Where I come from
I want to first put what I am about to say into context: where I am coming from. I grew up in the construction industry; it is in my blood. My training ground was with contractors before I then became a chartered quantity surveyor and ran my own practice for 18 years. I love construction; I feel as if I am back home when socialising with contractors and other construction professionals. When Chris, my wife (who is an artist), and I took our children for walks she would be pointing out the flowers but I would be pointing out the chimneys. My children are experts on the styles, function and age of Northamptonshire chimney pots!
During my time as a quantity surveyor I experienced many disputes (most of which I had not caused). Most went to arbitration, some to court: adjudication was not so popular at that time. Without exception it was a painful experience – and that was just for me! The outcome was always unjust because one party won outright, the other lost outright. ‘Unjust’ because life is not like that, particularly life in the construction industry which is weather-sensitive and subject to human error. It is never a black/white, total win/lose situation. People see the same facts and events through different eyes, and that is for a whole lot of reasons – education, culture, age, gender, politics, life outlook and so on – and it does not necessarily mean that they are any more right or wrong: just different.
An adjudicative process (court, arbitration, adjudication) cannot take that into account: someone has to win, and the other to lose. Different ‘truths’ are not allowed and that just is not fair. That is why I wrote Mediation of Construction Disputes which was published in 2008. Mediation can take all of that into account. Settlements can be reached any where along the spectrum of possibility from total win to total lose. All that it needs is for the parties (all the parties) to say ‘Yes’ and, once written up and signed, the deed is done and is binding. What is more, mediation can enable settlements that go far beyond the limited powers of the court (money and/or injunction but not much else). I have mediated cases that have agreed stage payments/deferred payments/discounts on future business; that have ended as joint-ventures, one even as a merger; many have resulted in a ‘drop hands’ where the parties have taken the opportunity that mediation provides to get off the litigation/arbitration treadmill and get on with life. None of that could have happened in an adjudicated process. The deal is whatever the parties agree, so long as it is legal. And they usually agree in a day – which makes mediation not only the just way to resolve disputes but also the quickest and most costeffective way. And most do settle on the day (between 75% and 85%). All of which provides a great opportunity for the advisors (solicitors, experts and so on) to have a satisfied client – and therefore the opportunity for further business. Not something that easily comes from arbitration or litigation. Indeed, many of my mediations end with the parties (and their advisors) having a drink together, and sometimes even planning future business together. A colleague tells me that one of his ended with a marriage proposal (not to him though!)
Mediation is an assisted negotiation where an independent third-party (the mediator) helps the parties reach a (their) solution in private. It is non-binding until reduced to writing and signed by the parties. It is therefore party- focussed, the lawyers and others are there in support, and the mediator manages the process. Indeed, I always say at the start of a mediation, ‘I am here to give you the best shot at doing a deal’. I sometimes also say (perhaps under my breath) ‘and if you foul up the opportunity that’s your problem’. Many people, lawyers included, do foul up but they still get deals – they just get there the hard way. The best way is for the parties, and their advisors, to see this as a joint problem and to co-operate jointly to find the solution. So, principled (needs-based) negotiation is more effective than positional (rights- based) negotiation. Better deals come from co-operating than from fighting. That is a challenge to those whose role in life is about winning. I will outline briefly what happens in a mediation. Most of my appointments are direct. Some come through In Place of Strife, which is the second largest provider of mediators behind the Centre for Effective Dispute Resolution (CEDR). Either way, I am usually asked what dates I have free. The same question may be asked of a couple of other mediators. I am not usually asked about fee; it is on the website and they will probably have downloaded my fee guide and profile before making contact.
