26 April 2004
Mediation statistics have for the last few years shown a healthy growth. Statistics from CEDR Solve, the Centre for Effective Dispute Resolution’s dispute resolution service, have often been used as an indicator of the field’s development, and for 2003 show an all-time high of 631 cases. This is an absolute growth of 35 per cent. Indications are that 2004 will be at least as strong.
The Government’s own last published statistics (2003) also revealed a sharp increase in mediation usage, from 49 cases in the previous year to 167 cases.
Recognising this increase, the strong settlement evidence (89 per cent) and the resultant estimated cost savings of £6m, it is perhaps not surprising that the Government has committed £1.5m to launch mediation pilot schemes in 40 courts across the country during 2004.
Last year, the courts played a significant part in encouraging the use of mediation through several judgments endorsing the use of or, at the very least consideration of, mediation (Hurst v Leeming, Shirayama Shokusan Co Ltd v Danovo Ltd and Cable & Wireless v IBM to name but a few). We are all anticipating the outcome of Halsey v Milton Keynes, which is currently being heard before the Court Of Appeal and which is widely expected to add further clarity to the question of lawyer obligation to encourage mediation.
Due to a combination of this judicial direction and the growing sophistication of users and their increased awareness, we are beginning to see sectors hitherto reluctant to consider mediation now embracing it. Last year, mediation activity within property, personal injury (PI) and employment disputes doubled.
However, while we are gathering strong support from the majority of the dispute professionals, starting with the lawyers and the judiciary, and now rolling out to clients and users in a variety of sectors, there is one potentially influential group that is so far proving a more reluctant user – namely, the major commercial insurer.
The Institute of Actuaries estimates that the total cost of compensation in the UK amounts to more £10bn and that this is set to continue to rise at more than 10 per cent a year (T2, The Times, February 2003). The implications of this are grave and there is general consensus that the industry cannot sustain these levels. Furthermore, studies have shown that a third of the total cost of compensation goes on legal expenses. Clearly, then, mediation does have a role to play and, when fully embraced by insurers, the potential for further growth will be enormous.
Encouragingly, there are early signs that some insurers, albeit in specialist sectors, are beginning to realise the benefits that mediation could play in countering the threat of a compensation culture. CEDR Solve has recently pioneered a major pilot scheme with PI insurers, with cooperation from law firms DLA and Beachcroft Wansbroughs. The scheme triggers the introduction of a neutral when claims for catastrophic PI are first notified – a point when communication between the parties is at its most positional.
And this scheme is perhaps a pointer to the most significant development of all.
Many organisations are starting to see that the benefits of mediation extend beyond the single ‘distress purchase’ to specifically resolve a single dispute. We are now seeing the first signs of organisations taking a systemic approach to dispute resolution, building a mediation approach into the way they deal with disputes generally, training their staff in dispute handling and, in some instances, even agreeing sector-specific schemes to deal with recurring issues or disputes within their industry.
This is, I believe, one of the key challenges for the next phase of growth of our field: to move mediation away from the courthouse steps and into the mainstream; to make mediation not just a one-off purchase when things go wrong, but an integral part of risk management in modern day business and legal practice.