Will Mediation Hit Escape Velocity?

Despite its slow growth over the past 20 years, there is a move by the Ministry of Justice (MoJ) to open the floodgates and divert thousands of civil disputes into mediation.?

Could this be the rocket fuel needed by the civil and commercial mediation sector in the UK to send mediation into the orbit of mainstream dispute resolution??

Modernising The Justice System

Mediation could soon become an integral part of the civil justice system as concrete proposals to introduce mandatory mediation for civil claims up to the value of ￡10,000 are put forward and a UK government consultation gets underway.?

This move forms part of a larger initiative to modernise the justice system in the UK. Her Majesty’s Courts and Tribunal Service’s (HMCTS) Reform Programme aims to improve access to and efficiency in the justice system with the goal of,? in their words, ‘making justice easier’.

A major component of this programme is the digitisation of the courts and provision of other legal services online. We can therefore also expect many of the envisaged mediations to take place online.

The consultation, which will inform moves to increase the use of mediation in the civil justice system, closes on the 4th of October 2022. It aims to gather information from stakeholders regarding the proposed scheme, including:

• Which cases should be mediated and which should be exempt;
• What will happen if parties fail to engage with the process;
• What the consequences of non-engagement or non-compliance might be;
• How non-compliance would actually be defined.

The consultation will also consider what improvements could be made to the existing service and whether public confidence in the service could be strengthened by regulating standards of training, practice and service providers, the latter being a controversial topic in the mediation field.

The UK Commercial Mediation Market

It’s no secret that mediation has been slow to get out of its launch silo despite case numbers inching gradually up and to the right.?

*Graph taken from the 9th Mediation Audit produced by CEDR

The Centre for Effective Dispute Resolution (CEDR) conducts a biennial survey that tracks, in a rudimentary way, the number of commercial disputes resolved through mediation. The growth curve is more ‘snooker cue' than ‘hockey stick' but, according to the survey, the number of mediations carried out is growing year on year - which corresponds with anecdotal accounts.

However, if the MoJ proposal gets the green light, as many expect it will, we could see a significant volume of cases come on stream in a compressed time frame. This is good for mediators, mediation and of course disputants who get the opportunity to reach swift and consensual outcomes.?

Mandatory Mediation - It Was Just A Matter Of Time

Much has been written over the years on the merits and demerits of mandatory mediation. Some commentators have suggested that ideological issues have imposed constraints on the adoption and growth of mediation.

The ideological debates between the purists and the pragmatists have been well documented, the purists arguing that any coercion or compulsion to mediate collides squarely with one of the core tenets of mediation - voluntary participation. A party should be entitled to make a free and informed choice whether they engage in mediation or not and forcing someone into mediation is a direct hit on party self-determination. The pragmatists, on the other hand, argue that contemporary professional mediation is in its infancy and is still searching for product-market fit and we should take a flexible and utilitarian approach to expanding the pie.?

Product-market fit is the degree to which a new product or service meets a strong demand by users/consumers.?

Did Professor Frank Sander get it right when he suggested, many moons ago, that coercion into mediation is not the same as coercion in mediation? In fact CEDR’s MD, James South , in a recent article on this topic, reasoned that the move to introduce mandatory mediation for small claims is a common-sense approach to the problem the courts and disputants face in today’s world.?

Let's hope common sense becomes common practice.

Market Economics?

Claims that economic arguments have held mediation back from hitting escape velocity have long centred on the winner-takes-all market phenomenon found in labour market economics.

Despite the pool of mediators widening over the past few years, there is still a perception that a large proportion of cases are mediated by a small number of mediators - something that could change considerably with this new mandatory scheme.

Dr Urska Velikonja, Professor of Law at Georgetown, argued that the market for mediators is unlike other markets for professional services and more akin to the market for professional athletes (or entertainers - you know who you are) where remuneration depends upon relative performance and concentrates rewards in the hands of the few. Velikonja identifies a number of market conditions that contribute to this phenomenon, the most obvious one being the imbalance between supply and demand.?

Further she argues that the buyers of commercial mediation services, typically lawyers, are driven by the avoidance of adverse effects and therefore opt for a trusted brand to get the deal done rather than take the risk of hiring an unknown quantity. Velikonja goes further to suggest that mediation, as a product or service, doesn’t meet the requirements of a properly competitive market, namely product homogeneity. The top flight mediator, working on multi million pound disputes, isn't competing in the same pool as the mediator mediating a ￡50K dispute, despite there being, possibly, a marginal difference between the skills and effectiveness of these two mediators.?