When appointed I will send a confirmatory email covering the date, time, fee, venue and facilities, timetable for exchange of information, the information I need (summary plus key documents) and the name of my assistant (I always have a less experienced mediator with me so that they can get experience before they become lead mediators). I enclose my standard mediation agreement and the assistant’s CV. Confidentiality then applies to any contact from then on. The documents arrive, usually not on the date I specified, and often do not comprise those that I requested. Instead of a summary of key issues and events I often get a copy of the pleadings. Not the same thing. Pleadings are a legal document which sets out the legal interpretation of the dispute. The document I am seeking is 5-10 A4 sheets that summarise the circumstances, the commercial issues, the personalities and (some of) the applicable legal context. It is as much to get the parties to focus on the key issues and to get out of the detail that will have immersed them for a long time, as it is to give me an overview of the dispute. It can be a useful reminder of where it all started and what it is really about, rather than the more complex legal argument that will have taken over. So a few days before the mediation date I will prepare for the mediation by reading (some of) the papers. I do not need piles of time-sheets or invoices; I do not necessarily need detailed expert’s reports (summaries are usually all that I need). All that is necessary is that I have a grasp of what the dispute is about and how the money claims are constructed. I am, after all, there to manage the process, not to have an opinion on the solution. But it is important that I am confident about the key issues and that the parties in turn can feel confident that I am on top of their case. After reading in I will phone the lawyers (sometimes the parties) and have a chat, which will include how I run a mediation, the character and relationships of the key players in the mediation, any special needs (including smoking), costs to date and through trial/arbitration, settlement discussions and offers to date. Sometimes we talk about how the dispute might be settled. These are usually separate calls but sometimes they might be conference calls. For the best outcomes in mediation, preparation by the parties is vital. I will come back to that later. Many do not prepare well, but get deals nonetheless. Many get deals despite bad preparation and bad tactics. Many get deals despite bad mediators! That all tends to show that parties just need the opportunity to bring the dispute to an end and get on with life. Typically, a mediation will go through five phases to reach a conclusion. They may not be immediately recognisable during the mediation but, looking back, a pattern will be seen.
o Preparing (what happens before the day);
o Opening (the joint session where the parties tell their story);
o Exploring (where the mediator, usually in private meetings, finds what drives the party’s positions);
o Negotiating (where the shape of the deal becomes clearer);
o Concluding (where the deal is done – or not).
They are all important but, of them all, the preparing (by the parties) and the exploring (by the mediator) are the most important. I will explain why as I take you through a typical mediation day. On the day I will arrive an hour before the start time so that I can familiarise myself with the layout of the venue (toilets, secretarial support, copier, fire exit routes, outside areas etc), set-up of the main room, location of each party’s room refreshment arrangements and if a fire alarm test is due. I will then greet everyone on arrival, see them to their room and let them settle before spending time with them getting the mediation agreement signed and dealing with any queries. I will also spend time encouraging each party to tell their story. This really is an opportunity for them to have their ‘day in court’ – much better than they would get in an actual court. Then we will gather in the main room and, after introductions and after I have laid down the few ground rules, each party (and each member of each party) will say what the key issues are to them, why they feel strongly about them and what is necessary to achieve a settlement. We then have a time of questions and discussion and, when it ceases to be useful, we break into private meetings. This first open meeting could be a couple of hours. There could be any combination of meetings through the rest of the day, including other joint meetings – whatever it takes to move the parties to a settlement as quickly and efficiently as possible. I always put the key decision makers together to seal the deal: it gives them ownership and pretty well guarantees that the settlement will stick.
