HELP! I’VE RECEIVED A REQUEST TO MEDIATE
From our own Emma Gooding, accredited mediator and solicitor
It is becoming increasingly common for the parties to a civil dispute to suggest mediation to those on the other side – sometimes even before litigation proceedings are issued. For parties who have not been involved in mediation before, it can be difficult to know how to respond, and many people are understandably anxious about agreeing to mediate when they don’t know what this involves. There follows a brief guide on what mediation involves, and the consequences of agreeing (and, importantly, not agreeing) to mediate.
What does mediation involve?
Mediation is essentially a structured negotiation. In civil disputes, mediation normally takes place over a single day (or, in simple disputes, half a day). The mediation is facilitated by an accredited mediator, whom you and the other party will select. The mediator’s role is to help you and the other party share information and to reach an agreement on how resolve your dispute. This is usually done in a combination of joint meetings (where all parties will be present with the mediator) and private meetings (where you will have a chance to share information privately and confidentially with the mediator without the other party being present).
If an agreement is reached between you and the other side, this will be written down in a settlement agreement and signed by both parties. It then becomes legally binding.
Can I be forced to take part in mediation?
No. As we explain in our FAQs, mediation is a voluntary process, and you cannot be forced to mediate. Even during the mediation itself, you have the freedom to walk away at any time.
That said, judges are increasingly encouraging the parties to litigation to give mediation a try. This is especially true in cases where the costs of litigation are likely to outstrip the amounts of money the parties are actually fighting over. It’s important to understand that if you refuse to mediate when it has been suggested by the court or the other side, and insist on litigating your dispute instead, you run the risk of the court imposing costs penalties on you.
Can I be forced to settle?
Absolutely not. It’s important to understand that the mediator is not a judge, and has no power to impose a decision or a settlement on you. The settlement terms will be suggested, and agreed upon, by you and the other party. You are free to walk away at any time until a written settlement agreement is signed by both parties.
Does mediation really work?
Mediation is extremely successful. Around 75% of disputes settle on the mediation day itself, with another 10% settling shortly afterwards as a direct result of the process. Studies show that parties who have settled their dispute through mediation are generally also much more satisfied with the process than those who end up going to court, viewing mediation as fairer and much more cost effective.
The magic of mediation lies in the involvement of the mediator, as an impartial third party who is skilled in the art of getting the parties to communicate better, and in the confidential ‘without prejudice’ nature of the process. This means that the parties have complete freedom to exchange information and explore possible ideas for settlement without worrying that the other side will use this information at trial, if the case ultimately does not settle.
Mediation is also far more effective than litigation where the parties to a dispute may want to do business together in the future. In litigation, there is a clear ‘winner’ and ‘loser’ which, combined with the combative nature and cost of litigation, is not conducive to an ongoing business relationship. Mediation, by contrast, allows the parties to be creative and include as part of their settlement the terms on which they will do business together in future (and to discuss how they can communicate better to avoid problems arising again down the line).
I’ve got a really strong case. Should I still consider mediation?
Yes. Your legal advisers will tell you that even the strongest case is not without risk. It’s also important to remember that even if you litigate your dispute and win at trial, you will not be able to claim all of your legal costs back from the other side. Typically the winning side in litigation will only be awarded 70% of its legal costs. In small claims cases (where £10,000 or less is being claimed) you cannot recover any legal costs, other than in very limited circumstances.
Let’s take a simple (but typical) example: Company A is suing its supplier, Company B, for supplying inferior quality goods, claiming losses of £70,000. There is a dispute about the terms of the contract between them, which wasn’t fully set out in writing; Company B also denies that the goods it supplied were of inferior quality, which Company A will have to prove. Company B says that any defects were caused by Company A not storing the goods correctly, which Company A in turn denies. With many of the underlying facts in dispute, the solicitors advising the parties estimate that a trial will take 5 days and cost each party £150,000 in legal costs. Even if Company A won at trial, therefore, it would only recover £105,000 in costs, and would have to find £45,000 out of its own pocket, even though it had won the case. This would reduce the damages it recovered from Company B to only £25,000 (probably significantly less than they would achieve at mediation).
These ‘irrecoverable’ costs often come as a very unwelcome surprise to those embarking on litigation. Once you consider the delay, inconvenience and loss of management time involved in dealing with any dispute (which also cannot be claimed from the losing party) and the fact that no claim (however strong) is without risk, you can see why mediation should be considered, even by parties with a strong case.
It’s also very important to bear in mind that, even if you win the case, the court can deprive you of some of your costs if the other side asked you to mediate and you unreasonably refused. We will deal in a separate blog post with the (limited) circumstances when it may be reasonable to refuse to mediate. However, it’s important to note that having a strong case is not enough by itself to justify a refusal.
OK, I’m happy to give mediation a try: what are the next steps?
Once the parties have agreed in principle to mediate, you will need to agree on a mediator. The mediator must be completely independent of both parties, and you should check that they are accredited and experienced in your type of dispute. Most mediators will have a CV setting out their career and mediation experience to date, and will be happy to have a no-obligation conversation with you before you make a final decision.
For a no obligation discussion regarding the suitability of your dispute for mediation and as to the background and experience of our panel of accredited mediators, contact Collaborative Solutions by telephone on 0207 129 1068 or by email at email@example.com