Overview on Mediation

Mediation

What is mediation?

Structured, flexible, voluntary process
Confidential and Without Prejudice
A third party neutral (the mediator) helps parties towards an negotiated settlement
The parties control outcome and terms of settlement, not the mediator

When can mediation be used?

Any kind of dispute
Any stage of dispute
Earlier is better - more cost-effective
Best time? Either before issue or as soon as sufficient information is available to enable negotiation

Costs of Mediation include:

Legal fees of solicitors/counsel
Mediator’s fee
Charges of the venue
Other disbursements e.g. refreshments, witnesses’ travel expenses, experts’ fees etc

Advantages

Informal
Flexible
Cheaper and faster than litigation
Creative settlement options possible – e.g. renegotiate a new contract on different terms
Parties in control of process and outcome
Confidential and without prejudice neither business damaged by adverse publicity
Negotiations assisted by the mediator
Can preserve commercial relationships

Disadvantages

Issues may not be clearly defined at pre-action stage
Accurate evaluation of the case may not be possible
No decision if parties cannot agree
No formal process for disclosure and exchange of evidence as in litigation
If ADR unsuccessful it may increase time and costs taken to resolve dispute

Types of Mediation Styles

Facilitative: mediator facilitates negotiations but gives no personal opinion about the merits of parties’ cases or predict a court outcome
Evaluative: Mediator again facilitates but will also evaluate each side’s legal case and offer recommendations for the appropriate range for settlement
“Transformative”: More rarely, mediators focus on improving relationships rather than dispute-solving, thereby leading parties to resolve their own dispute

Important factors to consider when selecting a mediator

Experience, training and accreditation
Expertise in subject matter of THIS dispute
Style – evaluative or facilitative
Bound by a code of conduct
Possessing Professional indemnity insurance
Personal attributes e.g. Congenial, persistent, fair, sympathetic, patient, trustworthy, authoritative
Neutral and impartial
Availability
Cost

Methods for appointing a mediator

Identify someone in private practice
Use an ADR provider eg CEDR, ADR Group
Use a court mediation scheme
Use the Civil Mediation Online Directory or CMC Directory of accredited providers

Preparing for mediation

Selection and appointment of a mediator
Agree and sign the Mediation Agreement
Agree and book a venue
Consider who should attend – must include someone who has authority to settle up the maximum value of the claim
Prepare and collate the supporting documents:

-agreed core bundle for all AND confidential bundle for mediator only

Draft the position statement (lawyer usually)
Ensure the client understands the process and is adequately prepared for it
Prepare case and negotiation strategy with client
Preliminary meeting or other contact with mediator (if necessary

The key supporting documents that should be sent to mediator are

Any written contract allegedly breached
Relevant documents e.g. delivery notes, despatch notes, documents recording damage, documents relating to quantum etc
Relevant correspondence
Draft witness statements already exchanged, if any
For mediator only: Any confidential information
Position statement

The outline of the Position Statement:

Background facts
Relevant procedural history (if any)
Matters agreed
Matters disputed (liability and quantum)
The party’s case on each issue
Settlement attempts so far, if any
The party’s objectives i.e. desired outcomes of the mediation

If Preliminary contact with the mediator occurs, the Mediator will:

explain the process and discuss whether it needs to be varied/personalised to meet needs of the parties
discuss practical matters such as the venue, any special arrangements needed, timing, who will attend, timetable for documents to be provided and exchanged
check who has authority to settle for each party + any limits on that authority
explore the issues
obtain the settlement history
identify any possible obstacles to settlement
check how the parties are funded
Obtain information about costs
identify the real interests and needs of the parties

Who else should attend the Mediation?

