only a small percentage make it to the final hearing. Whilst the idea of compromise seems unlikely in the most bitter and fractious of disputes, people’s perceptions can change when the reality of going to trial sets in.

Nobody can ever be totally sure that they or their witnesses will fare well in the witness box, and almost every case has the odd weakness that the most skilled opposition advocate can exploit. Despite various attempts to control legal costs and make them more proportionate, very significant sums are spent by both parties in a dispute, and by the time of trial, with barristers’ fees thrown into the mix, it can become eye-watering.

Mediation

For these reasons, settlement should always be considered. The most difficult disputes are quite often settled at mediation, which is a structured form of settlement that takes place in a neutral location on a single day. Everything that is said at mediation is “without prejudice”, meaning it cannot be referred to in the proceedings until after judgment has been given. It is voluntary and an independent mediator will be instructed who will go between the parties (who are sat in separate rooms) and try to persuade them to make proposals back and forth. Mediation does not always work, but in the majority of cases, it will. Any party can make an offer of settlement at any time but this is not always an open dialogue. Tactical offers can be made which are designed in the main to give cost protection to the offeror, and that party is unlikely to accept a less attractive counter-offer.

Mediation however offers both parties the chance to negotiate fully, air their views, iron out factual disputes in their cases, and bring up any particular points that they want to. The mediator will be the point of contact, and some of the parties’ stronger opinions and comments will be filtered appropriately through that individual. Mediators are not just messengers, however, they are legally trained and will press both parties not only on the legal points that they may struggle with at trial, but on factual and evidential matters they are being stubborn about.

Mediators will use a range of tactics to try and persuade warring parties to compromise, and although many mediations involve both sides sitting in separate rooms all day long, it is not unusual for them to pull the parties’ solicitors in together to enter dialogue, or to get the parties themselves to speak if appropriate.

Due to the effectiveness of mediation in resolving disputes, the Court expects the parties to have at least considered participating. If they do not, the judge at trial will expect them to have a good reason. Disagreeing over where a mediation is held, who the mediator is, or who should prepare the bundle are not good reasons and effectively, the Court will expect the parties to rise above personal pride. However, there are some cases where one party just will not agree or will try and find excuses not to take part. Unless the case involves an issue that only the Court can really rule on, there is no excuse for refusing mediation unreasonably.

Declining to mediate without good cause usually leads to the offending party failing to recover costs if they win, and/or having to pay the other side’s costs from the point of refusal onwards. Refusal does not always have to be direct, however, silence in the face of mediation requests can also amount to “unreasonable refusal” as was the case in PGF II SA v OMFS Company 1. If mediation is ever proposed, that proposal should be dealt with because the consequences of ignoring such a suggestion can be severe.

Whilst mediating is often successful, it is not guaranteed to be so and sometimes, the parties’ positions are irreconcilable. Occasionally, as an unintended consequence of the costs sanctions, it can be used as a box ticking exercise by a party that is not particularly interested in negotiating. The expense of mediation also should not be underestimated. Although the mediator’s fee is shared and usually quite reasonable, preparing for mediation involves a fair amount of work from your solicitors and indeed, some parties are represented at mediation by a barrister.

Mediating has its risks and its pitfalls, but it is still successful in the vast majority of cases and even when it does not lead to a settlement, it can still follow shortly afterwards if the dialogue between the parties continues.