What is Mediation?
Mediation is a process that allows parties in a dispute to mull over and think about things with a view to finding a settlement to the dispute. It involves two rooms, confidentiality, and an objective third party who acts as a go-between, mediates between the two parties and helps to find a resolution that the parties can live with.
This compares quite starkly (and often bitterly) to court proceedings, arbitration (another form of using a neutral third party to work through the problem) or adjudication, in which a decision will be imposed on the parties — often a decision that takes the form of something one party cannot live with.
In outline, mediation is a process that the parties to a dispute willingly engage in to reach settlement of the dispute. The process needs a mediator who must be someone who comes to it as a neutral; an independent with no axe to grind or any connection with the parties.
Mediation is held in private. The process is confidential and held on a “without prejudice” basis. This means that you can say what you like and none of it is on the record. This is important as it allows the parties to talk freely and explore settlement options without fear that what they say may then be repeated in court, or any offer made taken as an admission of fault.
One point to make, though, is that any agreement reached at mediation will be binding on the parties and capable of enforcement in court or through arbitration. There is little point in going through the process if, at the end, the piece of paper you all sign has no legal effect.
The terms of settlement can remain confidential, by the way, and they often do — which is unlike court, where the world might get to know about an interesting judgment with reporting of judgments widespread on the internet.
Why is Mediation the Best Approach?
What really appeals to me about mediation is that it is flexible. The parties can agree what they like. So as an example, the builder might agree to come back to site in return for payment of extras, the value of which has been negotiated in the mediation. Court cannot award this. Court awards money and that’s about it, although court may be more suitable if there is something like an injunction needed. The reality, however, is that most building disputes are suitable for mediation.
Parties also like the idea of being able to talk to the mediator about what the dispute is about. Discussions with the mediator are private and confidential. Litigation does not provide this opportunity as a judge cannot consider any evidence that is not out in the open when making a decision. A private chat with the judge just won’t happen!
Some disputes are about the cost of work done. Some disputes are about the time it has taken to do the job. Others are about the quality of the work. Many disputes are in fact a combination of the above. These are all issues that can be, and should be, resolved by negotiation — and mediation provides the facility to do this.
What’s Involved in the Mediation Process?
The flexible nature of mediation means that there are no hard and fast rules, but usually, mediators will help the parties reach a settlement through meetings and private discussion without seeking to impose a view on the case. That is not to say that the mediator is not afraid to reality test the perceived strength of a party’s position. Reality testing can be an important part of overcoming deadlock.
Once a mediator has been agreed by the parties (there are several mediator providers, for example, mediation4construction.com or cedr.com), a date is set and the parties will each send the mediator a “position statement”, containing an outline of the dispute. The paper can either be confidential between the party and the mediator, or shared.
I have often received an additional confidential paper in which the parties explain why the case has not settled and any offers that have already been made. It is often also helpful to be provided with each party’s settlement parameters (on a confidential basis, of course).
The day can start with an open meeting with the parties and the mediator together. An open session is not essential however, and can sometimes be counterproductive. For example, if there is so much bad feeling it is better to start with private sessions and see how it goes.
Most of the day is spent in private sessions with the mediator, who will explore the underlying issues and identify any common ground. The mediator will assist the parties in coming up with options for settlement; a good mediator will identify the “must have”, “can’t have” and “would like to have” from each party to identify settlement parameters.
The mediator may bring the parties together at various points in the day to help with discussion. On one session I undertook, I discovered that the parties had not actually spoken to each other for years, yet once they were put in a room together, the deadlock was broken.
Settlement is only achieved once all the issues have been agreed on, written down and then signed by the parties. This ensures there are no misunderstandings and gives the parties an agreement that can be enforced in court if necessary. If court proceedings are already underway then the court will need a copy of the agreement so the proceedings can be concluded.
How Much Does Mediation Cost?
Research, as well as experience, tells me that many disputes in the building trade are over sums of money, often up to £50,000. The mediator’s fee can be as little as £750 per party plus VAT, which represents excellent value for money and at a level that is proportionate to the sum in issue. Disputes that involve more parties and larger sums will cost more to reflect the additional work required and sums at stake.
Many parties are already involved in legal proceedings by the time they then decide to mediate. This often means that the parties will already have legal representation and the representatives are therefore likely to attend the mediation too. This adds a layer of cost to the process but at the same time good legal representation can assist not only the parties but also the mediator.
I would, however, encourage parties to mediate at an early stage of a dispute and come to mediation in person. There are no rules on this and I suppose you pay your money and take your choice.
What if I Do Not Settle?
Settlement rates at mediation are high — typically around 75 to 80% of cases settle on the day, with many then settling in the days that follow. Some cases reach an agreed way forward towards resolution, but there ought to be strong encouragement from the mediator to settle on the day.
If settlement is not possible then court proceedings will continue to trial (if it does not settle before). If proceedings are not yet underway then the parties may attempt mediation at a later stage during proceedings. One thing you can be sure of is that the court will want to know what attempts have been made to mediate, as an unreasonable refusal to mediate will, these days, be met with some sort of costs sanction.
In extreme cases, this can be reflected in an order that the winning party must pay the costs of the losing party if it has refused a reasonable offer to mediate.