Those with knowledge of the issues
Person with authority to settle

Steps in the mediation process

Opening phase (Joint meeting)

Opening joint meeting (plenary session)
- All parties present, their lawyers and any insurers/persons having authority to settle the case + any additional witnesses or experts (rare).
- For a typical seating arrangement at the opening joint meeting
Opening statement by the mediator
- Introduces himself, highlights his expertise
- Explains what will happen during the mediation.
- Confirm his/her neutrality
- Emphasise the confidential, without prejudice nature of mediation
- Confirm that he will not reveal confidential information gained in private meetings with one party to opposing parties without consent.
- Explain that there is no binding settlement unless the terms of agreement are recorded in writing and signed by the parties
Opening statements by parties
- Summarise the facts (briefly)
- Identify the issues in dispute
- Usually made by the lawyer, but lay client usually asked to contribute.
- Direct it to the other side as well as the mediator.
- Can refer (briefly) to any documents which support your position e.g. key core documents, extracts from witness statements etc.
- Identify the client’s objectives in the mediation
Opening statement by the other side
- They will not reply to the statement of the first party.
- They will concentrate on presenting their own case
- Content and delivery of the parties opening statements should seek to set the tone for settlement discussions
The role of lay witnesses and experts during the opening joint meeting
- They may attend, but if they do it is usually in an advisory capacity – very rare for witnesses to give evidence at a mediation
- If they do give evidence, it will usually take the form of a statement in the opening session
Extending the Opening Joint Meeting
- The mediator may ask the parties to work together to identify/explore some/all of the issues.
Closing the Opening Joint Meeting
- The mediator will summarise the areas for discussion and explain what will happen in the next phase of the mediation

Exploration phase (Joint or Private meetings)

Information exchange
Identification of issues/areas for discussion
Probing and assessing
Usually takes place in closed private meetings
Each party brainstorms ideas/proposals in private with the mediator
Mediator moves between the parties’ rooms (“shuttle diplomacy”) sharing information only with parties’ consent
Mediator invite parties to review and re-evaluate their aims / play “devil’s advocate” and help them to generate options for settlement

Bargaining Phase (almost always private meetings)

Through the mediator, who acts as a “shuttle diplomat
Usually still takes place in private closed meetings
Mediator conveys offers and concessions and information from one party to the other
Mediator therefore helps parties to negotiate more effectively than they could do themselves because:

– No instant or spontaneous response is given as in face-to-face negotiations

– The mediator can use his skill and experience to judge the timing of offers and concessions.

– The mediator will reframe offers and concessions so that they will appear more attractive to the other side.

– By taking the place of the other side, the mediator removes “reactive devaluation” of offers

The purpose of separate meetings (also known as ‘caucuses’)

They enable the parties to discuss their case and options for settlement in private.
They enable the mediator to meet privately with the parties to help them re-evaluate their case and proposals for settlements.
They give the parties time to consider offers and proposals from the other side so that they can give a considered response.
The mediator will act as a shuttle diplomat, conveying information, offers, concessions and counter-offers etc from one party to the other.
Disadvantages: private meetings give a lot of control to the mediator; risk of inadvertent disclosure of confidential information to the other party.

Closing Phase (joint meeting)

Final joint meeting
Outcomes summarised by the mediator
Settlement agreement drafted/signed (if settlement terms are agreed)
Agreement reached about the way forward (if no settlement is reached) – future role of mediator/further negotiation/reconvening the mediation
If Settlement is reached
- This phase usually takes place in open joint meetings (although the settlement phase will also involve private lawyer-to-lawyer meetings).
- The mediator will confirm that settlement has been reached and he will make sure all parties are clear as to the terms.
- The lawyers will then work together to produce the final draft. The mediator may assist the lawyers during this process but will not (usually) play any part in drafting the terms.
- When the settlement agreement has been drafted, the mediator will read it out to the parties, and ensure they agree the terms – if so he will ask them to sign the agreement.
If no settlement is reached
- The mediator will outline what has been achieved;
- Urge the parties to adjourn the mediation to another day (if further time is likely to result in settlement).
- Identify the sticking point(s) and suggest ways for them to be resolved
- Offer his assistance in the future (if the parties agree).

