Many businesses are finding that mediation is a more cost efficient way of resolving disputes.
The Greater Manchester Chamber of Commerce has launched a dispute management service with mediation at its heart. Businesses can now easily find a way through the litigation system and get right to the commercial heart of the problem.
The 2014-15 Civil Court User Survey found that of 2,212 business and individuals who responded, 68% would have preferred to avoid court action completely.
An American Arbitration Association’s survey of Fortune 1000 companies as well as 103 mid-sized US companies and 50 privately owned companies looked at whether they were ”dispute-wise” in favouring ADR over litigation. Comparing the price/earning ratios of the most dispute-wise with those of the least wise, they found that the index of the former was 28% higher than the average for all companies in the survey and 68% higher than the companies in the least dispute wise category. This suggests that “dispute-wise” businesses are more profitable than those which are not.
The Legal Affairs Committee of the European Parliament also considered the costs of mediation in terms of time and money compared with the time and money in litigation. This report concluded that 81% of mediations in the EU would need to fail before there would be no benefit in terms of time saved and 76% would need to fail before there would be no benefit in cost-savings. They concluded that ADR was consistently successful.
In his interim report on the Review of the Civil Courts Structure (Dec 2015, para 5.15) Lord Justice Briggs describes the lack of access to justice for ordinary individuals and small businesses as “a truly shocking state of affairs.” The Courts and Tribunals Service (HMCTS) is carrying out a major overhaul of the civil court structure which is likely to result in mediation being central to the Court system. However, Courts are being closed and Court fees increased.
It is likely that there will be a requirement to go through a formal consideration of the benefits of mediation before issuing an application and in the new Online Court, mediation will be part of the process.
For claims above £10,000 the primary incentive to mediate is the possibility of a winning party not recovering all of its costs because of an unreasonable refusal to mediate, but it is better to mediate from the outset so as to prevent the wasted expense, delays and the human cost of litigation.
What people often don’t appreciate until they are wrapped up in all consuming litigation is how the formal processes and time limits imposed by the system plus the increasing Court costs can become a barrier to resolving a case themselves.
A survey conducted here in 2014 analysed 9500 mediations (which shows the growth in mediation from the 2000 surveyed in 2003). 70% of those cases settled on the day of the mediation with another 15% settling shortly thereafter. The startling findings are that by achieving earlier resolution than would otherwise have been obtained by going to trial, the commercial mediation profession saved business about £2.4 billion in wasted management time, damaged relationships, lost production and legal fees at a cost of only £2.25 in mediation fees.
Recognising this, the government will shortly be launching the Small Business Conmissioner to direct parties to mediate and on top of that the ADR Directive and ODR Platform were recently introduced for consumer complaints. The Greater Manchester Chamber of Commerce and other organisations are ahead of the game and are helping businesses to find their way through the litigation maze to resolve disputes conveniently, confidentially and cost effectively.
To arrange a mediation or discuss whether your dispute is suitable for mediation, or if you are a business which has to comply with the ADR Directive, please give us a ring.