UK: The Increasing Importance Of Mediation In The UK

CEDR Mediation Audit 2014 and Commercial Mediation Rules and Model Documents

The marketplace

The results of the Sixth CEDR Mediation Audit show that the UK mediation market has grown by 9% in the last year. The current size of the civil and commercial mediation market is estimated as being in the order of 9,500 cases per annum. This does neither include community or family mediation nor the statutory ACAS service or the HMCS Small Claims Mediation Service, which are not included in the CEDR Mediation Audit.

In order to assess the overall economic impact of the commercial mediation field as a whole, CEDR combined the results of the six Mediation Audit surveys with detailed operational statistics taken from CEDR's own caseload and came to the following conclusion:

  • The total value of cases mediated each year is approximately £9 billion. (Since the impact of "mega-cases" can significantly influence this total value of cases mediated, the effect of such mega-cases has been excluded.)
  • Since 1990 the total value of mediated cases is approaching £65 billion.
  • Currently the commercial mediation profession saves business around £2.4 billion a year by achieving earlier resolution of cases that would otherwise have proceeded through litigation.
  • The results of CEDR's Sixth Mediation Audit suggest that the aggregate value of the mediation profession's total fee income is around £22.5 million per year.

The survey of commercial mediator attitudes and experience shows that clients and advisers refer 66% of ad hoc cases directly to their chosen mediator rather than working through providers. As might be expected, direct referrals are particularly prevalent amongst the most experienced mediator group.

The market is still dominated by a small group, although it is slightly bigger than in previous years; around 130 individuals are appointed for 85% of all non-scheme commercial cases. In 2012 just 100 individuals held 85% of the market.

The mediators and their practices

The overall profile of respondents is very similar to previous audits. 56% Advanced mediators – who described themselves as "reasonably" or "very" experienced; 22% Intermediates – who categorised their lead mediator experience as "some" or "limited"; and 22% Novices – who were accredited but had no experience as a lead mediator.

The survey finds that the average female mediator is 50 years old, and the average male mediator is 57. The Advanced mediator group are only about a year older than the average.

With regard to issues of diversity, things remain largely unchanged. 96% of mediators categorise themselves as being white. 26% of respondents are women (2012: 22%; 2010: 19%). However, women already in the mediator profession seem to progress more quickly and now represent 25% of the Advanced group of mediators (2012: 18%).

There are signs that more non-lawyer mediators are emerging. Only 52% of the respondents were legally qualified (2012: 62%). The non-lawyer mediators emphasise their profession when promoting themselves much more frequently than the lawyer mediators, but this does not seem to be working for them as well as it does for the lawyers.

The number of full-time mediators is increasing. 47% now describe themselves as full-time mediators (2012: 39%; 2010: 37%).

For the first time the CEDR Audit reports a decrease in fee levels. The increased competition has had an impact on billing rates and overall income levels. Average fees of the less experienced mediator group for a one-day mediation have fallen to £1,422 (a decrease of 6.3%). Average fees of the more experienced mediators for a one-day mediation have fallen to £3,820 (a decrease of 10.7%).

A significant proportion of mediator time continues to be unremunerated, either because the mediator did not charge for all of the hours incurred or because the mediation was arranged on a fixedfee basis. On average less experienced mediators wrote off over 6 hours, whereas amongst experienced mediators an average of around 4 hours was unpaid.

Factors for appointing a mediator

CEDR asked both mediators and lawyers to assess the relative significance of a number of factors in determining why individuals secured commercial mediation appointments. "Professional reputation – experience/status" has long been the clear winner with both mediators and lawyers, but this year lawyers place more emphasis on "professional reputation – mediation style". This might reflect an increasing sophistication of lawyer use of the mediation process and lawyers getting better at selecting the right mediator for each particular set of circumstances.

Settlement rates

Mediators report that about 75% of their cases settled on the day, with another 11% settling shortly thereafter so as to give an aggregate settlement rate of around 86%. The settlement rates reported in previous surveys are very similar.

Promotion and regulation of mediation

Mediators now feel even stronger that the civil justice system should be taking a more directive approach towards the promotion of mediation: 76% compared to 66% two years ago. 15% of mediators would support a fully mandatory system. Lawyers seem more inclined to favour the status quo and only 57% would like to see a toughening up of the regime.

Most mediators regard the market conditions as the biggest challenge for the development of their mediation practice, particularly the combination of an insufficient level of demand for mediation services and an over-supply of aspiring mediators seeking to break into a marketplace that remains dominated by a limited number of established players.

With regard to questions about the Jackson reforms and their impact on the mediation market, most mediators (over 70%) believe that it is too early to tell and that on the assessment of Jackson's impact the jury is still out.

CEDR's Commercial Mediation Rules and Model Documents

On 23 June 2014 CEDR launched its revised and updated Commercial Mediation Rules and Model Documents, including ADR Contract Clauses. These can all be downloaded free of charge from the CEDR website and user comments are welcome in view of future editions.

International Quarterly is produced quartely by Fenwick Elliott LLP, the leading specialist construction law firm in the UK, working with clients in the building, engineering and energy sectors throughout the world.

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