New Practice Models ? New Business Models

Professor Velikonja’s paper was written in 2009, long before the pandemic changed the game and mediating online became the norm. It’s now conceivable that technology will lift some of these competitive constraints as mediators familiar with the virtual world gain an edge on the trusted and familiar brands.

The economic landscape has also changed as companies tighten belts and look for greater process pluralism. Mediators who can offer something new, different and flexible might well forge a lucrative career path for themselves.?

Putting ideology and economics to one side for a moment, there’s another fairly obvious argument as to why it has taken a mandatory mechanism to drive disputants down the path of enlightenment to talk to each other directly to resolve their dispute. People, by and large, don't always make the best choices about what’s good for them.

We know spinach is nutritious and healthy yet presented with a bowl of spinach or a box of donuts, we are more likely to reach for the donuts (every time) despite knowing the detriments of refined sugar to our health.?

But the ideological and economic arguments at least provide some pause for thought.

Benefits Outweigh The Costs

Let's dive into the numbers.

It is estimated that something in the region of 20,000 fewer cases will reach the court each year as they get diverted into mediation. Furthermore the consultation document estimates that each year around 270,000 parties will get the chance to resolve their disputes consensually.?

The MOJ have carried out some modelling of the costs and benefits of the new scheme and the anticipated benefits are compelling.

Costs Of Implementing Mediation Scheme

The annual costs for HMCTS of implementing the scheme are estimated to be in the region of ￡2.8m with a further ￡2.1m loss of revenue from lost hearing fees of cases diverted into mediation. The impact on business is estimated to be in the region of ￡2.7m as they allocate resources to prepare for mediation. Lawyers may also lose income from representing clients, but before you reach for the Kleenex you might draw comfort from the MoJ, who are confident lawyers will find work of equal or better economic value.

The financial benefits however seem to far outweigh the costs.

and the cost savings...

It is anticipated that HMCTS will save between ￡4.6 and ￡7.1m annually from sitting days saved through the reduction in small claims cases. The savings to small business are also material, estimated to be between ￡37m and ￡58m, as disputes get resolved with far greater efficiency. With the average cost for a small business of a legal dispute estimated at around ￡3,400, many small businesses are likely to welcome a faster and cheaper alternative.

Then there are the intangible benefits - not to be underestimated - as parties achieve swift resolution of their disputes, incur reduced levels of stress and anxiety and reach peace of mind much sooner. Mediation also helps parties rebuild and preserve commercial relationships, the by-products of which could well be passed onto the consumer.

A Rising Tide Lifts All boats

I did read once about a training company in the US running 40-hour mediation training programmes on cruise ships in the Caribbean, but that’s not where I’m going next.

It has long been argued that the pace of growth of the mediation market is largely dependent upon a supportive infrastructure where users, mediators, educators and government all take an active role to establish this infrastructure.

Indeed the proposal for mandatory mediation comes at a time of regulatory tailwinds as the UK prepares to ratify the Singapore Convention. Even though some experienced mediators minimise the practical value of the Convention, many see it as a firm endorsement of the legitimacy of international commercial mediation by the international community and commercial stakeholders.??

The Singapore Convention is a Private International Law agreement which establishes a uniform framework for the effective recognition and enforcement of commercial mediated settlement agreements across borders.

Mediation has also hit the headlines recently with the high profile and tragic Grenfell Tower case heading into mediation. Former president of the Supreme Court Lord Neuberger has agreed to mediate between the victims of this disaster and the organisation accused of responsibility.

*Article and photograph appeared in the Guardian on 02 August 2022

Lord Neuberger will be joined by the vastly experienced Bill Marsh from Independent Mediators. This is just another example of mediation becoming part of the fabric of our justice system and another step closer to entering the consciousness of a population.??

The End...of the beginning

In conclusion, a solid and steadily-growing commercial sector with high profile cases hitting the mainstream press, and the real potential of low-value, high-volume disputes soon to be coming on stream, could well be the trifecta of wins mediators have long been waiting for.?

But let’s not kid ourselves.?

There is one thing and one thing only that will unequivocally prove to us all that mediation has finally hit escape velocity and that is when Google autocorrects meditation to mediation.

I'd love to hear your views on this and any suggestions on other ways to promote civil and commercial mediation in the UK and further afield.

Drop your comments below ????