By Peter Causton
Why compromise? Increasingly in civil litigation there are no winners — not even the lawyers, following the review and implementation of Sir Rupert Jackson’s report into costs. The question is rapidly being re-phrased as “Why litigate?”
Prior to 1 April, lawyers were able to work on a “no win, no fee” basis and recover a percentage uplift and after the event (ATE) insurance premium on top of their fees if the claim was successful. Now not only have the playing field and goal posts changed, but the game itself has, following the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO). Now the resources available for justice are limited, and the needs of the litigant have to be balanced against the resources available. This is recognised in the new overriding objective of the Civil Procedure Rules.
To start with, the funding options for claimants have changed. Now, lawyers cannot recover their success fee or ATE insurance premium from the defendant, but must instead look at other funding options, such as Damages Based Agreements (payment from damages) or Conditional Fee Agreements (where the success fee is taken out of damages, up to a limit). This results in claimant lawyers taking more risk. On the other hand, the changes also affect defendants, such as the 10% increase in general damages, the changes to CPR Part 36 regarding offers to settle, and Qualified One Way Costs Shifting in certain cases (whereby claimants can bring claims without the risk of having to pay the defendants’ costs if they lose). Parties in multi-track cases have to prepare a budget for the Court, estimating what the costs are likely to be in a particular case and the Court then approves a limit. Legal aid is being cut back as well, particularly in family cases, and the Ministry of Justice is under to pressure to cut its budget and to make Court users pay for the Court service. There is a sense in which mediation is being made to fill the void. There is no longer any unfettered right to litigate and mediation is seen as a way of reducing the cases that come before the Court. The former Justice Minister, Jonathan Djanogly was quoted as saying, in the context of family law:
“There’s been a 20% uptake in mediation and we know that of those who go through publicly funded mediation, 70% will have a successful outcome….It’s a cheaper process — one that takes a fifth of the time of going to court and it’s much less contentious…. 90% of people sort out their own problems, but 10% of people go to court. We think less of them should be going to court and more of them taking their own lives into their own hands, and mediation is a way of facilitating that.”
The Civil Procedure Rules have also changed, introducing a new test on proportionality of costs and tougher case management powers and low recoverable fixed costs in personal injury claims which are administered through the “portal.” Faced with these changes, is it any wonder that there is a renewed interest in finding alternative ways to resolve disputes? This is where mediation and other forms of alternative dispute resolution come in. Sir Rupert Jackson is a fan of mediation, judging by his report and recent judgments, so it appears to be coming of age. The Courts are increasingly willing to impose sanctions on those who unreasonably refuse to mediate, or negotiate and the Courts have their own mediation schemes in place, such as the Court of Appeal compulsory referral to mediation scheme. The successful small claims mediation pilot, applying to all non-personal injury small claims in the County Court, is being extended for a further 6 months to September 2013 and now takes in cases issued through the County Court Bulk Centre in Northampton and Money Claims Online. Cases issued with a value of under £5,000 are referred automatically to a Court Service mediator, who will try to save the parties’ and the Court’s time by seeing whether the case can settle. It has been successful so far, reducing the claims that go forward to a small claims hearing by a significant amount, freeing up valuable time to deal with other cases. These mediations take place by telephone and it is likely that online mediation will become increasing common as well.
Many claims could be resolved more quickly and easily through Alternative Dispute Resolution (ADR) and mediation. In order to succeed, however, parties must be open to compromise and willing to give up their day in Court. Those that choose the alternative path often find it to be more fulfilling and less frustrating than litigation. Looking forward with a crystal ball, it is easy to see why mediation is likely to increase in future. The European Commission is favourable towards ADR, having approved the text of a directive concerning ADR and Online Dispute Resolution between consumers and traders. This follows on from the Mediation Directive, which in cross-border cases, seeks to encourage the uptake of mediation, by both protecting mediators from having to give evidence and ensuring that settlement agreements are enforceable.
The Civil Mediation Council is tentatively looking at whether there is any appetite to widen its scope, to accredit individual mediators, and to possibly set up a Mediation Standards Board, having issued a consultation document seeking views on the future direction. It seems inevitable that with the increased use of mediation, the general public will want to see mediators abiding by a code of professional conduct, like other professionals, and to have a route to complain about a mediator. There are also moves afoot to introduce a business ADR commitment, much like the Dispute Resolution Commitment (DRC), which already requires government departments and agencies to be proactive in the management of disputes, and to use effective, proportionate and appropriate forms of dispute resolution to avoid expensive legal costs or court actions. This includes adopting appropriate dispute resolution clauses in all relevant government contracts.
In order for alternative forms of dispute resolution to take hold, we need a change of culture, so that instead of issuing proceedings, parties consider instructing a mediator to resolve their dispute at the outset. There are a jigsaw of initiatives being introduced to encourage a change of culture and to increase the take up of alternative forms of dispute resolution.
Peter Causton is a solicitor at Berrymans Lace Mawer and commercial mediator. He is a contributor to The Jackson ADR Handbook and a member of the Law Society Civil Justice Committee.
Image credit: By Henry Holiday (1839-1927) after Lewis Carroll [Real name: Charles Lutwidge Dodgson] (1832-1896). Public domain via Wikimedia Commons.