A case of arrested development?

While the use of ADR has jumped since the introduction of the Woolf reforms, it has not reached the levels predicted at the time. Solicitors still need to get over their suspicions and fear of mediation for it to really be a success, writes Jan Harvey

The introduction of Lord Woolf’s civil procedure rules (CPR) in 1999 was hailed by some as the death knell of litigation. Mediation, a quicker, cheaper and less confrontational method of resolving commercial disputes, was seen as its natural successor.
At first, the predictions seemed well-founded. In the first year after the introduction of the Woolf reforms, the Commercial Court recorded a 37% drop in the number of cases filed. Simultaneously, mediators reported a leap in their workload. The number of mediations carried out in the UK since the Woolf reforms has tripled.
Andrew Paton, litigation partner at national firm Pinsent Curtis Biddle, was one of the first lawyers in the UK to train as a mediator when he qualified in 1990. Over the next five years, he handled seven mediation disputes, rising to 18 in the 12 months before the Woolf reforms. In the year immediately following the reforms, the number rose to 50, although by this time the total number of mediators had exploded.
But while it is indisputable that the use of ADR has increased substantially since the Woolf reforms, recent reports suggest that it has reached a plateau. Paton says the expansion of mediation
has undergone a major slowdown. “We noticed there was exponential growth for about a year, and now that growth has flattened,” he says. His experience is reflected in figures released by the Centre for Effective Dispute Resolution (Cedr). The Cedr’s workload has increased by only 1% in the last year, from 462 mediations in the year 1999-2000 to 467 in the year 2000-01, against a rise of 140% for the year 1998-99, immediately following the reforms.
While much of this apparent fall-off in growth is attributable to the increase in competition for mediation cases, other forces are also at work. Cedr spokesman Dan Wood claims that, following the Woolf reforms, all forms of dispute resolution have fallen in popularity, as people seek earlier and less formal means of dispute resolution.
Wood also believes ADR suffers from a low public profile. “Awareness of mediation is growing, but it still needs to grow more,”
he says. “A number of small and medium-sized businesses we have worked with have
said they were never given legal advice on mediation.” Cyril Kinsky of Brick Court Chambers, a member of commercial mediation provider InterMediation’s panel, believes clients unused to litigation are not always getting the encouragement they need from their solicitors to pursue mediation. “[Solicitors] are not positively opposed to mediation, but they are reluctant to change,” he says. Kinsky also feels litigants need to fundamentally rethink their approach to dispute resolution if mediation is to reach its full potential. “The mindshift that needs to happen is for people to decide that it does not matter who is liable, what matters is reaching a mutually satisfactory solution,” he says. The arrested development of ADR may also be connected to the suspicion in which many lawyers still hold mediation. Peter Ashdown-Barr, chief executive of InterMediation, says that ADR requires solicitors and barristers to undergo a rethink of the way they operate.
“The vast majority of dispute resolution processes, alternative and mainstream, involve someone giving their view on whether someone is right or wrong,” he says. “Mediation specifically steers people in the opposite direction – to find a middle way. This is something lawyers are not necessarily familiar with. They are trained and instructed to win,” Ashdown-Barr says.
But despite the levelling off of demand for mediation, it seems doubtful that ADR will face a fall in popularity. The legal profession seems to be getting over its initial reluctance to use other methods of dispute resolution.
“Lawyers’ fears of doing themselves out of work have proved unfounded and even short-sighted,” claims Cedr’s Wood. “Ultimately they have to satisfy their clients, and if they are not offering mediation they are not doing that.”
So will mediation ever capitalise on its initial potential? According to Cedr’s research, yes. “The number of businesses telling us they favour mediation over all other forms of dispute resolution has doubled over the last year,” Wood says.
It seems that, following the plateau of the last 12 months, mediation may be about to get its second wind. In recent months, mediation has won support from a number of official bodies. In March, the Lord Chancellor, Lord Irvine pledged to promote ADR ahead of litigation, and committed government departments to settle legal cases by ADR wherever possible. Only last week the Financial Services Authority (FSA) followed suit, appointing Cedr to offer mediation for certain of its civil cases.
And despite the reputation of the insurance industry for shying away from mediation, Lloyd’s of London has announced it is to set up a series of ADR clinics in conjunction with the international underwriting association (IUA) and InterMediation as part of a longer-term Market Mediation Initiative.
Andrew Paton remains optimistic about the long-term prognosis for ADR. He points to new reforms being put in place in the Birmingham civil courts to encourage litigants to go into mediation as evidence that the boom is not dead yet. “The more we see these court-associated mediation schemes, the more it will roll back the frontiers of ignorance,” he says, “and the more we will see ADR being driven into the consciousness of the general legal profession, not just specialists.” Cedr sees so-called alternative dispute resolution becoming an increasingly mainstream feature on the dispute resolution landscape. “Currently ADR is seen as something running alongside litigation, but separate,” says Wood. “In the future, ADR and litigation will be part of the same bundle.” To reflect this, Cedr recently re-named itself the Centre for Effective Dispute Resolution, in order to distance itself from the ‘alternative’ tag of the past.
Mediators are now getting involved in projects at an ever-earlier stage in proceedings. “Part of the perceived potential for ADR is to usurp litigation as the primary method of dispute resolution,” Wood says. “But it is equally important to stop disputes happening in the first place, by bringing mediators in at an early stage.”
The use of mediators to prevent conflict is already widespread in the construction industry. Construction is Cedr’s main user group, accounting for around one in seven cases. Increasingly, mediators are brought onto the managing boards of new projects at the outset, where they are in a better position to intervene if disputes occur.
Central to this is the pre-action protocol released by the Technology and Construction Court in October last year. The protocol requires a party to set out their case in writing and for the defendant to respond to it within 28 days, with a view to having a meeting between the parties and discussions about how the case should be run in court if a deal cannot be struck.
According to Cedr, it is only a matter of time until other areas, such as medical negligence, follow their lead. “The whole ethos behind the Woolf reforms was for early and constructive settlement.
Pre-action protocols are a key part of this and have been successful already,” says Cedr director Bill Marsh. “The Technology and Construction Court has always been pro-active and was one of the first to embrace mediation. It would not surprise me now if others follow their lead. We will see a much greater use of these protocols.”
But while the growth of mediation seems assured, there remain areas where litigation is still the only possible means of resolution. The most common is the settling of a specific point of law, where the judge is called upon to set a precedent.
Mediation is also impossible where witnesses, expert or otherwise, disagree on the facts. The further polarised the parties are in their explanation of the facts, the more inevitable litigation becomes. And it is not just a question of legality.
“Suitability for mediation has little to do with the subject, much more to do with the objectives of the parties involved,” says Andrew Paton. “There will always be cases that people do not want to settle.”
Kinsky agrees. “Many people going into litigation are more interested in finding out who is liable rather than damages,” he says. “A lot of litigants say that their action is a matter of principle, and that what they really want is for the other party to admit they have got it wrong.”
The battle between mediation and litigation may not be over, but the prognosis for all forms of alternative dispute resolution is good. “I think we are going to see slow, solid growth,” Kinsky says.
“The success rates may go down as people become more experienced with the mediation process and less willing to concede as much as they once were. But it will definitely increase steadily, if not in the explosive way that was initially predicted.”