Meet the middleman

THE ALDER HEY CHILDREN'S HOSPITAL SCANDAL HIGHLIGHTED THE BENEFITS OF USING MEDIATION.

YET ALTERNATIVE DISPUTE RESOLUTION IS STILL VIEWED WITH INDIFFERENCE.

JACKY LEWIS INVESTIGATES

It is just over four years ago that Lord Woolf's Civil Procedure Rules - intended to introduce fast-track access to justice - were introduced.

At its inception, the idea of mediating disputes without going to court - central to the CPR's purpose - was novel and creative.

How have his ideas weathered? Are lawyers finally convinced?

March saw the conclusion of the largest mediation of a group action against the National Health Service, with Alder Hey Children's Hospital apologising fully to the parents of children whose organs were wrongly retained by the hospital (see [2003] Gazette, 6 March, 1).

The NHS settlement consisted of a 5 million payment to parents of the children, equalling 5,000 for each child, an apology, a pledge to erect a plaque to commemorate the children, and to donate 100,000 to charity.

The hospital will also push for reforms in the law in regard to organ retention.

Ian Cohen, a partner at Liverpool-based Goodmans and lead solicitor for the claimants, says financial compensation was never the driving force in the case.

'Strong sanctions are needed to ensure that this does not happen again, and my involvement in the case will only end when new regulations come into force,' he says.

Mr Cohen considered mediation the most appropriate option because the threat of litigation meant the parents were having difficulties obtaining the non-financial remedies they sought.

One of the many difficulties faced by the claimant legal team was, he says, 'how to incorporate the wishes and manage the expectations of some 1,200 emotionally charged individuals into the mediation process'.

In this case, a focus group of parents was established to represent a broad cross-section of claimants.

What the parents really wanted was an apology and accountability from the hospital, but it was unwilling to be 'fully open' because it was concerned about ongoing litigation issues.

It was the hospital's push for law reforms that was the 'vital plank of the mediation settlement'.

Mr Cohen says that in mediating clinical negligence cases, much depends on there being a real desire on behalf of the parties to secure a settlement, while at the same time a willingness on behalf of defendants to look beyond financial redress, so as to match the wishes and expectations of the claimants.

But mediation and alternative dispute resolution (ADR) generally still continue to lack momentum.

The standard reason is that people are unwilling to use ADR, but once they do, they are converted.

In the most recent Association of District Judges Law Bulletin, the association's ADR committee conceded that there is 'not universal enthusiasm for ADR...

some judges would no doubt resist a suggestion that judges should become involved directly in the process of mediation.

Many might regard it as demeaning.

In any case, not all judges would wish to be involved or have the aptitude'.

The committee concludes that judges might become directly involved only if there is a court-based ADR scheme, at least until the practice of full cost recovery is dropped from the court system.

District judges suggest that the justification for ADR on the grounds of saving costs and expediting the resolution of cases is sound.

Mediation serves to thin out the court lists, and a pilot scheme began in March at Exeter County Court for claims worth more than 5,000.

Embarking on mediation after hefty pre-trial costs have been incurred in litigation defeats the object; for ADR to be cost effective it must be considered at least three months before a trial.

Joanna Kennedy, head of dispute resolution at City firm Collyer-Bristow, says the Alder Hey settlement has taken mediation to 'a whole new level'.

While her expertise is in construction, she considers that mediation is suitable for almost every type of dispute; she almost always proposes it and encourages her team to propose it.

She suggests that there are two crucial stages where mediation can be worth considering.

The first is at the beginning, when issues may not yet have been properly clarified and parties may be more flexible about settlement.

This is also the stage before substantial legal costs have been incurred.

The second is after witness statements have been exchanged and issues have been clarified; each side has had an opportunity to make a reasonable assessment of their costs and of the likelihood of success.

Ms Kennedy maintains that mediation may not be suitable in situations that require a precedent, in intellectual property disputes, for example, when clients may be protecting a brand and may need a decision to deter any other potential infringers.

Another area less suited to mediation might be in the field of defamation, if a client needs a public vindication.

However, there is evidence of greater use of ADR in that field.

Terry de Souza, a construction and engineering partner at City firm Berwin Leighton Paisner, says: 'We are finding ADR increasingly common as an effective method of dispute resolution; clients are thinking about it as a first option more than they did a few years ago...

more people are aware of it - more people seriously consider it.'

He considers that mediation is the most common form of ADR the firm uses, but it has been involved in other forms of ADR including expert determination, a mini-trial and an early neutral evaluation.

City firm CMS Cameron McKenna is also enthusiastic about ADR.

Stephen Tester, an insurance and reinsurance partner, says the firm uses it 'a great deal'.

The majority of its professional indemnity cases settle before proceedings even start, he says.

Mr Tester says this is due to the pre-action protocols.

Both the construction and engineering protocols and the claims against professionals protocols envisage the use of ADR.

The latter goes further in requiring parties actually to state why they do not think mediation is appropriate (if that is the case).

'It's a "why not?" test, rather than a "why should we?" test.

The protocols create a structure, a kind of chain and response,' he says.

The emphasis on mediation has been reinforced by several court decisions against people refusing to mediate.

Mr Tester says: 'Even if they won, parties were penalised with costs for refusing to mediate.'

