“MEDIATE DON’T LITIGATE”

My father-in-law, a Chartered Patent, Agent with an office in Holborn, told me that many years ago there was a man who walked up and down outside the Courts of Justice in the Strand carrying sandwich boards bearing the words “ARBITRATE DON’T LITIGATE.” We assumed this poor soul had had a bad experience of litigation (or he may have been an out of work arbitrator).

Many years on there is now, rightly or wrongly, a widespread perception in the construction industry that there is little to differentiate arbitration from litigation in that they are both long, drawn out processes, exceedingly time-consuming and exceedingly expensive.

Indeed some argue that litigation should now be preferred because the Judge and the Courtroom come free, paid for by the taxpayer.

If the sandwich board man was to return his boards might now read “MEDIATE DON’T LITIGATE.”

Mediation does offer a number of advantages over litigation and arbitration. For example:-

a It is quicker.
b The costs are a fraction of the costs of arbitration or litigation.
c It is confidential.
d There need not necessarily be a winner and a loser.
e The parties have more control over the outcome.
f The resolution of disputes can take account not just of the parties legal rights but also their wider interests, which may in many ways be similar.
g It is a non-binding process until such time as the parties agree a settlement.
h The parties can gain a better understanding of one another’s’ motivation, concerns and abilities to help one another in their difficulties rather than ‘fight’ one another.
i Ongoing good working relationships can be maintained or restored. This can be particularly valuable on long running contracts and serial contracts.

One disadvantage of mediation is that whereas at arbitration and litigation disputes are decided one way or another by the judgement/award, there is no guarantee that mediation will produce a result at all. However, statistics show that a high percentage of mediations are successful. My own experience as mediator in more than 40 cases is a 90% settlement rate. These disputes have ranged from small but nonetheless complex disputes, to multiparty, multinational, multimillion pounds disputes with both sides legally represented and with experts and Counsel in attendance.

In any event, in the minority of the cases where mediation fails the downside risks in terms of time and expense are relatively small. Those risks are worth taking.

So if mediation has so many advantages and is predominantly successful why is it not the standard, first method of resolving disputes after party negotiations fail.

I believe there are three main reasons:-

1. There are still many people who are unaware that mediation is available or how it works or how to avail themselves of it.
   
2. There is a misfounded perception that to suggest mediation is a sign of weakness. There are still some macho construction men who think that the only way to resolve a dispute is to fight hard and win.
3. Adjudication
   

The ignorance of mediation will disappear as the providers of mediation promote themselves more effectively but also because the courts are intent that mediation shall become the norm before litigation proceeds, not the exception. There is a growing list of case in which the Courts have made it clear that failure to be prepared to mediate a dispute will be penalised by adverse cost orders regardless of the eventual judgement.

As to the macho men and mediation signalling weakness, the abovementioned policy of the courts will also force review of that sort of thinking.

More heartingly there is a growing band of well informed lawyers who know that to best serve their clients they must be able to utilise a wide range of techniques including mediation.

It is not essential to use lawyers in mediation but my experience is that they can be very helpful in focussing their client’s thoughts and, of course, in drafting the settlement agreements. Many parties also like the comfort of having legal advice available before making final and binding settlement decisions and for that reason alone lawyers attendance can assist in reaching settlements.

So, if mediation is such a good idea, how do you go about it. This is undoubtedly easier now that there are highly reputable organisations, who train, accredit, monitor mediators and maintain panels of experienced mediators.

In the case of the Chartered Institute of Arbitrators, for example, panel mediators have to successfully complete an approved training course of not less than five days to become accredited mediators. They then subject themselves to two days of assessment in which they conduct mediations, with other candidates acting out role plays to show the assessors that they have the necessary personal qualities and are capable of using their knowledge and skills in practice.

They subsequently undertake pupillage and gain assistant mediator experience and they cannot apply to join the panel until they have conducted at least three mediations as lead mediators and obtained two references from parties or their lawyers.

Those accredited and experienced mediators may then apply for a panel interview and if successful only then become a member of the panel.

A list of panel mediators is made available by the Institute to anyone one looking for a reliable mediator. It only takes an email, fax or telephone call to access that list. If one party to a dispute wants to mediate they can offer mediation to the other party by suggesting that that party may select any mediator from the panel with experience in the relevant field. What could be simpler?

If the other party agrees the mediation proceeds. If they refuse they may end up having to explain to a Judge why they did so. Recent cases show that there are very few reasons a judge will accept as valid for refusing to mediate prior to litigation and significant cost penalties result from a refusal to mediate.

So you have a mediator. What happens next? The simple answer is that the mediator will explain the process fully and clearly to both parties, explaining what is required in advance of the mediation meeting and what will happen on the day of the meeting itself. Mediators are trained to assist the parties at every step of the process. Indeed the lead up to the mediation meeting can be a very important part of the process if the result is to be a success.

I gave three reasons why mediation is not more widespread in the construction industry, the third reason being the availability of adjudication. This fasttrack, relatively inexpensive process has the advantage of a definite result at the day of the 28 day period. Its disadvantages are that the adjudicators’ decisions are not final, the parties have less control and it is not helpful when ongoing relationships are valued. Adjudication and mediation can, however, be used effectively in tandem.

Adjudicators’ decisions are often accepted as the final result by both parties but when that is not the case the adjudicator’s decision can be a starting point for mediation.

A combination of adjudication and mediation could be particularly useful where there are core issues on which neither side are prepared to compromise but other issues on which they are. An adjudicator can be used to get an independent decision on the non-negotiable issues, perhaps legal issues, with a mediator used afterwards as the means of finally resolving the remainder of the dispute.

In the foregoing scenario the adjudicator and mediator would be different people so that the adjudication is not prejudiced by the adjudicator hearing confidential information and the mediator is not perceived as partisan having decided core issues in one party’s favour. There are serious dangers in one person trying to perform both roles but that is not to say that the adjudicators cannot encourage parties to settle during the course of an adjudication and use some mediation skills in that process, but with the definite exception of meeting the parties in private caucus.

Lawyers and other specialists in dispute resolution know they serve their clients best by being fully au fait with and utilising a variety of methods for resolving disputes in the most efficient possible manner. This will always include arbitration and litigation but hopefully as a last resort. Successful negotiations are always the best method. Construction now has the swift, decisive and relatively cheap adjudication. This is now the most common route and I certainly spend most of my time as an adjudicator or representing clients at adjudication. Mediation is a very effective but currently under utilised method which has unique advantages over all those other methods.

Go on give it a try. Just imagine, in as little as three weeks your dispute might be fully resolved. You could be free! You could think and talk about something else, get on with your business and get on with your life. John F. Kennedy said “Let us never negotiate out of fear but let us not be afraid to negotiate.” When negotiation fails never mediate out of fear but don’t be afraid to mediate.