Lawyers could lose a significant chunk of work if mediation becomes compulsory for small claims, the government has acknowledged.

Under government plans announced yesterday, parties involved in a legal dispute over claims up to £10,000 would be referred automatically to a free hour-long telephone session with a mediator provided by HM Courts & Tribunals Service before their case can progress to a hearing. If the parties reach a compromise, it will be made legally binding through a settlement agreement.

The government estimates that its proposals will divert up to an extra 20,000 cases away from court and free up 7,000 judicial sitting days for more complex cases.

However, an impact assessment published alongside the government’s consultation document states that lawyers could lose work representing small claims parties. ‘We assume that they will find work of equal or next best economic value,’ the impact assessment states.

A woman on the phone

Parties in disputes for claims up to £10,000 would have to attend a telephone session

Source: iStock

The government also revealed yesterday that it wants to go further. ‘While our current proposals address small claims, with free mediation provided by the small claims mediation service, our future ambition is to extend the requirement to mediate to all county court users,’ the consultation document states.

Any extension would involve referring parties to external mediators. While the civil mediation market is ‘thriving’, the government is considering whether it needs to get involved in overseeing the sector, which is currently self-regulated. However, it acknowledges that many mediators work as legal professionals who are already regulated by bodies such as the Solicitors Regulation Authority.

Currently, 55% of cases mediated via the government’s small claims mediation service result in a settlement. However, only 15%-21% of parties use it.

The Law Society welcomed greater access to low-cost mediation, but warned of risks. ‘If parties are not interested in entering into mediation in good faith it could waste time as well as money, and there is a further risk that mediation may entrench imbalances of power between parties,’ vice-president Lubna Shuja said.

The consultation states that non-compliant parties could be hit with wasted costs orders or have their claim or defence struck out.

Shuja added: ‘The mediation service needs to be properly funded and well-resourced to facilitate these proposals. With proper funding, it could help reduce the court backlogs. We will consider the proposals carefully to see whether they contain sufficient safeguards to ensure they contribute to justice rather than undermine it.’

 

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