Roles of the Mediator

Organise/administer the process – eg getting mediation agreement signed, agreeing dates, time, duration, venue, adjustments to process with the parties (ADR provider may do this instead if ADR provider is used)
Give guidance on the process, his role, the documentation, and the persons who should attend mediation
Organise the mediation meeting and chair joint meetings
Make an opening statement at the mediation
Meet with the parties privately in mediation and facilitate negotiations between the parties
Act as shuttle-diplomat conveying offers, counter-offers and information etc between the parties
Resolve deadlock
Assist with the drawing up of the settlement agreement by ensuring all agreed terms are included and facilitating negotiations in respect of outstanding issues (but s/he will not usually draft it unless the parties are litigants in person )
Close the mediation and try to secure agreement on the way forward

What strategies can the mediator use to break deadlock?

Carry out a reality test
Create multiple issues
Isolate lawyers
Help the parties to save face
Create solutions for bridging the gap
Persuade the parties to re-evaluate their case
Carry out a costs-benefit analysis with the parties
Focus attention on the alternatives to settlement

Counsel’s role in mediation

Before the mediation:

Undertake a legal, factual, evidential, practical and costs analysis and evaluation of the case
Consider underlying interests affecting settlement eg commercial/personal factors
Prepare negotiation strategy

At the mediation:

Make opening statement (and draft Position Statement if so instructed)
Advise client on offers, concessions etc
Evaluates case in light of further information/reality-testing by mediator (if required)
Persuades mediator of strength of client’s case/weaknesses in other side’s case
May conduct lawyer-to-lawyer negotiations of one or more of the issues
Re-evaluates case and advises client throughout the process
Reviews settlement proposal
Drafts settlement agreement. For recent cases where a lawyer was sued for failing to ensure that mediation ended in a legally binding agreement
Ensures client understands and agrees the terms of settlement.

The Without Prejudice rule

Without Prejudice rule provides that:

all communications (Written and oral)
passing between the parties to a dispute
whether made orally or in writing
made in an attempt to settle the dispute
are protected from disclosure to the court or any third party (including other parties in the litigation) in existing or future litigation between the same parties which is connected with the same subject matter

The parties will usually mark up the communications with the words “without prejudice”, but even if they do not, the privilege remains.

Rationale behind the Without Prejudice rule:

It is in the public interest to encourage litigants to settle disputes
Encourages open and honest communications in negotiation
Encourages parties to make concessions in negotiations without those matters being used against them in litigation if settlement is not reached

What is covered by the Without Prejudice(WP) rule?
All communications between the parties, the parties and the mediator, made in the context of mediation for the purpose of settling the dispute are covered by the WP rule.

It includes:

Pre-mediation communications about the mediation
Documents prepared for the mediation such as position statements

BUT it does not cover documents that would have to be disclosed in the usual course of litigation.

When can the court look at Without Prejudice communications?

To see if a settlement was reached and, if so, to ascertain its terms or to construe the terms agreed. The court can also look at “without prejudice” communications if they form part of the factual matrix or surrounding circumstances which would assist the court to construe an agreement that resulted from the negotiations
To see if there are grounds for dismantling the settlement eg fraud, misrepresentation, duress, undue influence
If an action is brought for rectification
If the WP rule is being used oppressively or improperly eg to mask threats, or for some other “unambiguous impropriety
To explain delay in prosecuting a claim/defence
Where ALL parties agree to waive the WP
Where the parties agree that communications can be looked at to decide the issue of costs – communications must be explicitly made on the basis of ‘without prejudice except as to costs’

Mediation agreement is NOT covered by the WP rule, so it can be adduced to prove its terms.

The WP privilege belongs to the parties so if all the parties agree to waive it, the mediator cannot stop them.