Mediation in the legal system
Although there is no mandatory mediation in the UK, most courts give a very strong nudge to parties to consider ADR, particularly mediation. They assume that the courts should be the last resort and so mediation, and other forms of ADR, should be ‘first resort’. Indeed the courts are able to sanction costs if a party does not consider mediation or enter into it in good faith. Mind you, I do not know how the judge would decide such an issue if the mediator cannot be called as a witness. Because it is still a (relatively) new process, there is little case law on mediation in the UK. Such as there is has reinforced its position in the accepted UK dispute resolution spectrum. It is no longer ‘alternative dispute resolution’ but ‘accepted dispute resolution’. However, as users get experienced in using the process, there will be more challenges and abuses. One, in 2009, was the Farm Assist case, where the mediator was called to be a witness in a trial that sought to overturn a mediation settlement due to alleged duress by the stronger party. In the end, it was not tested because the party calling the mediator as a witness withdrew the ‘request’, but the judge confirmed that confidentiality in mediation was paramount and could only be breached ‘in the interest of justice’. The fact that the parties may waive confidentiality has no effect if the mediator, who is party to the confidentiality agreement, does not. They can, of course, waive privilege, which does not involve the mediator. Mediation schemes It is worth mentioning mediation schemes. Many courts now have their own scheme for small value claims using salaried staff mediators. Much of their work is over the telephone and the settlement rate is impressively high. In addition, most courts have mediation schemes for medium-value cases Although the settlement rate is lower, there is no doubt that the schemes have provided a public service and significantly reduced court lists. There are many mediation hybrids emerging. The Construction Conciliation Group devised a scheme, for small domestic building disputes that are not covered by Part II of the Housing Grants, Construction and Regeneration Act 1996 (and where therefore there is no right to adjudicate disputes). It gave a fixed time (three, five or eight hours), fixed fee and a fixed outcome. The mediator made a binding decision if the parties could not negotiate a settlement themselves. It is a sort of Med-Adj. Like Med-Arb it is not a particularly satisfactory process as it casts the mediator, who would normally manage the process and build trusting relationships with all the parties, in the role of decision-maker. Parties are likely to be more guarded in the information they give to the mediator and so reduce the chances of a settlement in the mediation. Some arbitrators are reversing the MedArb process and offering Arb-Med, whereby the arbitrator withholds the decision and offers mediation in its place. If the parties do not settle, then the arbitrators award is made. So, after over 20 years, mediation is firmly established in the UK legal system. Current estimates are that there were 9,000 commercial mediations (including schemes) in 2013, but no one really knows. It is an area of research that is now quite urgent. Overseas Much of the world is following suit. Of course, the United States of America and Australia were there before us, and indeed exported the process to the UK, but many would say that the UK, at least until now, has preserved much of its purity where the early users have strayed into more ‘tainted’ uses, or abuse, of mediation. Indeed some Americans who have experienced the UK process have enthusiastically urged that the UK should re-export mediation back to the US to remind practitioners how it should be done! Much of Europe, including the emerging eastern European countries, has adopted mediation as an integral part of their legal system. Indeed the European Directive not only encouraged its adoption but opened the way for mediation to become mandatory, if a country so chooses. However, most have not done so, but lack the bite of the Woolf Reforms that caused its acceptance in the UK. The Netherlands are probably the exception where the use of mediation is common. One problem is that there is no uniformity in the model of mediation being used – some countries use the ‘no caucus’ form, others advocate nothing but private meetings. Many countries, Finland for one, have allowed the judges to take the role of mediator, much to the disappointment of those other commercial mediators who have trained and invested time and money in developing a commercial mediation practice. The level of ‘qualification’ also varies. In Austria a commercial mediator is expected to do something like 300 hours training – in the UK anyone can adopt the title of ‘commercial mediator’, and many have undertaken only two day’s training before being ‘accredited’. But more of that later. Mediation is so suited to cross-border disputes, where the relevant jurisdiction may be contested, or even exist in several countries, and enforcement can be a nightmare. International business is gradually recognising the value of mediation in settling disputes in a global economy. UK mediators are now training others all over the world. CEDR has run many courses in Hong Kong, Pakistan, Nigeria, North Africa, India and mainland China. Commonwealth countries are particularly suited to the UK model because of the common law system. In many, arbitration is a new process and is in direct competition with mediation, whereas it is seen in the UK as a long established form of dispute resolution. Indeed, the Chartered Institute of Arbitrators recently celebrated its ninetieth year.
So mediation is recognised throughout the world and has become established in many countries. The challenge is how this emerging profession might be regulated. The call for regulation In the UK, and in many other countries, there comes a time when a new profession becomes respectable and with it comes the expectation of setting recognised standards and regulating the practitioners. There is a misconception that regulation guarantees standards, whereas there is a danger that it creates mediocrity.
