Disputes can threaten the health of a business. Mediation can offer a cure - sooner than you may think.
Mediation seems to be increasingly popular as a method of dispute resolution. It is not hard to see why - it offers a quick, cheap and amicable “get out”. With a relatively high success rate, it is a valuable alternative to long, expensive litigation or arbitration.
Tackling the dispute early
So why not makes straight for mediation when a suitable dispute arises? Surely an early resolution will make the dispute less painful, by avoiding the parties becoming entrenched in their positions and stemming legal costs before they become prohibitive? If the dispute is an infection, perhaps the mediator is a doctor – book yourself in straight away and you might come out with a prescription that nips the infection in the bud.
The trouble is that this approach can backfire.
Just as a doctor may be reluctant to dole out antibiotics at the first sign of an infection, so a mediator may not be able to help the parties to reach a resolution at a very early stage. It may be too soon for the parties to assess the risks attached to the dispute and identify the range of acceptable outcomes for their businesses. Some surveys indicate that more successful mediations tend to take place after close of pleadings, after disclosure or even later in the proceedings, than at the earlier stages.
Structured mediation – Litigation lite?
There is a way of bringing your mediation forward that can work though. Essentially, the parties incorporate into their mediation procedure an abbreviated version of the key stages that they have yet to go through in litigation/arbitration. The idea is that this gives them enough of a flavour of those stages to assess their positions and take a view on early settlement.
There is no particular name for this type of mediation, but it can perhaps best be described as an early, structured mediation.
So for example:
- If the parties consider that their respective legal positions have not been adequately presented, for lack of pleadings, they can agree to a limited exchange of correspondence that achieves this within a certain, proximate deadline.
- If evidence is limited so far, they can incorporate a “request to produce” stage, aimed at securing disclosure of limited information or documents material to the mediation.
- If the dispute turns on technical points, there can be a without prejudice meeting of technical experts to clarify or unlock key issues.
The stages that the parties choose to incorporate into their mediation procedure must be tailored to the case and to what might help crack it at the mediation day. There is no point mirroring all the usual stages of litigation for the sake of it: mediation is intended to be a flexible and creative process. To use the infection analogy again, a doctor would not prescribe a long course of antibiotics when a short one would do.
It can be useful to involve the mediator in setting the structure and timetable. Although he (she) cannot make directions on the timetable in the absence of agreement, as a judge would at a case management conference, he can act as a barometer for what is reasonable by way of preparatory stages and make suggestions that are likely to bear weight.
Whatever “litigation-lite” stages are agreed on, they should all fall within the without prejudice veil cast over the mediation process as a whole.
Just like the treatment of infections, the early, structured mediation procedure can be prone to complications. It relies heavily on the co-operation and goodwill of the parties – something that, paradoxically, cannot always be relied on in the run up to mediation and that is particularly volatile the more parties there are involved.
Perhaps more so than with other mediations, the early, structured mediation process is open to abuse by strategic opponents. Such opponents may draw the benefit from your complying with the agreed pre-mediation stages, whilst neglecting to comply properly themselves. Or they may seek to expand each stage beyond what was intended, so that the process resembles “litigation proper” more than “litigation lite”, causing costs to snowball.
Even if the parties are both acting in good faith, there can easily be a mismatch of expectations as to how in-depth the pre-mediation stages are to be. There is nothing more frustrating than to see what you envisaged would be a one-hit request for information expand into an excessive series of requests for detail that has no bearing on the overall risk allocation of the claim. Still worse is to see a simple request for documents start to resemble a full disclosure exercise. If a single meeting between the parties’ experts develops into an ongoing technical debate, where realistically agreement is not going to be reached, time really starts to be wasted and tempers may start to fray. This all feeds the adversarial mind-set that is so contrary to the spirit of mediation, eroding confidence that an amicable solution can ever be reached.
It may be that in fact one party does genuinely feel it needs more material than its opponent is willing to provide in the preparatory stages of the process. Unfortunately it has no way of forcing the opponent to provide it: its only leverage is to threaten to withdraw from the process. This is clearly a high risk option, which can put an end to the mediation before it has had a chance to succeed.
The problem is that there is no CPR to define what is expected by way of compliance with the procedural steps leading to mediation. Nor is there a judge to impose penalties in the event of abuse. Recourse can be had to the mediator, but he needs to maintain his independence, as well as the trust and confidence of both parties.
Ultimately it has to be up to the parties to sort out their procedural disagreements. If they cannot do that, I hear you say, what prospect is there of them resolving their bigger legal and commercial issues? They may as well give up and litigate. It is a fair comment. But bear in mind that the procedural spats may be driven by the lawyers more than the parties themselves. They may be a procedural tactic aimed at seemingly gaining the upper hand for a party whose case, on the merits, is weak.
The point is that if you can navigate a route through the unnecessary procedural diversions to arrive at the mediation day, the spats along the way may no longer matter. You have got to where you need to be and the discussion can focus on what really matters – settlement.
Back on track
This is the key to an early, structured mediation – perhaps the key to any mediation – leave your luggage behind on the day. Assess your exposure on the claim and your alternatives to a negotiated outcome based on the information acquired through the “litigation lite” precursor stages. Then “park” the frustrations that may have arisen along the way, climb out of the trench you may have become barricaded in and concentrate all your efforts on creating the movement that will help the parties meet somewhere between their trenches, in settlement territory.
It helps that the mediation day is a new start, a date that the parties will have had in their diaries: and on their minds for some time. It also helps that the parties are physically present, to communicate directly rather than through correspondence or lawyers. This can encourage an open, co-operative approach. But the mediator has a major part to play too in setting the right tone from the very start of the day, ignoring the distraction of past grievances and looking forward.
Structured mediation can be an invaluable tool for achieving early resolution of a dispute, before the impact on your business becomes disproportionate. It can have nasty side effects though, just like some antibiotics that the doctor prescribes. There is a lesson in always reading the label first. If the mediation process is misunderstood or abused by one of the parties, it can end up doing exactly the opposite of what it should: pushing them further apart and towards litigation/arbitration.
If you opt to go down this route, do so conscious of this risk and be prepared to manage the frustration (and cost) that it may cause. Then approach the mediation day itself with fresh energy and intent, focussing on what will best dispose of the dispute that has been plaguing your business. Hopefully the business will end up feeling much better for it.