Briefing for Solicitors

The March of Mediation

Opportunity

Mediation, as other forms of ADR (alternative dispute resolution), offers a ‘fast track’ resolution of cases outside of the rigidity, cost and stress of formal litigation, it is successful in over 80% of cases. This may be advantageous for you firm:

·       Can dispose of difficult or problematic cases equitably.
·       Can build trust and repeat business from your client – acting in their interest.
·       Allows the parties to rehearse arguments in a confidential (without prejudice) ‘safe space’.
·       Allows more control over the outcome rather than leaving the decision in the hands of a Judge and the lottery of a final hearing.
·       As of Oct. 2024, it protects you against adverse costs or allows you to seek them.
·       If mediating pre-action (where no consent order is required) the settlement can contain provisions that are not possible in a court order (such as a
written apology).

In the right context, advantages for your client include:

· Significantly less cost, time and stress.
· More accessible - not bound by formal legal rigidity.

It’s Coming – Recent Case Law & CPR is making Mediation a Common Resort

You will know, in October 2024 the new CPR came into effect regarding mediation. This followed the landmark case in November 2023, of Churchill v Merthyr Tydfil Borough Council, in which the Court of Appeal held that courts can compel disputing parties to engage in mediation and other forms ADR. The clear message was that going to court should be a final resort.

The Court of Appeal subsequently ruled that courts can now make people mediate provided that the court order a) does not a undermine the parties’ right to a fair trial or b) is made in pursuit of a legitimate aim, or c) is proportionate to achieving that aim. The CPR has been amended so that the ‘overriding objective’ of the court to deal with the case justly and at a proportionate cost now includes ‘promoting or using alternative dispute resolution’. (Rule 1.1 (2) (f)). Active case management by the courts now includes ‘ordering or encouraging the parties to use and facilitating the use of alternative dispute resolution’. (Rule 1.4 (2) (a)).

The rules on procedural directions for fast track and multitrack cases (those above £10K in value) include the courts’ need to consider whether to ‘order or encourage the parties to engage in alternative dispute resolution’. (Rule 28.7 (1) (d) and Rule 28.14 (f)).

Your Behaviour Matters

Crucially, a Judge must now actively consider the conduct of the parties in relation to whether they have engaged in mediation for the purposes of deciding costs, specifically whether a party ‘failed to comply with an order for alternative dispute resolution (ADR) or unreasonably failed to engage in ADR’. (Rule 44.25 (e)).

It is far too early to see how this will play out what can be certain is that a party who refuses to engage in mediation or some form of ADR either before a claim is issued at court or during proceedings could severely expose themselves to the risk of paying all the other sites costs if it can be shown that pursuit of a case to a final court hearing was unnecessary.

The courts can also still order parties to undertake ADR/mediation as part of proceedings even if they have already undertaken it unsuccessfully at a pre court action stage (see Frances v Pearson [2024] EWHC 605 (KB)).

The new CPR rules also allow a party to request a court order or make an order for ADR regardless of the wishes of the other party, this is at the discretion of the individual Judge but given the growing importance of ADR it's very likely such orders will be made.

The courts will carry on exercising their powers in costs to penalise any party who unreasonably refused to engage in mediation/ADR there have been a number of court decisions recently even prior to these new rules coming into effect including Conway v Conway and another [2024] EW Misc. 19 (CC) and Northamber PLC v Genee World Ltd and others [2024].

Most Recent Case

High Court Judgement in Churchill in DKH Retail Ltd v City Football Group Ltd [2024] EWHC 3231 (Ch) where the claimant’s application for the court to order mediation was upheld and the defendant’s objections rejected. Here, Miles J ruled that:

·       Even when the parties’ positions are diametrically opposed mediation has been shown to be successful.
·       While there was some force in the defendants’ view that mediation was too late, there can be an advantage in positions being crystalised through
pleadings and witness statements.
·       Mediation can often overcome an entrenched reluctance of parties to negotiate.
·       The range of options available in mediation to resolve the dispute went beyond the binary answer a court could provide.
·       The mediation was likely to be ‘short and sharp’, since little documentation would be required, and mediation would not significantly disrupt the parties’
preparations for trial.

A few days after this judgment this case was mediated and settled.

Does Mediation Mean a Loss of Income for your Firm?

Mediation can dilute fees, but with that is also the dilution or risk, stress, distraction and non-strategic or repeating work. Economic advantages of a happy client and repeat business may mitigate this somewhat, also billable hours in preparing and attending a mediation may not differ greatly from those in preparing for a hearing. It may also be justifiable for a higher rate fee earlier to attend a mediation, rater then someone to sit behind Counsel.

Timing is Everything - When to Mediate

As early as possible if you want to put yourself in the strongest costs position. Of course, you need to know your case and the case against you and understand where mediation is not appropriate. If you’re not ready to mediate but are requested to do so, a) set out what evidence you need and why this prevents you from mediating, b) make it clear your Client will mediate when that information is available. Any refusal to mediate or silence may have dire consequences, even if your client succeeds in the case.

Compulsory Mediation?

Not quite yet (outside small claims) - but it’s inconceivable that any legal team would not advise their client tactically to engage at an appropriate stage in proceedings to offer mediation to the other side to try and resolve the dispute. Compulsory mediation for most if not all Civil cases is coming, and already mandatory for small claims cases. In the next 1 to 3 years it's likely all cases issued in fast, intermediary and multitrack, as well as cases regarding contested probate, employment and other tribunals will require parties to mediate as an early stage for example post issuing of directions questionnaires.

All political parties are on board and legislation is already being prepared.

Bottom line

This may turn out to be the biggest change in the way cases are conducted in the civil courts since the introduction of the CPR themselves back in 1998 - over the coming year there will be more and more cases where parties pay heavily in costs for not engaging in mediation.

Economic disadvantages may be outweighed in risk reduction and repeat business.

It may therefore be worth getting acquainted with Mediation now as it may form part of your working day in the future.

[Steve@FastResolveMediation.com]. February 2025