Mediation Set To Increase As Disputes Damage Business

One in four serious business disputes has a significant impact on the parties' business and many businesses are likely to increase their use of mediation.

Pinsent Curtis, a leading UK law firm and CEDR (the Centre for Dispute Resolution), international provider of mediation and conflict management services, have established the first ever national benchmark survey of corporate attitudes to disputes and mediation. The survey, conducted by MORI, will be carried out on an annual basis as part of a combined move to increase the use of mediation as an effective alternative to litigation.

Two-thirds of respondents said that at least some of the disputes their companies were involved in have had a significant impact on their business, with 28% saying disputes have had a detrimental impact in over 30% of cases. This is not surprising given that the single largest source of a dispute is with a customer or client (38%), supplier, retailer or wholesaler (18%), or employee (16%).

When dealing with customer disputes, businesses are more likely to choose mediation if the dispute would otherwise go to court (37%), 17% citing mediation as their "preferred" method of resolving a customer dispute. Similarly with supplier disputes 46% would choose mediation over court action and 12% gave mediation as their "preferred" dispute resolution method.

When asked what the key perceived benefits of mediation are, 28% cited "preserving relationships". The two largest perceived benefits are "less expensive" 47%, and "quicker outcome" 37%.

The majority (61%) of those who have used mediation before believe that mediation is more effective than other methods of dispute resolution with only 17% believing it to be less effective. Of all respondents, 55% said they were likely to increase mediation use as a means of resolving disputes in the future with 31% not very likely and only 10% not likely at all.

Commenting, Andrew Paton, Partner at Pinsent Curtis and a CEDR Accredited mediator said, "Perhaps the most damaging statistic coming from the poll for lawyers as external advisers is that still, even a year after the introduction of the Woolf reforms, 37% of clients had received no advice on mediation from their company's external lawyers. Mediation has a vital role to play in dispute management and should be a consideration not only for every dispute but at different stages during a dispute. Firms that have no mediation systems tied into their litigation procedures are quite simply failing their clients."

Karl Mackie, CEDR's Chief Executive, agrees, "Our most recent statistics on mediation growth show that once again they have more than doubled during the last year. However, there are still too few law firms who not only advocate the use of mediation but proactively incorporate mediation into everyday client service.

"A recent independent report on the NHS Mediation Pilot Scheme pinpointed lawyer's ignorance of the mediation process as one of the key barriers to its take-up. If, despite the new CPR - which strongly advocate that mediation be considered at an early stage - lawyers are still not advising their clients appropriately, new training standards must be incorporated into law school and CPD curricula. Otherwise, lawyers and more importantly their clients, may find themselves on the receiving end of court imposed sanctions."

Key findings from the CEDR / Pinsent Curtis survey:

Disputes:

• 25% of disputes seriously impact on the business
• The single largest source of dispute is with a client or customer (38%), followed by supplier, retailer or wholesaler (18%) and then employee (16%)
• Almost half (47%) of disputes ended up in court

Mediation:

• Only 18% of companies interviewed have used an independent mediator to help resolve a dispute
• One in three companies (37%) had not been informed by their external lawyers about the benefits of mediation as a means of alternative dispute resolution
• Mediation is the preferred choice for only a minority of respondents (12% supplier dispute; 17% client dispute), although many more would use mediation if the alternative was going to court.
• The main benefits of mediation are seen to be that it is:
  • Cheaper (47%)
  • Faster (37%) than traditional litigation
• Only 5% of companies would never consider mediation as an option
• In the future, over half (55%) are very or fairly likely to use mediation more frequently.

Sample profile:

CEDR (the Centre for Dispute Resolution) is internationally recognised as providing expert third party conflict management and unparalleled mediator training.

CEDR is a not-for-profit organisation with charitable status. Its mission is to encourage cost effective dispute prevention and dispute resolution in commercial and public sector disputes and in civil litigation. CEDR operates in the UK and internationally and has been instrumental in helping to bring ADR into the heart of business practice and into the judicial system.

CEDR has managed over 3,000 mediation referrals covering every industry sector and a wide-ranging cross section of disputes and case values ranging from less than 1635,000 to 1631bn matters.

Pinsent Curtis is a leading UK law firm in the top group of legal advisers to listed clients. The firm has pioneered the use of ADR for more than ten years. All of its 120 litigators are trained in mediation techniques. Last year, Pinsent Curtis was the greatest user of CEDR's mediation services. The firm's four qualified mediators handled more than 50 cases in 1999 and its litigation lawyers used mediation in 26 cases last year. On average, the firm estimates that clients achieve settlement of a dispute within two days using mediation and see an average saving of 16330,000 on costs.

Andrew Paton is a national recognised leader in the field of mediation. He is a member of CEDR, ADR Net, In Place of Strife and was a founder member of the Panel of Independent Mediators.