The Association of District Judges is worried that cost sanctions might adversely affect the integrity of any agreement that results.

Further, it worries that the agreement may unravel afterwards on the grounds of lack of true consent.

Its ADR committee suggests that the cost sanction should only be applied after the final resolution of a dispute.

Camerons most commonly uses mediation, although it can use other forms of ADR 'less formally'.

These include binding expert determination or early neutral evaluation.

Henry Brown, a consultant at Penningtons' City office, sits on the Law Society's ADR committee.

He says there has been a gradual increase in the use of early neutral evaluation.

Mr Brown says: 'I am very clear that it is an invaluable process and - although the take-up is increasing all the time - relative to its potential it is still underused.' He suggests that there is a movement towards using mediation in 'the more difficult cases', ones that do not settle easily.

The Alder Hey cases highlight the growing mediation spotlight on clinical negligence.

Mr Brown is the consultant to a clinical negligence research project run jointly by the NHS Litigation Authority, Action for Victims of Medical Accidents and Centre for Effective Dispute Resolution.

This will lead to the development of a body of highly specialist mediators who will understand the needs of both sides of the dispute.

It will help specialist lawyers to use mediation effectively and serve to work out procedures for a preliminary review to decide whether a case is suitable to mediate at a particular time, or needs further work.

Clare Jaycock is head of Reynolds Porter Chamberlain's health law department.

Its largest client is the NHS Litigation Authority, which has been promoting mediation 'for the past three or four years'.

She says her field of law is much more emotional than other areas and the process of mediation allows a much fuller dialogue to take place than is possible in a trial situation.

Often the claimant's real concerns become apparent and this can lead to assistance being offered, which is outside the scope of the courts where parties are restricted to receiving a monetary award.

One example is that particular provisions may be made for a patient's ongoing care.

Patients in clinical negligence cases often stress that they want to prevent medical mistakes happening again to others.

Ms Jaycock suggests that 'it is one of the oddities of litigation that parties only meet when they get to court'.

Through the medium of ADR, patients may get the opportunity to meet the doctor or hospital risk manager, which presents a 'huge benefit'.

They can see what steps are being put into place to prevent the situation happening again.

One problem with mediation in this field, however, is the amount of time it takes to prepare a case and the reliance of both sides on expert evidence before the case can be settled.

In a case of late diagnosis of cancer, for example, all the pre-mediation preparation may make it too late for the patient.

Ms Jaycock would like to see a less formal without-prejudice meeting with both sides, to try and resolve cases of alleged negligence.

There is often, surprisingly, a reluctance to mediate on the claimants' side.

Ms Jaycock suggests that this might be the result of an 'over-protective lawyer', while claimants themselves are usually enthusiastic about the process.

Mediation can present an opportunity for an apology, it gives people a voice and helps them to make sense of what happened to them.

In being aware that they have been 'heard' and that their feelings have been acknowledged, parties move on towards a settlement.

The confidentiality in the process can ensure that people save face and the best-case scenario in commercial disputes can be that they maintain their relationship and do business together again.

A good mediation moves parties from an entrenched adversarial stance to one of a working alliance, but it may be the mind-set of some lawyers and judges that has to move on too.

Jacky Lewis is a freelance journalist

Main forms of ADR

- Mediation: A method of settling disputes in which a neutral, specially trained (legal or non-legal) mediator enables the parties to come to their own agreement, which each considers acceptable.

It takes the form of a without-prejudice meeting.

Mediation can be evaluative, with the mediator assessing the legal strength of the case, or facilitative, where the mediator concentrates on assisting parties to define the issue from their own standpoint.

When a mediation is successful and an agreement is reached, it is written down and forms a legally binding contract, unless the parties state otherwise.

- Arbitration: A procedure whereby both sides in a dispute agree to let a third party, 'the arbitrator', decide the case.

The arbitrator may be a lawyer or an expert in the field of the dispute.

The arbitrator will make a decision according to the law.

The decision is known as 'the award', is legally binding, and can be enforced through the courts.

- Early neutral evaluation: A process in which a neutral professional, commonly a lawyer, hears a summary of each party's case and gives a non-binding assessment of the merits.

This can then be used as a basis for settlement or for further negotiation.

- Expert determination: A process where an independent third party who is an expert in the subject is appointed to decide the dispute.

The decision is binding on both parties.

- Conciliation: A procedure akin to mediation, but where the conciliator takes a more interventionist role in bringing the parties together - suggesting possible solutions.

This process is gradually falling into disuse as mediation grows in popularity.

- Med-Arb: A combination of mediation and arbitration where the parties agree to mediate but if that fails to achieve a settlement the dispute is referred to arbitration.

The same person may act as mediator and arbitrator.

- Neutral fact-finding: This is a non-binding procedure used in cases involving complex technical issues.

A neutral expert in the subject matter is appointed to investigate the facts of the dispute and make an evaluation on the merits of the case.

This can form the basis of a settlement or a starting point for further negotiation.

- Ombudsmen: These are independent office-holders who investigate and rule on complaints from members of the public about administrative abuses in government and more specifically in public and private sector services.

Some ombudsmen use mediation as part of the dispute resolution procedures.

The powers of ombudsmen vary.

Most ombudsmen are able to make recommendations; only a few can make decisions which are enforceable through the courts.