Mediation As litigation specialists, we are often asked about mediation and how this could be applied to a client’s claim. Over the last few years, mediation has become a very significant feature and milestone in the pursuance or defence of any civil litigation claim and a key feature of the whole dispute resolution process. Below, Deian Benjamin an associate in our litigation department provides and in-depth analysis on what is involved in a mediation appointment, outlining a number of key issues associated with the mediation process and provides an explanation of what is involved and how a mediation appointment could suit your needs and requirements. What is Mediation? Mediation is one of many forms of alternative dispute resolution available to claimants and defendants to resolve their difference rather than pursuing matters to Court. Mediation is a process where the parties to a dispute meet with a neutral third party (or mediator) who will then be engaged by the parties to encourage discussion on the issues giving rise to a dispute that could eventually lead to a resolution. Mediation is completely voluntary and will only take place if all parties to a dispute agree to engaging in a mediation appointment. Such a meeting, when arranged, is conducted in private and is entirely confidential. All information used or disclosed during the mediation is also ‘Without Prejudice’ meaning that neither party can rely on that information without the permission of the other party or until after a matter has been determined by a Court. Any agreement reached between the disputing parties is binding in the form of a contractual agreement and any party who fails to comply with the agreed terms of settlement can be held to be in breach of contract as a result. What is the mediator’s role? The parties to a mediation will agree on the appointment of a mediator. The mediator is a neutral third party who will assist the parties to work towards negotiating a settlement of their dispute. The role is to facilitate and develop communications between the parties. A mediator cannot give advice to the parties in respect of the claim or respective defence and any discussions between the parties will be confidential and not shared with anyone unless permission is granted by the parties to discuss such information. Why should I use mediation? Statistically, the majority of mediations result in settlement either on the day of mediation or shortly after mediation has taken place. Mediation is a far more informal process than attending Court and offers the parties an opportunity to achieve a settlement that may not always be available for a Judge to consider. In addition, mediation often preserves goodwill and trading relationships with parties and can often narrow the main points in dispute before further settlement offers or indeed Court action may be required. Even if a mediation appointment is unsuccessful, such a step early in proceedings can often be used as a starting point for further discussions and possible settlement talks between parties. Advantages of Mediation Mediation can often be perceived as having far more advantages than disadvantages to disputing parties. Among the many advantages of referring a dispute to mediation are: • Mediation is far more cost effective than pursuing matters to Court; • The informal, non-adversarial nature of a mediation appointment is ideal for disputes involving emotive issues which are often better resolved by discussion, for example family matters. • Mediation allows flexible and pragmatic agreements to be reached which may not be available at Court, which may result in both parties feeling that they have 'won', rather than be the loser in an adversarial court battle; • Clients actively participate in mediation discussions, driving the matter towards an accepted result as well as controlling the outcome of discussions, something not always available at Court. • Mediation appointments can be quick and settlements can be reached on the day; • Mediations are low risk, even if a settlement is not reached on the day of the mediation. This does not end the possibility of further discussions, as valuable insight into each other’s positions is gained by both parties, often resulting in a better understanding of the issues or indeed narrowing the issues in dispute; • All negotiations are confidential, as details of what was discussed cannot be used by either side. • Any settlement reached will be confidential. A Typical Mediation Appointment Mediation appointments often start at say 9.00am or 10.00am and can last for most of the day. Parties will attend the mediation with their legal representative (and possibly Counsel) who will advise the client during the course of the day. Each party will have separate rooms so private discussions can take place between the client and their legal advisors. A typical mediation would start with the mediator meeting both parties separately in their separate rooms, explaining the mediators role, what can and cannot be done in a mediation and how the day is likely to proceed in the mediator’s view. At the meeting with both parties, the mediator will invite those present to briefly discuss the parties’ positions with each other on a joint basis. This is not a mandatory meeting and quite often, such a meeting does not take place if having such meeting is too emotive or difficult for the parties. During the day, the mediator will go between each room to get a better understanding of the issues and points in dispute, with a view of narrowing the issues in dispute. This, in turn, will lead to the mediator inviting the parties to negotiate and based on discussions with both parties, the mediator, more often than not, helps parties formulate an offer which is put to the opposite party. This process will continue until either a settlement that is acceptable to both parties is reached or if a party decides to withdraw from the process. If a settlement is reached, a binding agreement will be drawn up by the legal representatives and this will be signed by the parties before leaving the mediation. This agreement becomes biding and any party in breach of the agreed terms could be sued for breach of contract. Costs of Mediation The costs of mediation vary. However, any mediation appointment will consist of the following costs: 1. Venue Costs – Such a cost will depend on the chosen venue, location, duration of the mediation and number of parties to the claim. Mediators working from chambers or solicitors often provide venue hire for the mediation, but as an estimate, venue hire can often be between £300 - £600, which is shared between the parties. Using the facilities of the legal representatives often reduces the costs of venue hire. 2. Mediator – The mediator’s charges will often depend on experience, expertise, location etc. The fees are often shared equally between the parties and as a rough estimate, mediators often charge between £1,500 - £3,000 per party. Some mediators may carry out work for a fixed fee, subject to the value of the claim and/or counterclaim. 3. Legal Representatives Costs – The costs or arranging, preparing and indeed attending the mediation appointment will also need to be budgeted. Such representation may be agreed on a fixed fee basis or on an hourly rate basis with the legal representative. 4. Barrister’s fee – it is often advisable to have counsel attend the mediation, especially if counsel has been retained from an early stage of proceedings or if the issues in dispute are complex or technical. Counsel’s costs will also depend on experience, expertise and location and may be agreed on a fixed basis in advance of the mediation. Mediation is therefore not a cheap option, but in comparison with pursuing the claim or defending the claim at Court, the costs are substantially less. Clients should therefore be fully aware of the implications and costs of both pursuing the matter to Court against the likely savings made in attempting a resolution of the issues at mediation. Mediation is not compulsory and neither party nor the Court can enforce mediation. However, if a party ‘unreasonably’ refuses to engage in ADR or to mediate, such conduct is likely to be criticised by a Court and possible costs orders made against the party who acted unreasonably as a punitive measure for failing to engage in active dispute resolution without court intervention. Refusing to engage in mediation is a risky strategy for a client and should not be rejected out of hand, but the timing of the proposed mediation may not be suitable or further evidence is required before a client can make an informed decision on such a referral to mediation. With the emphasis in civil litigation these days on seeking to resolve disputes on a cost efficient basis, mediation should be a key feature of discussions with clients on seeking alternative ways to resolve their differences without pursuing matters to Court. At Sinclairslaw, we are experienced in handling complex mediations and all forms of alternative dispute resolution. Contact us today to discuss your needs and how we could assist you or your business in using mediation and alternative dispute resolution to your advantage.