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Mediation in commercial litigation

This blog giving an overview of the mediation process in commercial litigation is the third in a series of blogs from Maitland Walker’s litigation team giving insights on the different stages in the dispute resolution process. The first two blogs are available here: Commercial Litigation Uncovered – Part 1 and Commercial Litigation – Uncovered - Part 2.   

Maitland Walker has a nationally recognised practice in litigation and dispute resolution and takes instructions in relation to most types of commercial litigation including contractual disputes, professional negligence claims, property disputes, competition law claims, intellectual property disputes.

The team is headed by Julian Maitland-Walker, the firm’s Senior Partner and specialises in complex, high value disputes with a particular niche in “group claims” (claims with multiple claimants) although we represent a variety of clients in both the High Court and County Court in a range of types of claims.

Julian is assisted by Sheree-Ann Virgin, Senior Associate Solicitor and David Hollier, AssociateSolicitor. The team are based in Maitland Walker’s Minehead office but all regularly travel to Taunton, London and elsewhere to meet clients’ needs and attend Court.  

What is mediation?

Mediation is a form of alternative dispute resolution (“ADR”) in which a neutral third party (“the Mediator”) helps parties to work towards a negotiated settlement of their dispute. It is a means of resolving a dispute that is alternative to the litigation process that goes through the Court system, although it is often used after court proceedings are under way. Mediation can be used to attempt to settle most types of disputes ranging in value and complexity.

The most commonly used form of mediation is facilitative mediation in which the Mediator will work to facilitate an agreement between the parties but the parties, not the Mediator, decide whether to settle and on what terms. The process is usually completely confidential so that all discussions and documents are treated as confidential and ‘without prejudice’. This means that the facts and matters discussed during the mediation and the documents prepared for it cannot be referred to in front of a judge until after the dispute has been formally decided at trial or formally settled.

The dispute resolution team at Maitland Walker are experienced in taking a wide range of cases to mediation and negotiating settlements at those mediations or after. In the period from March 2018 to May 2018 we have taken three of the cases we are handling to mediation - two of these claims have since settled.

 

When should parties mediate?

The optimum time to take a case to mediation will depend on the nature of the case and on factors like whether the issues have been properly defined (in pre-action correspondence, in pleadings, in responses to Requests for Further Information or post pleading correspondence) what disclosure there has been, whether interim orders are necessary, limitation issues, enforcement considerations, etc. Our team advises our clients on the best time to mediate or suggest it to ensure that it has the best chance of achieving success.

In large cases the parties are required, in the Directions Questionnaire, to confirm whether they want to stay the proceedings for one month to attempt settlement which might include mediation.

After disclosure might also be a good time to mediate as the parties understand the case against them and are in possession of the other party’s documents that support or harm their case (assuming that there has been standard disclosure) and it is still early enough in the proceedings to provide the incentive of cost savings if the mediation is successful since the witness evidence and trial costs will be avoided.  

 

What happens at a mediation?

The parties will usually have exchanged “position statements” in advance of the mediation setting out what each party regards as the critical issues of fact and law, an estimate of the costs expended to date and estimated going forward and an account of any previous negotiations.

The Mediator will usually greet the parties and show each party to its own private room. The mediation is usually formally opened by the Mediator with all parties present and here the Mediator will give an overview of the process, their role and the procedure. Each party usually then has an opportunity to make an opening statement, giving its perspective of the dispute. After this opening, the Mediator will have private discussions with each party to assist in the negotiating process.

The negotiations might reach a settlement at the mediation or shortly thereafter. Studies suggest that the success rate of mediation could be as high as 67% of cases settling on the mediation day and 19% settling shortly after the mediation day.

 

What is the role of the Mediator?

The Mediator’s role is to control the mediation procedure, remain impartial and try to facilitate an agreement between the parties. He or she will at no point impose any decision on the parties although they might play “devil’s advocate” and test the position the parties are taking.

The Mediator will act as an intermediary between the parties by using shuttle diplomacy, communicating offers, information and questions between the parties subject to their permission.

The parties will usually agree on the appointment of a Mediator. Selection is usually made on the basis of the nature of the dispute and the Mediator’s experience or known approach. A Mediator may have a variety of backgrounds including as a lawyer or other professional, e.g. surveyor, etc. 

 

What are the benefits of mediation?

There are many potential benefits of mediation most of which result from the role of the Mediator acting as a neutral third party intermediary. Other benefits include:

-          Costs efficiency compared with the cost of litigating to trial;

-          Business relationships can be preserved or enhanced by mediation;

-          The private and confidential nature of the process – public judgments are avoided;

-          Flexibility of remedies – a remedy might be agreed in a mediation that it would not be possible for a court to order;

Even if a mediation does not result in a settlement and the litigation continues it is likely that the parties will have benefited from the mediation process by developing a better understanding of each other’s case and objectives and narrowing some of the issues in dispute.

 

What are the costs of a mediation and what costs consequences follow a refusal to mediate?

Who should bear the costs of mediation is agreed between the parties but it is most common for parties to agree to share the Mediator’s fees and other costs of the mediation and to bear their own legal costs relating to the mediation. If the case does not settle at mediation then commonly the losing party will pay the legal costs of the other party relating to the mediation.

The costs for the Mediator vary greatly depending on the experience and expertise of the mediator, the value of the dispute and the duration of the mediation. It is not usual for a mediation to last longer than a day even in complex cases.

If a party rejects the other party’s suggestion to mediate without any consideration of whether mediation is suitable, it is likely that a court would impose costs sanctions on that party. If a suggestion to mediate is considered but rejected and a thorough explanation of the reasons for rejection provided, there is still a risk that a court would impose costs sanctions. It is difficult to predict in advance the court’s likely view on the reasonableness of a refusal to mediate since this decision will only be made at the end of a case after trial so extreme caution must be exercised before rejecting mediation.

 

Is the mediation confidential?

Mediation provides a private forum in which the parties can gain a better understanding of each other’s positions and work together to explore options for resolution. During the mediation, the Mediator meets privately with each party to discuss the problem confidentially. This allows each party to be frank with the Mediator and have a realistic look at their case in private, without fear that any weaknesses discussed will be communicated to other parties.

 

At Maitland Walker we provide clear and practical advice having taken into account all of the options available to you and risk involved throughout the dispute resolution process. In most cases we encourage clients to consider mediation.

To recap, the litigation team at Maitland Walker deal with most types of commercial litigation including:

Contractual disputes;
Debt disputes;
Shareholder disputes;
Professional negligence claims;
Company and partnership disputes;
Property disputes;
Intellectual property disputes;
Competition law disputes;
Group actions;
Any aspect of European law;
Tax disputes;
Civil fraud claims; and
Financial services claims.

For more information on the mediation or litigation process or if you want some advice, please do not hesitate to contact Sheree-Ann Virgin by telephone on 01643 707777 or by e-mail to sheree-ann.virgin@maitlandwalker.com. We can arrange for your initial consultation to be by telephone or in person in one of our offices in Minehead, Taunton or London.

The next blog on “Enforcement” will be coming soon.