The Civil Mediation Council is currently struggling with this issue. In the past it has set minimum (if not the lowest) standards for the training and accreditation of commercial mediators. Experience has shown that the danger with setting minimum standards is that practitioners no longer aim for the best, only to achieve the standard set. Far better would be to identify aspirational standards that give the ‘gold standard’ and for training and mediator providers to measure performance against them. That is much more likely to enable a profession in search for excellence than the setting of minimum standards. Unfortunately, history indicates that the mediator profession will follow others and not have the courage to aim high. An organisation called the International Mediation Institute (IMI) has created a register of practising mediators with details of each mediator and a ‘rolling’ digest of feedback.
The intention is to provide a worldwide source of commercial mediators that will give confidence to those seeking an effective mediator for their particular dispute. It is still a relatively new venture but deserves support in its aim to be a credible source of reference. The threats A common fear is that mediation will go the way of arbitration and adjudication, both of which started as a quick and cheap way to resolve disputes, but which have now become mired in legality.
My response is that mediation is not a legal process: the mediator’s role is to manage a process that gives the parties their best chance of settling their dispute. It may be a process that is set in the legal arena but it is not in itself a legal process. It is probable, therefore, that mediation will not go the way of legal argument and precedent, but remain what its users need it to be – an assisted commercial negotiation. Of course, the lawyers control mediation in other ways. They are the gatekeepers, the ones who chose the mediator and who decide when, how and if they use mediation. Inevitably, I suppose, they mostly choose lawyer mediators, perhaps because they are the same breed, perhaps because they may identify with the legal arguments, perhaps because they may have a reciprocal arrangement with other lawyer mediators. Enlightened lawyers recognise that mediators with a business background are far more likely to help their (the lawyer’s) clients and to understand the dance of commercial negotiation. But, as a non-lawyer mediator, I would say that would not I?
One threat to mediation as it is properly practised is the rise of evaluative mediation. By ‘evaluative’ I mean mediators (inevitably lawyers and particularly barristers and former judges) who are prepared to express an opinion on the merits of the case and the relevant law. I do not mean by ‘evaluative’ a mediator who is prepared to challenge and question and rigorously reality test a party’s position. Those should be every effective mediator’s basic tools of trade. I suspect that some lawyer mediators resort to expressing an opinion when the mediation get tough or becomes deadlocked. My response is that I, and other non-lawyer mediators, cannot do that (opine on the merits) yet we achieve settlements at least as good, so we must use non- evaluative techniques to get there. That is far better then, than risking the alienation of one or all of the parties – not to mention the potential loss of the independent role rightly expected of the mediator. Whilst I acknowledge that a ‘natural’ mediator can come from any background, I have a real concern that the ascendancy of judge (whether ex- or not) mediators may be bad for the profession. It has happened in Finland, is being established in New South Wales and is on the rise in many countries where mediation has become established. In the UK it is seen more as a retirement interest (and pension booster). There are many problems with this, not least that judges should judge. That is what they have been trained to do and it is the opposite of a facilitative process where the parties decide the outcome. The partys’ attitude is different when a judge is present – even with a judge as an assistant I found the deference and expectation on him very different to others. Perhaps I was jealous!
Mediation is common sense We live in a society where common sense is often hard to find. We have created, or allowed, a blame culture where if something goes wrong, someone is to blame and they have to pay. It is enabled by insurers, fuelled by greed and stoked by lawyers – some lawyers. In that society, mediation is the fresh air of common sense and it is one reason why so many cases settle.
So often, if I ask a party, ‘what is it that you need most to be able to do a deal today?’ they reply, ‘to put an end to the misery’. They had a problem which they could not sort out themselves so, naturally, they went to a lawyer who put the dispute into a legal box and went to battle with the other side. The party became a bystander who had no control of the case except to pay bills and use up huge quantities of time, which could otherwise have been spent in wealth- generation. So, for a day, the parties have the control back of their dispute and they have the say in how it will settle – not something that happens in court.
Can you wonder that I believe mediation is the only route to justice?