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3 themes shaping the UK mediation market

by Matthew Rushton on 23 Feb 2017

mediation_market

Taken from a presentation at the inauguration of Oxford University's ADR Society

I've picked three broad themes to discuss this evening as we think about ADR in the UK market. In doing so, I hope to reflect on the purpose of ADR, its importance to society in general and the importance of continued support for ADR from those of you with less grey hair than me.

My first theme is the proliferation and growth in ADR; my second is generational change and its effect on the practice of mediation; finally I'm going to offer some thoughts on competition: that is, competition between individuals and, as importantly, competition between ADR processes.

1. Proliferation 

Let me start, then, with proliferation. The story of the last decade in mediation circles, I believe, has been one of growth. Not simply in absolute numbers, but in the extraordinary spread and diversity of contexts in which mediation is currently used.

Mediation has crept – not quite unnoticed – into so many areas of human interaction. As a community we tend to divide ourselves into civil/ commercial mediators and family mediators. But arguably more interesting than that is community mediation; gang mediation; prison mediation; mediation between the police and the public. And there are peer mediation schemes – in schools, colleges and community centres. There is mediation between individuals and employers; between whole communities and planning authorities. Mediation is permeating the minds of people of all ages, at all levels of society, in an ever increasing array of contexts.   

While some (me included) lament the slowing growth in absolute numbers, we should all be celebrating the ongoing evolution of the process, and its seemingly unstoppable diversification.

Looking more broadly still, mediation's core competences: an appreciation of psychology, of cognitive biases, an understanding of the sources of conflict; an exploration of interests, consensus building, structuring negotiations, and ultimately finding and driving consensual resolution – are evolving in related fields of executive and business coaching, collaborative law and restorative justice.

To my mind, these developments all underscore a much bigger and more important trend in society: there is compelling evidence (Pinker, 2012) to show that as a species, we are becoming more skilled in working out our differences, and, as a result, less violent with each passing year. Alternative dispute resolution might be little more than fine-tuning, but it's a marker of human progress, and what could be more important than that?

2. Generational change 

Let's move on to think a little about commercial mediation, and my second theme of generational change.

The shape of the UK mediation market reflects that of other parts of the legal profession in which very few enjoy a very substantial market share. In the 1930s, FE Smith (later Lord Birkenhead) described the English Bar as a profession of 2,000 with enough work for 1000, done by 500. In commercial mediation circles, these ratios seem unattainably aspirational. Stephen Walker, a mediator and commentator, has suggested that commercial mediation is a "cottage industry of about 6,000 with work for 500 carried out by 100". That seems spot on to me.

Mediation remains a "nascent" profession – if indeed it can be considered a profession. The first providers into the UK market opened their doors in 1989, but it wasn’t until The Woolf Reforms to civil procedure a decade later that mediation became entrenched in the mainstream of dispute resolution.

Thus those with the biggest practices now are – with notable exceptions – those first onto the bandwagon in the early 1990s.

But that is changing. With a handful of deaths and retirements, some of the pioneers are slowly falling away. And that, in my view, is having two effects:

  1. Work is less concentrated in the hands of the very few than previously.
  2. More interestingly, those who are replacing the pioneers have a different character, outlook and approach.

The second generation are not, on the whole, evangelicals. They have not had to travel the country banging on doors, explaining the process and constantly educating potential users. Most of them are commercial litigators whose experience of mediation comes not from text books and the class room, but from acting as counsel in dozens and dozens of mediations.

Thus, they arrive as mediators with an astute understanding of what they think the process is about: what they've seen work, what they've seen fail. They understand first-hand what clients like and dislike about the process, and tailor their own offering accordingly.

And this causes more rancour, disagreement and falling out than you'd ever believe possible among a profession of peace-makers.

The gulf between mediation theory and mediation practice has always s been a sore point. Collaboration, problem solving, brainstorming options for mutual gain, expanding the pie – the foundation blocks of mediation are seldom in evidence in mediations I've observed.

Mediators are taught that it is a future-focused process: the parties aren't there to rehearse legal arguments. Mediators are taught not to offer a view on the merits; they are taught not to suggest settlement figures: that's the job of the parties. It is, after all, the parties' day – they must own the dispute, and own the solution.

