News

22nd October, 2012

Mediation - why does it have to cost so much?

Everyone knows that costs are an issue in litigation, so why would parties voluntarily incur further costs in mediating? After all, surely an experienced litigator ought to be able to 'persuade' his or her opponent to accept the inevitable and concede defeat simply by having a without prejudice meeting or discussion?

If that ever was the case, most, if not all, modern litigators recognise the benefits that can be gained from bringing in a mediator to assist the parties in resolving their dispute but cost remains a factor, and can be an obstacle in disputes involving modest sums. Courts are increasingly prepared to mark their displeasure at 'mediation avoidance' with costs penalties: Rolf v De Guerin [2011] EWCA Civ 78 and PGF II SA v OMFS [2012] EWHC 83.

The purpose of this article is to examine a number of key areas where some thinking ahead can help the parties to keep those costs down.

"The secret of good comedy is ...timing"

That's not to say that mediation is a laughing matter, though trying to keep the mood light and spirits up can sometimes be a key part of the mediator's role. But timing is important. When parties are willing (and indeed keen) to mediate there can sometimes be a rush towards the mediation, with the risk that there hasn't been the opportunity to think about the case, to identify the issues that actually need resolution (and how that might be achieved) and to exchange information with the other party so that they understand where you're coming from.

Conversely leaving it too late can mean that positions have become entrenched through months of 'warfare' making it difficult for parties to move away from those positions and towards settlement. In addition the later the parties agree to mediate, the more substantial the costs will be, which can present another huge obstacle to settlement of the dispute.

Perhaps the ideal time is once there has been a proper exchange of information about the case, allowing the issues to be indentified, and the parties to form their own views on the relative strengths and weaknesses of their own cases, and of their opponent.

"The key to success is preparation"

A mediation is not a trial. That sounds like an obvious comment, but too often it is forgotten. Position statements can become like pleadings. Opening statements (if the mediation starts with a plenary session) can become like the opening of a case to a judge. Bundles can be voluminous, akin to those required for a trial. And all that activity inevitably increases costs.

I'm not saying that in more complex cases it isn't necessary and appropriate to have the documentation available. After all, mediation requires parties to be able to justify their position and enables them to seek clarification of their opponent's stance, so the consideration of relevant documents can be very helpful. Nor am I saying that position statements should be anodyne briefs amounting to little more than a confirmation of a desire to settle.

To be effective in the mediation, parties need to focus on what is really at stake. What are the issues that they think need to be resolved? What information do they have which supports their case? What sort of structure do they see for any settlement?

Focussing on those points in preparing for the mediation helps to achieve a number of things. It enables you to manage your client's expectations as well as those of your opponent. It should enable you to limit the amount of information which the mediator needs to consider, which can help to reduce the costs. Perhaps most importantly it should enable you to present your client's case in its best light, which can mean that by the time the mediation starts the mediator (and hopefully your opponent) is seeing your way forward as being the best way to resolve the issues.

Talk, but don't forget to listen

It's a trite observation but talking is a good idea, and I'd add to that that talking before the mediation, particularly to the mediator but with your opponent too, helps as well. The position statement needs to do its' job – to set out your client's position. But there may well be comments, ideas for settlement or even concessions that you want to draw to the mediator's attention before the mediation starts.

Sometimes it can be a 'smoking gun' that you hold that blows a hole in your opponent's case which you don't want to disclose at this stage. Sometimes it can be the information that your opponent doesn't yet know but which will seriously undermine your client's case when (or if) it comes out. It's always a matter for your judgment, but letting the mediator know about what's on your mind at an early stage will always help the mediator in understanding what lies below the surface which can in turn inform the way in which the parties approach the mediation itself.

Talk to the mediator (and your opponent) about the structure of the day. How much preparation will be involved? Do you need a full day or can you ask for a time-limited mediation? Your mediator should be prepared to be flexible – it is, after all, your client's mediation, not the mediator's, even though on the day it will be the mediator who takes charge.

Along with talking, don't forget to listen. Sometimes your opponent will say something which completely changes the way in which you and your client see the case. If you're not listening you may not hear it. Conversely you may discover by what is said that your opponent is unaware of a point which you feared could irreparably damage your client's position, which gives you the chance to change your approach and capitalise on the point. That underlines why dialogue (and listening) are crucial aspects of a successful mediation.

Summary

Clearly on their own no of the points made in this article will avoid the cost of the meditation day. Taken together though they should make your preparation for the mediation, and the mediation itself, more time (and cost) effective, as well as improving the chances of a successful outcome.

Richard Price is a CEDR accredited mediator. Since joining chambers in 2010, following a successful career as a solicitor at Pannone LLP where he was head of property litigation, he has acted as mediator in a range of disputes from a 2 day multi-party property and professional negligence claim through to half day Inheritance Act mediations. For more information on Richard's mediation terms please contact Julia Lanza.



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