Difference between the without prejudice rule and the confidentiality rule in mediation

The mediator can enforce a confidentiality clause in the mediation agreement
A confidentiality clause can be enforced by an injunction and/or claim for damages for breach

When can confidentiality in mediation be overridden?

The court can override confidentiality and admit evidence of what took place in the mediation if it is in the interests of justice to do so.Examples of when it might be in the interests of justice to override confidentiality include:

Where it is sought to set aside the agreement reached in mediation on the grounds of duress, undue influence, misrepresentation, fraud etc
Where the mediator is being sued for breach of contract/professional negligence
Where lawyers acting in the mediation are being sued for professional negligence/misconduct)
Disclosure is required by law eg under Proceeds of Crime Act 2002
Disclosure is necessary to prevent serious crime or harm to the public or third parties

NOTE: there is a different test for overriding confidentiality in mediations in cross-border disputes.

What are the professional duties of a Lawyer to a client in mediation?

Act in the best interests of the lay client (CD 2)

a) You must promote fearlessly and by all lawful and proper means the client’s best interests

Act with honesty and integrity (CD 3)
You must not behave in a way which is likely to diminish the trust and confidence which the public places in you or in the profession (CD 5)
Maintain your independence
Keep the affairs of each client confidential (CD 6)
Provide a competent standard of work and service to each client (CD 7)

Consequences of counsel misleading mediator

If the mediator suspects that a party is misleading her/him, he/she is likely to stop the mediation.
The lawyer may be reported to her/his professional body and may face disciplinary proceedings.
Any settlement reached as a result of the provision of misleading information might be impeached on the grounds of misrepresentation.
The barrister may face a professional negligence action

Can a claim be brought against a mediator?

Possibly
Contractual relationship by Mediation Agreement
Implied term of reasonable care and skill
Also duty owed in tort (probably)
Need to show causation
There may be an exclusion clause – check agreement – it may be unreasonable under UCTA 77.

Regulation of Mediation and the Role of the Civil Mediation Counsel (CMC)

Mediation is largely unregulated except family mediation.

Some level of control/regulation/quality assurance is provided by:

a) ADR providers set minimum standards for the mediators they accredit

b) The governing body of some professions will lay down minimum standards

c) Civil Mediation Counsel (CMC)

What is the role of CMC in mediation?

CMC was set up in 2003 and became a limited company (Civil Mediation Council Limited – “CML”) in January 2015. Its aim is to:

Become the trusted authority for mediation in England and Wales
promote mediation
represent the interests of mediators/mediation providers
promote high standards/best practice
ensure compliance with those standards

Individuals and organisations can apply to become members of CMC/CML.

Main features of the CMC ‘Provider Registration Scheme’

1) Only open to ADR providers and bodies not individuals

2) ADR provider applies + pays annual fee

3) ADR provider must meet (and set out details in the application form, supported by a Statement of Truth) minimum requirements set by the CMC about:

a) No of mediators on their panel (at least 6)

b) Training undertaken (40 hours from 1/4/11

c) Compliance with the EU Model Code of Conduct for Mediators or a similar Code

d) Complaints procedure devised and operated

e) Mentoring and supervision and CPD scheme for mediators

f) Adequate insurance (£1,000,000 for each mediator

g) Adequate system of administration

Main features of the CMC’s individual membership scheme

Open only to individual mediators
Apply and pay fee
To apply, they must certify that they comply with the training standards laid down by CMC and meet similar requirements imposed on RMPs.
If the application is accepted the individual will become a Registered Mediator (RM).

Variations in the Mediation Process

Evaluative mediation

Mediator will evaluate the case (or a particular issue) or predict the outcome or give his opinion on the appropriate range for settlement

MED-ARB

Mediation takes place first
If it is unsuccessful, the mediator assumes the role of arbitrator and determines the dispute

ARB-MED

Arbitration takes place first
Arbitrator issues a sealed decision
The parties then mediate the dispute
If settlement is reached at the mediation, the sealed arbitration award is destroyed.
If settlement is not reached at mediation, the parties are bound by the sealed arbitration award.

