·         Mediation, should it be considered before and instead of litigation?

There is a push from the clients … looking for rapid and effective dispute resolution,” says Richard Naimark, senior vice president of the American Arbitration Association (American Bar Association Journal 11.3.2009.), which accords with Lord Woolf’s comment (reported 22 October 2009 by Jonathan Rayner – Law Society Gazette)  that litigation was intended to be used as a ‘last resort’. See also Victoria Brackett’s report in Solicitors Journal of 9th February 2010 - http://www.solicitorsjournal.com/section.asp?navcode=318 survival skills.

·         Arbitrators – should they be more pro-active before the arbitration takes place?

International arbitration has ‘lost its way’, the former lord chief justice Lord Woolf told the Law Society Gazette this week (03 December 2009), as he launched a set of guidelines which will build mediation into the arbitration process.

The guidance will streamline proceedings at a time when there has been a marked increase in disputes.

It includes a ‘mediation window’ to be inserted into arbitral proceedings to make it easier for parties to come to a settlement in international arbitrations. This would enable proceedings to be adjourned so that mediation can take place at the request of the parties.

The guidance allows an arbitrator, with the parties’ permission, to give a preliminary view on the merits and issues in the case and the evidence required for a party to prevail. ‘Litigation in the commercial courts has improved, and if we aren’t careful international arbitration will suffer and be left behind because it hasn’t made changes to its procedures,’ he said.

‘Mediation and other early settlement techniques are being encouraged by the commercial court, but this is not taking place in international arbitration. If this continues clients will walk away from it.’

Echoing Lord Woolf’s sentiments above Patrick Dean, senior legal counsel at Nestlé, said: ‘We’re seeing an increase in the number of claims and everything is calling out for a more streamlined process. These rules and guidelines are timely.’

Lord Woolf’s views also accord with those of John Wilkinson of the New York State Bar Association’s Dispute Resolution Section who said in his article  in the ABA Dispute Resolution Magazine (Fall 2009) “The ultimate efficiecy in resolving a dispute is settlement through mediation before any arbitration is even initiated.”

·         Litigation – are cash-strapped corporations of all sizes, private individuals and others seeking to avoid litiga­tion costs by resolving business-to-business, consumer disputes via mediation?

Lord Woolf’s comment reported above (22 October 2009 Law Society Gazette) that “he had been told by one large corporation that the cost of defending litigation was so high that it always settled cases unless there was a public interest reason not to do so.”

Ian Luke, managing director of construction company Skanska, also took the stance in relation to Lord Woolf’s comments (03 December 2009), which also echoed the comments of Richard Naimark: ‘We spend a fortune each year trying to resolve disputes. As a businessman, that’s not good. Anything that reduces the need for litigation or arbitration is worthwhile.’

Not many people are aware of a quite frightening business secret.  Believe it or not - the estimated annual cost of conflict in the workplace to the UK economy is a staggering £24 billion pounds!!

This isn’t my figure - those clever people in the Chartered Institute of Personnel and Development have come up with this number after carrying out extensive and careful research.

We all know that disputes at work cost money through lost management time, lower productivity, higher sickness and absenteeism and higher employee turnover, and this is just the direct cost to the UK economy.  Indirect costs, which are harder to value, include:

Ø  Reduced employee engagement

Ø  The likelihood of projects being delivered on time and on budget

Ø  Increased theft and sabotage

Ø  Lower employee attraction

Ø  Potential interruptions to the supply chain

Ø  Poor customer service delivery

Ø  Poor staff morale

And the list goes on . . .

So, at a time when there is pressure on every organisation in the UK to look for cost savings, why then are companies not looking to achieve cost savings and a competitive advantage by reducing conflict in the workplace?

Although I hate to admit it, we often have to look at what is happening in the United States of America before we can then look to follow examples set by our American brothers and sisters.  So here is a bit more information which you might find interesting.

A survey conducted by the American Management Association some years ago found that Chief Executives, Directors and Senior and Middle Management spend, on average, 24% of their time resolving conflict in the workplace.

Again, looking at American companies and in research undertaken by Karl Slaikeu and Ralph Hasson in ‘Controlling the Costs of Conflicts’ the following are examples of what can be achieved in practice:

§  In the first year of comparison, Brown and Root reported an 80% reduction in outside litigation expenses by introducing a systematic approach to collaboration and conflict resolution regarding employment issues.

