'Bullied' City law firm keeps costs despite refusing to mediate dispute

ADR: local government lawyers miss major costs savings by not making full use of mediation

Mediation should not be used as an aggressive weapon in litigation, and successful parties should not be deprived of their costs for reasonably refusing to mediate, according to a High Court ruling.

City law firm Maxwell Batley had refused to mediate with human resources consultancy Watson Wyatt in a dispute over advice to Societe Internationale de Telecommunications Aeronautiques (SITA).

When Maxwell Batley won the case, Watson Wyatt unsuccessfully applied to the court to deprive the firm of part of its costs, on account of its refusal to mediate.

The original case involved SITA successfully suing Watson Wyatt for failing to inform it about a $70 million expense which would be incurred as it set up its staff share reward scheme.

Watson Wyatt in turn sued Maxwell Batley - which advised SITA on another aspect of the share scheme - for not informing SITA of the cost.

In the summer, a court found that Maxwell Batley had acted fully within its remit to SITA.

The High Court recently found that Watson Wyatt had tried to 'dragoon, browbeat and bully' Maxwell Batley into going to mediation with the aim of forcing the firm to contribute to a settlement with SITA, rather than compromising their dispute.

Mr Justice Park said: 'The way Watson Wyatt sought to press Maxwell Batley to join the mediation is...

disagreeable and off-putting.'

The judgment quoted a note from a meeting between the parties when an officer of Watson Wyatt implied that the reputation of Barlow Lyde & Gilbert - Maxwell Batley's solicitors - would suffer for not joining mediation.

Earlier this year, in Dunnett v Railtrack, the Court of Appeal deprived the successful party of its costs because it refused to mediate.

Paul Matthews, a partner at City firm Reynolds Porter Chamberlain and a mediation expert, said: 'There was a feeling after the Railtrack decision that a refusal to mediate would almost certainly result in a costs penalty against the defaulting party.

However, the judge in this case clearly realised that the requests to mediate were being used as a weapon to force a settlement and were not a genuine attempt to reach a reconciliation.'

Meanwhile, local authorities are missing out on major cost savings by failing to use alternative dispute resolution (ADR) to resolve disputes, according to a new survey.

Sixty per cent of local government lawyers seldom refer disputes to ADR or mediation, according to the survey of 50 local government lawyers produced by the ADR Group and City firm Nabarro Nathanson.

It found that 44% of local authorities handle more than 200 legal disputes a year.

Referring a quarter of those cases to ADR would save 625,000 a year, it calculated.

Stephen Rickitt, chairman of the Law Society's Local Government Group, said ADR may be more widely used than the survey showed.

'I think in a number of cases lawyers may use the spirit and technique behind ADR without actually putting the name to it,' he said.

Victoria MacCallum