Telephone mediation
- A joint telephone conference call usually takes place between the mediator and all parties to discuss issues/air views
- Then the mediator will hold private conversations, by telephone, with each party
- Negotiation phase takes place by mediator telephoning each party (as appropriate) to pass on offers, concessions and counter-offers
- A final joint conference telephone call may take place between all parties to confirm agreement and its terms
- Small claims mediations through the Small Claims Mediation Service– usually take place by telephone – but there is usually no joint telephone conference call

Online mediation

Mediation takes place by joint e-mail exchanges between the parties and private e-mails between the mediator and each party
A webcam conferencing facility can also be used during the process (this is rare)

The Civil Mediation Online Directory

It is an Online Directory maintained by the MOJ .It enables parties to find ADR providers in their local area. ADR providers servicing the Directory are registered by the CMC. It offers time-limited, fixed-fee mediations. The parties must expressly state that they found the mediation provider using the Directory for the fixed fees to apply.

The Main Court Schemes

The Small Claims Court Service

The Small Claims Mediation Scheme was set up by H.M. Courts Service

It operates in the County Court and deals with money claims less than £10,000.

The mediators are all employed by the Government and are attached to the court.

All small claims cases are automatically referred for mediation (although the parties may decline to mediate) except:

road traffic accident, personal injury or housing disrepair claims
any claim in which the sum claimed exceeds £10,000
any claim in which any party to the proceedings does not agree to referral to the Mediation Service

Parties are not charged - wholly funded by the Government. The mediation tends to take place by telephone and will usually last no more than 1 hour. The Small Claims Scheme is very successful and has a high success rate.

The Mayor’s & City of London County Court Scheme
Court of Appeal Mediation Service (“CAMS”)

The scheme is administered by CEDR Solve. The mediators on the CAMS Panel are all accredited by a recognised training provider and are sufficiently experienced. Members of the panel are regulated by the Court of Appeal.

The single judge who hears the application for permission to appeal will consider whether the case should be mediated. If so, it will be referred to CAMS, and CEDR Solve will contact the parties and invite them to participate in mediation. Parties can also refer their case to mediation through the scheme of their own volition. If the parties agree to mediate, CEDR Solve will appoint a mediator from the CAMS panel of mediators. CEDR Solve will then seek to agree a date for the mediation with the parties.

The parties themselves find and pay for a suitable venue. The mediator will usually be facilitative (although the mediator may be willing to provide an evaluation if requested by the parties) but can provide an evaluation if required. The mediation is time-limited, fixed fee mediation (currently £850 + VAT per party for the mediator + venue costs and parties usually will pay their own legal costs). If the claim is more than £1 million, or the case is exceptionally complex. CEDR may propose a higher fee for the mediation, but the court has to approve this.

If a party has no public funding, and is otherwise of limited means, they can apply to the court for the fee to be waived.

The Court of Appeal Mediation Pilot Scheme
The Birmingham, Manchester & Central London County Court Mediation Information Pilot Schemes

Can mediation be used to solve multi-party claims?

Yes .A number of mediators can be appointed .Claimants can be divided into sub-groups .It may need a series of mediation meetings on different days. Post mediation needed to divide up global sum amongst the different parties.

Advantages of Mediating Multi-Party Disputes

Cheaper than litigation
More speedy resolution
Can maintain confidentiality if this is important
Process is more flexible than group litigation orders in court proceedings and it can be tailored to meet the needs of the dispute/parties.

Problems of Mediating Multi-Party Claims

The process can be difficult to administer – need an ADR provider to help with administration
Mediating such claims can be more expensive and can take longer than mediation in a typical two-party dispute
Need to appoint parties to represent those whose claims raise similar issues of liability or quantum
Usually more than one mediator will be required

Mediation