UK: Mediation - A Growing Trend

What should a Director do when he detects the first signs of a commercial dispute brewing? He or she will know that although the company assets, products, services and reputation must be protected, several potentially harmful factors will be about to emerge. If all attempts to negotiate a deal direct have proved fruitless lawyers will be instructed, legal costs will be incurred, the relationship between the parties may be irreparably damaged and, maybe most important of all, the valuable time of the management team will be taken up and deflected away from its main concern; running the business effectively and efficiently.

At this point the Director should take legal advice and consider all of the different methods of "dispute resolution". Litigation, although marginally quicker, is more costly following the Civil Justice Reforms introduced in April 1999; arbitration is slow and expensive; and adjudication, whilst being fast, is also expensive. One method open to both parties if they agree (irrespective of what the contract states) is to refer the dispute to mediation which is a great deal more cost effective and quicker. Statistics demonstrate that it is very effective. Unfortunately, some lawyers are not staunch advocates either because of their inexperience of the process or because they retain the blind, competitive old-school approach of drawing up the battle lines before they consider resolution.

Ensure you ask your legal advisers to consider mediation. It is rarely inappropriate. It is no longer seen as a sign of weakness to propose its use, it is private and the terms of settlement can remain confidential. If settlement is achieved you are left to get on with running your business with the stress, strain, cost and distraction of proceedings circumvented or curtailed. Your business relationship may also be preserved.

Prior to the introduction of the civil justice reforms, surveys revealed that many lawyers were not discussing the option of mediation with their clients despite a desire in boardrooms to learn more about it. The reforms gave mediation a "shot in the arm". The courts have made it clear that if a proposal to refer a dispute to mediation is unreasonably refused that party may incur cost sanctions. Generally, its use continues to grow beyond traditional areas such as negligence, breach of contract or personal injury claims to disputes involving defamation and, more recently, employment. There is little doubt that the employment arena will be the next to witness a growth in its use.

Next time you consult your lawyer over a dispute ensure he advises you on the use of mediation. It could save you a great deal of time and money!