§  Motorola Corporation reported a reduction in outside litigation expenses of up to 75% per year over six years by using a systematic approach to conflict management in its legal department and including a mediation clause within its contracts with suppliers.

§  National Cash Register Corporation reported a reduction in outside litigation expenses of 50% and a drop in its number of pending lawsuits from 263 to 28 following the systematic use of alternative dispute resolution.

§  The US Air Force reported that by taking a collaborative approach to conflict management in a construction project, it completed the project 144 days ahead of schedule and $12million under budget.

And it is not just in America that enlightened organisations have introduced pro-active systems for dealing with conflict in the workplace.

East Sussex County Council (‘ESCC’) & Globis Ltd collaborated with trade unions to introduce a workplace mediation scheme that was ultimately short-listed for an award at the Chartered Institute of Personnel and Development 2009 Awards in the ‘Change Management through HR Impact’ category.

ESCC report that the introduction of Mediation has:

ü  Prevented workplace disputes from escalating out of control.

ü  Reduced the cost of resolving conflict (financially and emotionally).

ü  Contributed to a positive and productive working environment.

ü  Reduced the stress and anxiety of all parties involved in the process.

ü  Provided a ‘safe place’ for all to be heard.

ü  Placed the power and responsibility directly with the parties rather than HR or trade unions.

ESCC measured the impact of its Mediation Service in the years 2008 and 2009 and reported that:

ü  100 % of cases (34) referred to mediation were successfully resolved.

ü  The number of formal workplace disputes fell by 47%.

ü  ESCC recouped its initial training investment within one month.

ü  ESCC reduced the average time taken to resolve disputes using a formal grievance procedure from 60 days to 3 days for a mediation.

ü  An increase of 5,814 productive days.

ü  The cost of resolving an average mediation was measured at £2,400 compared with an average cost of £18,000 to go through a traditional method.

ü  3 employees returned from long term sickness immediately after mediation.

So what does all this mean for the UK economy?  Can we really dent this £24 billion pound problem simply by doing a better job of managing conflict in the workplace?  I am sure we can. We just need to think about how we can collaborate and develop systems to get the best from our most important resource (people), and have systems for resolving conflicts in the workplace in a private, quick and economical way.

Mediation in the workplace is here to stay!

Peter Vinden,  North West Mediation Solutions.

Best practice advice to clients on the meaning of these terms.

Your client contacts you as her solicitor regarding an impending settlement meeting. It has not yet been decided whether it will be a mediation or a joint settlement meeting. The issue bothering your client is confidentiality; she is concerned that negotiations will necessarily touch upon matters that are commercially sensitive to her company and she wishes to ensure that these will remain private.

Your main advice in response to this query is quite straightforward. First, whether there is a joint settlement meeting or a mediation there will, as matter of routine, be an agreement that the meeting is “Without Prejudice”. This, of course, would preclude one party telling the judge what happened at the meeting in the event that it did not produce a settlement. Secondly, if the settlement meeting did proceed by way of mediation there would ordinarily be an Agreement to Mediate which would confirm the “Without Prejudice” status of the meeting and also include contractual provisions about confidentiality.

So far, so good. Now, can you tell your client, in light of that advice, to relax? In general terms, you can. The courts have a long history of encouraging settlement discussions on the basis that the parties are free to talk about settlement without having what they say repeated at any later trial. It would be courageous, however, and some would argue negligent, to allow the client to believe that there was confidentiality without limit or exception.

The “Without Prejudice” rule has long been subject to exceptions. See for example those listed by Robert Walker LJ in Unilever ( [2000] 1 WLR 2436 at 2444);  they include situations involving estoppel, perjury, blackmail or other “unambiguous impropriety” as well as the need to explain procedural delay or apparent acquiescence. They also include the circumstances where one party’s assertion that “Without Prejudice” discussions led to a firm settlement agreement are contested by the other – see Brown v Rice and Patel  [2007] EWHC 625.

Two other cases, Muller v Linsley & Mortimer [1996] P.N.L.R. 74. and Cattley v Pollard [2007] Ch. 353, deal with the situation where there are two actions that are connected in some way and a party in the later action wants to adduce evidence from the first action. This would be the case where, say, there was a personal injury claim but the claimant was dissatisfied with the outcome, sued his solicitor for negligently handling a mediation and therefore wanted the court to consider all the mediation papers. In Muller and Cattley, where the court was faced with similar circumstances to these, disclosure was ordered, notwithstanding the claim that the material was “Without Prejudice”. See, however, Ofulue v Bossert 2009] UKHL 16 where the House of Lords held that “Without Prejudice” negotiations which took place during the first of two actions could not be reviewed by the court in the second action.