But, the reality is often different. People, and companies come to mediation for all kinds of different reasons – some are well prepared, some are not. Some are experienced users of mediation, some are not. Some genuinely want to settle – some merely want to advance their understanding of the other side's case for ongoing litigation.

Very often, what they want from a mediator, is an independent third party who - to paraphrase Geoff Sharp- gently pulls at the loose threads in their opponent's case (and indeed, sometimes their own) – knowing when clients might be badly advised, or simply refusing to listen to good advice. A mediator can reframe those arguments – and in the same way that my son would literally rather drown than let me teach him to swim – advice is almost always better, more politely, received from a "stranger".

If what I’m describing is sounding somewhat closer to arbitration – where the neutral third party is responsible for the outcome, then I would suggest that could be what the market is asking for.

And if that's the case, it's only right that mediation accommodates that. So in some ways this change wrought by a new generation of commercial mediators ties into my first theme – that of leveraging the flexibility of the process into new and different areas in new and different guises. Many will no doubt regret that, but more optimistically, I choose to view that as progress.

 3. Competition 

Let's turn, then, to my final theme: competition

Competition is a growing trend – not just between the huge numbers of qualified mediators – but also between processes: early neutral evaluation, conciliation, adjudication. Traditionally, international arbitration has been considered the only available option for resolving disputes of a cross-border nature. It's not cheaper, and it's not quicker than litigation, but it's final, confidential and the resulting awards are enforceable (at least in theory) in over 150 states worldwide under the New York Convention.

But there's been an enormous backlash against international arbitration: partly political – on one side are those who think "justice" is always the responsibility of the state, and not a matter for private resolution; and partly commercial: the costs and delays in international arbitration are frequently described as intolerable. And courts are responding.

There are English language common law courts in Dubai as part of the DIFC, and Abu Dhabi. In 2016, Singapore followed suit opening an international court – incorporating English law and precedent; later this year an international court will open in the Netherlands. And we have to recognise certain advantages:

  1. Interim remedies - arbitration can't match court, particularly ex parte.
  2. Selection of the arbitral tribunal is now getting very tactical; some question whether a judge isn't as least as good.
  3. Procedural rules – greater certainty in courts.
  4. Number of parties - generally limited to parties to the contract in arbitration.
  5. Costs of the process – arbitration is often more expensive.
  6. Need for appeal process. Number of institutions– including JAMS – offer optional appeals, suggesting a growing appetite for appellate proceedings.
  7. Enforceability of awards and judgments. While the New York Convention is, on paper, more straightforward, others have argued that the Hague Convention is not needed as foreign courts will enforce judgments from other jurisdictions as a matter of course.

While few of court's perceived advantages are insurmountable challenges to arbitration, it illustrates growing competition and greater choice for disputants, that is: greater choice as to where and how they can resolve their disputes. Whether this is good news for the UK is a moot point.

At present, three out of five disputes in the commercial court involve no UK parties. Four out of five have at least one foreign party. That, historically, has been the norm. Back in 2012, before the EU implemented sanctions, 60 per cent of commercial court litigants came from Russia and the CIS. Those countries do not have to use our courts, and in turn, use our mediators.

It would, in my view, be somewhat cavalier not to be concerned about mediation's future in light of the Brexit Referendum. Whatever your views on the merits of departing the EU, prioritising immigration above myriad other concerns, seems incompatible with the notion of "Global Britain". London is already the global leader in international dispute resolution and therefore has little to gain and much to lose in the current climate of uncertainty.

If predictions of remoaning doom-mongers come to pass, will that be good news for mediation? The argument is logical enough: economic uncertainty, regulatory uncertainty, legal uncertainty, rapid inflation, disrupted supply chains and broken trading relationships make splendid fuel for a surge in litigation. But based on past experience of economic crises, such conditions are inimical to mediation. Compromise is always more attractive when further deals are in the pipeline. JAMS has a sufficient caseload from which to draw meaningful conclusions, and our growth has roughly tracked the health of the economy in general, and law firms in particular. Thus, the evidence, I believe, is that mediation is a cyclical phenomenon. I conclude therefore that a successful Brexit will be a prominent factor in shaping the continued good health of commercial mediation in the UK.

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Matthew Rushton

Written by Matthew Rushton