Mediation has numerous, obvious benefits: saving time, capping risk, and exploring wider settlement options
than are available through the courts. All discussions are confidential and without prejudice to further proceedings, and mediation often represents the best chance of preserving a commercial relationship when disputes arise. Given that parties now run costs risks in the English court if found to have unreasonably refused an offer of mediation, the more relevant questions are not whether to engage with mediation, but how and when.
A common question, given that the overwhelming majority of disputes settle without the intervention of the third party neutral, is whether and in what circumstances mediation is preferable to inter partes negotiation. One of the best reasons to opt for mediation where negotiations are stalling is efficiency. Mediation brings structure to the negotiation, identifying and tackling the major points in issue. It also brings a different emphasis, shifting parties away from rights-based remedies (as defined by law) and onto commercial interests. This shift in mindset is
often enough to reinvigorate seemingly intractable negotiations.
Unlike court, or inter partes negotiations, mediation offers the parties the chance to discuss the past and vent frustrations. In some instances, pent up emotions are the obstacle to settlement, even if it’s “just business”. From such a position, it is possible for the mediator to encourage information exchanges and initiate a forward-looking approach to finding a solution.
The role of the mediator
In summarising positions and interests, the mediator can be useful to both counsel and management in
terms of re-evaluating not only their initial views of the merits of the case but also, and importantly, their
commercial goals. In this way, mediators are often adept at breaking deadlock where other processes have
failed. Such an assessment or suggested solution is often more acceptable when coming from a neutral
third party than from a counterparty or one’s own counsel. This is human nature.
A mediation hearing initiates its own momentum: having committed the time and expense of traveling to attend the hearing, expectations of settlement are raised, and once the commercial parties are given a platform to meet and discuss the differences in a defused, neutral and privileged environment, the chances of a settlement are all the greater.
While mediation enjoys the backing of commercial clients, legislators, the judiciary, and favourable civil procedure rules in many jurisdictions, the process has its limitations and critics. Some commentators remain culturally opposed to the idea of mediation, viewing the court – with its legal precedents and procedural safeguards – as the proper forum for the resolution of disputes. Others are reluctant to engage with mediation because of cost and the lack of certainty as to the outcome.
Arguments against mediation
Let’s look at the ideological arguments against the mediation process. “Mediation is not about just settlement, it is just about settlement,” said UCL’s Professor Dame Hazel Genn, arguably the UK’s most outspoken critic of mediation. The context of her remarks was a denunciation of a longstanding government policy to continue cutting public funding of legal aid and cutting investment in court infrastructure and resources. In Genn’s view, the expectation was that private sector operators offering ADR would spring up to fill the gap, robbing the general public of the safeguards of due process and access to justice.
The comments, however, make a number of dubious assumptions. First, they presuppose that justice is only
that which is handed down by someone in a wig and robe; they also fail to take into account the emotional
cost of litigation, and the irrecoverable damage the losing side suffers – often through no fault of their own. Moreover, it is not possible to label mediation intrinsically “unjust” with any authority unless the observer could make a side-by-side comparison of the results at trial. Even then, the results – when considering award of damages – are silent as to the value a claimant might attach to matters such as immediate payment.
There is much to be said concerning ideological arguments, but in the interest of brevity, one should note that mediation works best in tandem with strong, well-funded, properly functioning civil justice systems. Mediation is not and cannot be a replacement for a functioning justice system.
Moving on to more practical considerations, mediation is non-binding, and though statistically likely, a result is
not guaranteed. To view a mediation that doesn’t settle as a “failed mediation” is inaccurate as it doesn’t tell the
whole story. First, those mediations that do not settle on the day frequently do so in the weeks and months
that follow. One litigator estimated that of the 20 to 30 per cent that do not result in settlement on the day, 80
per cent settle in the immediate aftermath. Secondly, an unsettled mediation often has a value: in narrowing
issues, in gaining a better understanding of one’s own arguments and those of the counterparty. Few
participants consider a mediation a waste of time and money in the event that settlement is not achieved.
Other criticisms of mediation concern making compromises. Bullish litigants may believe that they have a case they can’t lose; no respectable lawyer, however, would ever advise in those terms. All experienced lawyers have lost cases they believed that they would win and vice versa. The law is not a science, and litigation risk is often underappreciated, downplayed or miscalculated.
To read more about mediation as a cost-effective alternative to litigation, read our eBook on the subject, Litigation in Review.