Mediation is now a very familiar tool in the armoury for the resolution of disputes. The mediation process is largely well known by lawyers and there is a wealth of experience of how to work with it. It is widely recognised (particularly when applied to the right claim) that it can be instrumental in the resolution of claims.
In recent times however there has been anecdotal comment of a perception that more mediations than before are failing with the parties walking away without having reached a deal. Given the resources (both of time and cost) that are often involved on the mediation process this can be frustrating and here we seek to explore to what extent that perception is borne out by actual mediation outcomes.
Facts and figures
The CEDR Mediation Audit is a biennial audit and is compiled from the survey responses of UK based mediators dealing with civil and commercial claims. The result of the last audit was published in May 2016 and is available here.
Amongst other detail compiled it reports deals directly on the success rate of mediations based on the results of the survey. On that issue the report comments;
Although the overall success rate of mediations remains constant, with an aggregate settlement rate of about 86% there is a variation from previous years audits in how those settlements are achieved. The proportion of cases that achieve settlement on the day of mediation has fallen from 75% to 67% but this decrease has been offset by an increase in the proportion of cases that settle shortly after mediation, rising from 11% to 19%.
When linked to the evidence that mediations are taking longer, this change in the pattern of settlement rate may well suggest that cases are becoming harder, with parties needing longer time to reach agreement.
We have looked at the figures for the previous audits from 2007 and the breakdown is set out below. This includes the 2016 figures for ease of comparison;
Based on this data the success rate of mediations (assuming that success is measured on the basis that a settlement was reached) has stayed largely constant over the last decade or so (between 86% and 90%) but the 2016 results do reflect a reduction in the disputes that settle on the day. So whilst collectively the rate of settlement is constant at circa 86%, in a third of disputes, there is no resolution actually at the mediation. As for the figures for post mediation settlement these are described as being reached "shortly thereafter" but no detail is provided of how long exactly is "shortly" – days/weeks?
We are mindful that the contributors to this audit are mediators and it is compiled by CEDR. In that sense the audit cannot be viewed as entirely independent. That said the results may indicate, if not an overall reduction in success rate, a change in the pattern of mediation outcomes.
We have obtained views within the team as to whether the experience of lawyers "on the ground" is indeed that fewer claims are now reaching a settlement at mediation. It is fair to say that there are lawyers who do share that view and equally some do not.
A clear picture is perhaps difficult to extrapolate as in any one year a lawyer will only run a small number of mediations – this has never been a high volume activity. The perception of outcomes may well be coloured by a recent experience of mediation rather than being representative of an actual trend.
Why do mediations fail?
Whatever the true picture mediation as a process is here to stay for the foreseeable future and so here we seek to summarise some of the reasons why mediations fail. Success can never be guaranteed (there will always be claimants that want more than the defendant is prepared to offer) but attention to these factors so far as is possible, especially in the preparation for the mediation, should increase the prospects for success.
1. Lack of engagement
A claim is more likely to settle where the parties are committed to and engaged with the process. The making of orders by the court that encourage ADR including mediation together with the potential for adverse costs consequences of refusing to mediate can mean that a recalcitrant party simply views mediation as a "tick box" exercise. This can be difficult to address and the expertise of the mediator to draw the party to the table will be crucial.
2. Strategic / tactical
There are always difficult opponents from time to time (parties and their lawyers) – mediation is no exception. Those that view the mediation process as an opportunity to play games or simply as a fishing expedition will make settlement an uphill struggle. It is essential to be well prepared for this type of opponent and have thought through in advance the strategies to be deployed. The appropriate approach by the mediator will again be essential.
The timing of the mediation in the life of the dispute is an important element in the process of securing a resolution. Too early and a party may feel they don't know enough to make decisions on settlement – too late and there will be the investment that has already been put into the claim to handle. This has to be considered on a case by case basis. It is not a one-time fits all exercise.
4. Choice of mediator
The mediator has to have the right mix of legal, technical and interpersonal skills for the dispute at hand. He/she will need to secure the trust and respect of the parties quickly and build rapport. To be impartial is essential (both real and perceived) and to have the ability to conduct the shuttle diplomacy and the skill to unlock impasse is key. Time spent in making the right choice is likely to pay dividends.
5. Preparation and approach
Thorough preparation of a parties' case for the mediation is crucial. This extends not only to the facts and legal principles at play but also to the tactical and strategic approach to settlement to be taken. A clear rationale why a particular position is being adopted or why an offer is made in those terms will increase the prospects that the opponent will engage with it.
Those who have the authority to make decisions on settlement should ideally attend for all parties. If that is not possible then they should be accessible or instructions provided as to workable settlement authorities.
A settlement is not reached – what then? To describe that as a "failure" of mediation is perhaps over simplistic. The mediation (as the data above records) may well pave the way to a future deal. In any event the likelihood is that more will be known about the opponent's position; there may be agreement on some points and a narrowing of the issues. The parameters of potential settlement are often then clearer. Frustrating – certainly yes; but a complete "failure" – probably not.
First published January 2017
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.