Future Trends – Alternative Dispute Resolution

This article first featured in New Law Journal

In the eleven years since the Woolf Reforms were introduced, Litigation Departments across the City have been fast disappearing. A brief perusal of the websites of the top 20 law firms shows that the majority of those law firms now promote their litigation practices as “Dispute Resolution”. The motivation behind such a re-branding is understandable when acting in commercial disputes: clients normally prefer to settle cases as soon as possible rather than become mired in time-consuming and expensive court proceedings.

Lord Justice Jackson begins his examination of the function of ADR in controlling costs in his Review of Civil Litigation Costs by saying that: “alternative dispute resolution (“ADR”) (particularly mediation) has a vital role to play in reducing the costs of civil disputes, by fomenting the early settlement of cases. ADR is, however, under-used. Its potential benefits are not as widely known as they should be”.

Yet, although Lord Justice Jackson acknowledges the importance of ADR and considers it under-used, he concludes the section on ADR in his final report by saying that he does: “not recommend any rule changes in order to promote ADR…” His recommendations are that:

• there should be a serious campaign (a) to ensure that all litigation lawyers and judges are properly informed about the benefits which ADR can bring and (b) to alert the public and small businesses to the benefits of ADR;
• an authoritative handbook should be prepared, explaining clearly and concisely what ADR is and giving details of all reputable providers of mediation. This should be the standard handbook for use at all JSB seminars and CPD training sessions concerning mediation.

However, for most commercial litigators, his impression that ADR (and particularly mediation) is under-used does not ring true. Having canvassed the opinion of many practitioners, it appears that virtually every dispute issued in the High Court which reaches the stage of disclosure and witness statements involves the parties actively considering whether mediation is likely to assist in reaching a settlement. Parties who unreasonably refuse to mediate may be penalised in costs . In the majority of cases a mediation is held.

To that end, it is debatable as to what benefits a serious campaign to ensure that all lawyers and judges are aware of ADR would bring. Highlighting the benefits of ADR to the public and to small businesses may assist where they act as litigants in person, but in most commercial cases it will have no impact because the parties are legally represented and will be guided by their lawyers with regard to mediation. As far as the judiciary is concerned, the fact that the allocation questionnaire expressly asks whether the parties require a stay for settlement, and such stays (if requested) are very rarely refused, indicates that the judiciary are alive to the potential advantages of ADR.

With regard to an authoritative handbook, some practitioners could find it useful. However, selecting a suitable mediator is usually best done by word of mouth recommendation. Each mediator will have his or her own particular strengths, both in terms of the type of dispute and the type of client he or she is best equipped to deal with. Further, the fluid nature of mediation means that setting out a prescriptive procedure could prove counter-productive.

It is also likely that practitioners will welcome Lord Justice Jackson’s sensible acknowledgement that: “mediation is not…a universal panacea“. He recognised in his preliminary report that: “in inappropriate cases…mediation causes increased costs and becomes just another hurdle to be crossed before the parties can get to trial”. In some cases one party will use mediation simply as a tactic, with no real intent to settle the matter, but to place pressure on the other side or find out further information to bolster its own case.

The focus of the ADR sections of Lord Justice Jackson’s Preliminary and Final Reports is on mediation as the primary form of ADR. The Preliminary Report, however, refers to other forms of ADR, such as expert determination, adjudication and Med-Arb. In practice, the other forms of ADR are not widely used in commercial disputes.

As to whether Lord Justice Jackson’s ADR recommendations will be put into practice, it is currently difficult to say. The lack of primary legislation or rule changes required makes their adoption much easier than certain other of his proposals. However, the new Government will not view his report as a political priority, particularly for those recommendations which require state funding.

What then is the future for ADR? Lord Justice Jackson suggests that what is needed is a culture change rather than a rule change. The lack of any proposed alteration to the CPR will be welcomed by many practitioners. However, for the majority of commercial litigators the change of culture has already happened. It is over ten years since the Woolf Reforms made mediation a central part of business disputes. Whilst there are a few practitioners who remain resistant to mediation, nearly all recognise that it has an important role to play in settling a substantial number of cases. Indeed, those practitioners with less than ten years’ experience have grown up with ADR being a standard part of the litigation process.

Although the majority of mediations in the early days of the CPR settled on the day of the mediation itself, in recent years there has been an increasing tendency for mediations not to settle on the day, but to act as a catalyst for serious negotiations between the parties which in many instances result in settlement in the few weeks or months after the mediation. Overall, mediation has proved successful in a sufficiently high number of cases that, whether or not Lord Justice Jackson’s ADR recommendations are implemented, it is here to stay.

By Gavin Foggo and Molly Ahmed of Fox Williams LLP for New Law Journal.

Gavin is Honorary Secretary of the London Solicitors Litigation Association and a partner at Fox Williams LLP. Molly is an associate at Fox Williams LLP. Both specialise in commercial litigation and dispute resolution.