So, the “Without Prejudice” rule is not without exceptions or “grey” areas. It may have been thought that a contractually based mediation confidentiality agreement might be more watertight, but there are exceptions to take into account here as well, as can be seen from the recent decision in Farm Assist Limited (in liquidation) v The Secretary of State for the Environment, Food and Rural Affairs (No.2) [2009] EWHC 1102 (TCC). Here the claimant was seeking to set aside a mediated agreement, reached some years before, on grounds of economic duress. Both parties agreed to the court examining mediation material and to calling the mediator. The mediator did not agree to this and sought to set aside the witness summons on a number of grounds, including the confidentiality provisions in the agreement to mediate and the fact that the mediation negotiations were “Without Prejudice”. The court summarised the authorities and gave this guidance:

“(1) Confidentiality: The proceedings (at a mediation) are confidential both as between the parties and as between the parties and the mediator. As a result even if the parties agree that matters can be referred to outside the mediation, the mediator can enforce the confidentiality provision. The court will generally uphold that confidentiality but where it is necessary in the interests of justice for evidence to be given of confidential matters, the Courts will order or permit that evidence to be given or produced.

“(2) Without Prejudice Privilege: The proceedings are covered by without prejudice privilege. This is a privilege which exists as between the parties and is not a privilege of the mediator. The parties can waive that privilege.”

The above does not purport to be a full outline of the law relating to the “Without Prejudice” rule and confidentiality. It perhaps says enough, however, to suggest that best practice on advising clients about settlement meetings and mediations should be couched in careful terms and should be preceded a dialogue to discover whether any of the various exceptions might apply. Statutory provisions such as the Proceeds of Crime Act, the Data Protection Act and the Freedom of Information Act should also be borne in mind.

Clients should not be put off from having confidential discussions, for the reasons mentioned above, but they should be aware that if the court thinks that the public interest may be involved there are circumstances where it may be prepared to lift the veil.

Tim Wallis

Mediator and Solicitor
Chair, Dispute Resolution Committee, Civil Justice Council

North West Mediation Solutions

A.  The first part of this answer may seem obvious:

• know your case inside out;
• the 2nd is – know your opponent’s case inside out.
• All of which means:
• Which facts are in dispute.
• Which facts are agreed.
• Which facts are critical.
• Which facts are irrelevant.
• What remedy to you desire, BUT, more importantly –
• what remedy do you NEED.

Q.  Explain point 2 above.

A.  It may be difficult to do this but try and place yourself into your opponent’s team (in mind  
only obviously). It will help you to predict where potential blockages may occur in your
negotiations. It will give you time to think about available options to get round problems
with your opponent.

Q.  Should I consider the fact that mediation may not succeed?

A.  Yes, so you must consider your Best Alternative To Negotiated Agreement (BATNA) and
your Worst Alternative To Negotiated Agreement (WATNA). This way you will be able
to contrast what you desire to achieve from the mediation with the best and worst
scenarios if mediation fails.

Q.  Why?

A.  No-one likes to think about failure but refusing to consider the two positions above could
mean that you are approaching mediation with potentially over-optimistic aspirations.

Q.  “Desire” and “Need” have been mentioned – please expand.

A.  An example may assist. You may be claiming £250,000.00 which will keep your
shareholders happy and may lead to a bonus for you (your desire) but you will also know
that unless you obtain a minimum payment of £100,000.00 you may be faced with your
bankers recalling your loan facilities (your need).

Q.  We know that litigation can be a gamble and costly, but what else does mediation offer?

A.  Options that are not available to a Judge or Arbitrator. Consider in preparation things that
can be offered to ease negotiation, e.g. future work, extended warranties or future
discounts.

Q.  Anything else to consider?

A.  Remember that if the mediation is successful there will be an agreement between the
parties – a hand shake and a written document, and in many cases most importantly, the 
sting taken out of the dispute, thereby enabling the parties to work together in the future.

www.nwmediationsolutions.co.uk
e. peterwhitman@nwmediationsolutions.co.uk
t. 01254 720278 f. 01254 720278 m. 07774 694964