The carrot beats the stick

Mediation has proven itself an invaluable aid to business – just so long as it’s not foisted on the participants

The Government has introduced the automatic referral to a mediator of all claims below the current small claims limit of £5,000. One could be forgiven for thinking this the thin end of the wedge of compulsory ­mediation, but the Government is clear that this is not the case.

This is welcome clarification. Where there is compulsory mediation numbers rise, but that is about the only positive. Settlement rates and respect for the process usually decline. Consider the old lawyer joke: a potential new client is waiting in the reception of ’Bastard Bastard & Smith Solicitors’; when told that Mr Smith is ready to see him, the client replies, “Oh, I was hoping to see one of the Bastards”.

People do not like being forced down a path they have not chosen, particularly at the outset of a dispute.

The Government has also proposed a review of the effectiveness of mediation information. This is also welcome, for there is no shortage of information, but it is a bit one-­dimensional – ’Go mediation, it’s less bad than court’.

Parties should see mediation as a business process that avoids long and expensive negotiation, not just ­litigation. More importantly, they should see it as a way of maximising their chances of settlement.

If the Government’s aim is to keep more cases out of court, it should think about those that do not go to mediate but go to trial because ­negotiations have failed.

Take the case decided last year ­between breweries Samuel Smith and Cropton. It was noted by the judge that despite two (obviously ­unsuccessful) without-prejudice meetings, the case should have been referred to mediation. He recognised that many cases will not settle in ­negotiation but will at mediation.

Mediation is more than turbo-charged negotiation. Negotiation is an inherently adversarial process with many pitfalls. A smirk too far, an insult too cutting and there they go – it’s a walk-out. A stroppy without-prejudice letter invites a similar response, with polarisation the result.

Negotiation can also be open-ended, time-consuming and costs-guzzling, lacking the intensity of focus that mediation offers. At mediation proposals can be analysed and dealt with in half an hour, not days or weeks. Parties’ interactions can be managed so as to help, not hinder, with traction maintained until the job is finished.

Not all parties need mediation. Avery Brewing and Russian River Brewing each developed a Belgian-style beer, but both called it Salvation. Did they slug it out? No, they ­decided to blend the beers and called the result ’Collaboration, not Litigation Ale’. Not a name that rolls off the tongue (particularly after you’ve had a few), but one that captures the ­genesis of a no doubt fine beer.

This is the kind of story that makes a mediator go weak at the knees, ­although the parties above did not need one. However, plenty of parties do, and if negotiations are likely to prove rocky, protracted, expensive or inconclusive, why not streamline the process and increase the prospects of settlement by enlisting the help of a settlement professional? It makes sense, but must also be the parties’ choice.