Mediation 2016: Trends

Cost-consciousness and mitigation on the part of corporations have been the driving forces behind the development of mediation over the past year, as it has grown to become a valuable alternative to costly and lengthy litigation and arbitration proceedings. 

Cost-consciousness and mitigation on the part of corporations have been the driving forces behind the development of mediation over the past year. As companies increasingly look to resolve conflicts cost-effectively and efficiently, mediation has grown to become a valuable alternative to costly and lengthy litigation and arbitration proceedings. Although it has not yet reached the heights and prominence that its practitioners believe it merits, they are in no doubt that the practice area has a bright future. 

As the practice area has grown and developed, so has the role of the mediator: more often than not, this consists of aiding those involved in the preparation of a mediation, ensuring that they fully understand the process, through to conducting the mediation itself. Many practitioners highlighted that it is increasingly common for the parties involved in a mediation to not settle on the day. Instead, both parties use the mediation process to identify the strengths and weaknesses of their cases and their options going forward. After this further negotiations continue, and some arguments may be dropped or settled, or the case may be refined for litigation. The role of the mediator has evolved, and his or her task is no longer merely enforcing a settlement, but rather helping to build processes in order to achieve one; in short, to facilitate a dialogue between the parties. Many mediators view this shift as a sign of the development of the practice area, as it becomes better understood and recognised as a valuable form of conflict management.

Over the past few years, the growing cost of litigation has been a huge driver towards mediation as an alternative form of dispute resolution. In January 2015, the UK government announced that for money claims worth more than £10,000, court fees would be increased to 5 per cent of the sum claimed. This change in cost seems to have created a barrier to entry for those wishing to bring a case to court in the UK; however for mediators, it presents an opportunity for more mediation as an alternative.

Although cost savings are often regarded as the principal benefit of mediation, its speed and efficiency also stand out as strong advantages. Many sources have noted that in the fast-paced business environment of today, both litigation and arbitration can be “inherently inefficient”, consequently motivating lawyers to advise clients on pursuing mediation. Furthermore, it can be seen to invert the process of litigation, in that it seemingly transfers the responsibility back to the parties – thus allowing clients to feel more in control of the resolution process, and to take a more personal approach to it.

Globally, the future of mediation looks bright, especially in those jurisdictions where the courts are currently inundated with cases. India is a clear example of this: according to the National Judicial Data Grid, there are more than 22 million cases trapped in the Indian system pending judgment. Furthermore the country offers only 13 judges to every 1 million people. In such situations, mediation and other alternative forms of dispute resolution offer a solution to help alleviate the ever-growing burden and pressure on the courts. In the UK, the legal market has witnessed moments of mediation promotion from the courts over the past year. The case of Reid v Buckinghamshire Healthcare NHS Trust in December 2015, saw the defendant penalised for refusing an offer from the claimant to mediate. It is hoped that more frequent examples of such action will help to enhance the profile of mediation, encouraging parties to view it as a first port of call.   

Despite the seemingly overwhelming benefits of mediation, many mediators have lamented the slow pace at which the practice area is growing. They have highlighted the increased understanding and recognition of the process among private practitioners; however they have also observed that this has not been as significant a trend among in-house counsel, with whom there is still much progress to be made. It would therefore seem as though in the short term, the development of mediation is most likely to be propelled by lawyers in the community, rather than by client interest.

The main source of work for mediators continues to be through referrals and repeat business, another reason as to why its progress has been noticeably gradual. Many practitioners have observed that once a company or individual has been engaged in mediation they are, more often than not, open to do so again. Moreover, with arbitration now seeming like a costly option, businesses are beginning to apply mediation clauses to contracts. Mediators are aware that progress in the field will take time; however they remain confident that the advantages and value of the process as an alternative form of dispute resolution will eventually come to the fore and gain traction with clients.  

The key international centres of mediation continue to flourish namely the US, UK, Australia, New Zealand, Singapore and Hong Kong. Singapore has had a particularly active year, with the establishment of the new Singapore International Commercial Court, launched by the chief justice of Singapore, Sundaresh Menon, in January 2015. This comes as part of a drive to further consolidate Singapore’s position as a leading international centre for dispute resolution, and follows the opening of the Singapore International Mediation Centre at the end of 2014. It will be interesting to see the level and nature of the activity that the ADR hub will attract over the coming year, and whether or not it will lead to other jurisdictions reassessing and updating their own offerings.

The mediation market in the US also remains strong. International work continues to grow rapidly, as does the number of partnership disputes. When one considers the benefits of mediation, it comes as no surprise that with regards to labour and employment and corporate issues, it is a suitable choice. Its ability to avoid a “cookie-cutter” and “one-size-fits-all” approach makes it an ideal option for those who require, and can then enjoy, the bespoke nature of the process.

Competition in the marketplace remains steady, with a similar pool of practitioners continuing to spearhead the practice. Although many have commented that the market is saturated with qualified mediators, they do not hesitate to mention that only a handful of these can be considered truly experienced leaders in the field. There remains an air of apprehension surrounding successful entry into the practice area, which can be quite tricky: work is naturally absorbed by more experienced and established mediators. Sources are keen to see how newcomers will attempt to penetrate the market, but they also see a need to facilitate this trend in order to ensure that the field continues to grow. The advance in lawyers looking to enter mediation is ultimately very promising for its future, demonstrating an increased awareness of its value.

With the cost of litigation and arbitration on the increase, mediation as an alternate form of dispute resolution seems likely to continue growing over the next few years. Practitioners are confident in the budding realisation among clients and fellow practitioners that the process delivers real value, both financially and commercially. This overall increase in understanding of the process leaves mediators assured of a promising and busy year to come. 

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