Over the last few years we have seen an increased trend in the referral of matters to mediation. This is attributable to a number of factors – the courts placing greater weight on the mediation process as an alternative means of dispute resolution; a disillusionment with the litigation process and, in particular, the time and costs of litigating in England; an increasing appreciation that mediation can preserve continuing business relationships between contracting parties; and, perhaps, the effects of a recession meaning that litigants are more willing to accept the certainty of a resolution, even if it involves compromise.

Encouragement of the courts

The courts have imposed a requirement for solicitors to confirm that they have explained to their clients the need to try to settle and the options available to them, and to specifically state whether they would like the court to arrange mediation on their client's behalf. Case law shows that where a party unreasonably refuses to mediate it may be penalised in costs by the judge at the conclusion of the trial.

What is it?

Mediation is commonly referred to as 'assisted negotiation' with the parties appointing an independent third party to work with them to achieve a resolution of their dispute. Generally we recommend that the mediator is a qualified lawyer, but sometimes a professional from a relevant industry is more appropriate. The process is entirely consensual and the parties are free to choose whether and, if so, when they mediate. Invariably the mediation agreement will contain a confidentiality provision meaning things disclosed by the parties at the mediation will be confidential and cannot be made use of at a subsequent hearing if the dispute does not settle.

Around 85% of mediations settle. Whilst most settle during the mediation, it is common for mediators to stay in touch with the parties after the mediation and we have seen unsuccessful mediations settle in the days following. Even if a settlement isn't reached, the mediation can provide insight and understanding into the dispute and the parties' true position which may ultimately lead to a resolution of the dispute.

On the day of the mediation, the process will be led by the mediator and their preferred approach. In general, the parties will meet together in an opening session at the start of the day (the plenary session) where they will make a brief opening statement. The mediator may encourage the parties to speak to each other face to face (often this is the first time they will have done so since the dispute arose) depending on the history of the dispute and the personalities involved. Following the plenary session the parties will go to separate rooms with their legal representatives where they will remain for the rest of the process (unless the mediator feels that progress can be made by bringing the parties together again). Mediations are usually set for a day and can last late into the night. Sometimes we encourage our clients to agree a time-limited mediation intended to focus the parties' minds and limit costs.

When should you mediate?

Mediation can happen at any stage of the dispute – pre- or post- issue of legal proceedings or a reference to arbitration. In some cases we advise our clients to wait until certain procedural stages of the litigation or arbitration have taken place (for example when witness statements have been exchanged or the parties have disclosed their documents) so that an informed evaluation can be made of the relative strengths and weaknesses of the parties' cases. In others we may take the view that it is best to mediate at an early stage before significant costs have been incurred, which often serve to make it harder for the parties to reach an agreement.