Mediation (a negotiation managed by a neutral mediator) has been with us for many years but, perhaps surprisingly, many more disputes are resolved through the courts than through mediation not withstanding its clear benefits: speed and low cost.
Earlier this month the Ministry of Justice implemented massive increases in the fees the courts charge to those parties who commence proceedings. Claims for more than £10,000 now attract an issue fee of 5% of the value of the claim up to a limit of £10,000, so, for example, a claim for £200,000 will now cost £10,000 to issue in addition to lawyers’ fees.
To put that in perspective, a claim of that order should not cost more than between 15% to 30% of that figure for the mediator’s fee. The recent hike in court fees ought to make more businesses pause before instructing their lawyers to issue proceedings. There will be cases where it is necessary to commence proceedings if a claim is close to being time-barred under the Limitation Act but in other cases there is much to be said for embarking on a mediation prior to the commencement of proceedings.
Yes, if unsuccessful, it will have added some additional cost as it will still be necessary to issue proceedings but when compared with the likely cost saving of an early resolution of the dispute it is, generally speaking, a risk and cost worth taking.
Even if there is no settlement parties will be far better informed than they were before the mediation as to the strengths and weaknesses of their position.