The future of ADR?

• United Kingdom

• Financial services disputes and investigations
• Litigation and dispute management

14-01-2019

Summary

The Civil Justice Council ADR Working Group[1] (“the Working Group”) has published its final report [2] (“the Final Report”) following its review of the use of Alternative Dispute Resolution (“ADR”) within the civil justice system of England and Wales.

The Final Report concludes that progress can only be achieved if an ADR strategy is devised in the following areas: awareness, availability and encouragement by the Courts/Government.

It recognises that the current rules are too generous to those who ignore ADR and it proposes earlier and more stringent encouragement of ADR in case management so that there should be a perception that formal ADR must be attempted before a trial can be made available.  Whilst, applying sanctions for unreasonable conduct should also be explored, the report did not advocate compulsory ADR.

Recommendations include the establishment of a Judicial-ADR liaison committee, increasing public awareness of ADR, peer mediation in schools, increased law faculty and professional training and a new website to act as a single umbrella source for information about ADR.

Background and Interim Report

The Working Group’s  Interim Report [3] (“the Interim Report”) concluded that ADR had not become an integral part of the civil justice system  It made interim recommendations aimed to promote debate over possible changes to increase the use of ADR and posed a number of questions for consultation.

Conclusions in the Final Report

The Final Report (on the whole), confirmed the Working Group’s interim findings on the current ADR landscape but noted significant changes since publication of the Interim Report such as Online Civil Money Claims service; the NHS Resolution and Medical Protection Society mediation schemes; proposals for a Joint Boundary Dispute Mediation Service; the increase in the small claims personal injury limit and the implications of Brexit.  Despite some improvements, the Working Group concluded that more must be done by all parties to ensure an improved use of ADR.

The Working Group recognised that the form of ADR which is suitable for each case will depend on the subject matter and value and considered the following common methods: negotiation and round table meetings; mediation; conciliations and ombudsmen; Judicial neutral evaluation and private  neutral evaluation; arbitration. It also looked at on-line dispute resolution within the court system and privately.

It concluded that ADR is under-utilised, mainly due to a lack of awareness of the benefits of ADR by both the general public and the legal profession; a lack of availability of ADR both in terms of funding and logistic issues, and quality and regulation; and a lack of involvement of the Government and Courts in encouraging the use of ADR.

The Working Group concluded that there is an increasing need for the Government and the Courts, and the ADR community to encourage the use of ADR by reviewing the effectiveness of the existing rules and reinforcing the importance of them, together with enforcing appropriate sanctions for parties who ignore the benefits which ADR offers. They proposed the creation of a Judicial/ADR Liaison Committee who would ensure that stakeholders have a forum to discuss ADR on a regular basis.

Findings and recommendations

Awareness: The Working Group pointed out that there is a “chronic lack of public awareness and understanding of the operation of the legal system as a whole” and the recommendations considered that more should be done to educate the public and the legal profession about the benefits of ADR. This education should take place within schools, colleges and legal and professional training to make the public aware of ADR’s advantages and to facilitate legal professionals’ education of the public. Disciplinary codes should be reviewed to emphasise a professional duty to educate clients and advise on the benefits of ADR. Spokespersons of the ADR community, including practising specialists, should improve communication (via broadcast and social media) to ensure ADR is better promoted and sponsored, especially in respect of mediation. For instance, the Working Group considered that the Citizens Advice Bureau and other non-profit organisations, as well as Councils and specialist mediators in Family, Employment or Civil should be seen as acting as “one voice” and a new website should be established as a single source of information. In addition, the benefits of Online Dispute Resolution should be promoted as part of the public’s education and the creation of a Judicial/ADR Liaison Committee would ensure that stakeholders have a forum to discuss, monitor and encourage ADR on a regular basis.

Availability: funding was identified as a challenge especially for cases which fall in the middle ground between small claims matters (which can be referred to the court telephone mediation service free of charge) and high-value litigation (where mediation is more cost-effective). The ability to recover mediation costs must be addressed, by recognising the costs of the third party, the venue and the parties own lawyers as part of the fixed costs regime. There is also a need to improve logistical aspects of the mediation services at a proportionate cost, such as issues with physical attendance of lawyers. There is also hesitation within the judicial system to encourage users to use ADR where the processes are not regulated or quality assured.  It was recommended that Online Dispute Resolution should have its own set of established standards and case officers of the Online Court must be trained and recruited accordingly; joint neutral evaluations should be made available for low and mid-value cases; small claims mediation should be fully resourced; the Civil Mediation Council should promote cheaper mediation models such as 3-hour telephone mediations for mid to low value cases; and the Civil Mediation Council should improve its regulation of mediation and mediators, in line with the Family Mediation Council.

Encouragement: existing rules, such as the pre-action protocols and the Consumer ADR Regulations should be reviewed to ensure compliance and official Court documents revised to include a presumption that ADR will be attempted. ADR should be encouraged at the outset of a dispute and further encouragement should be provided when proceedings are issued, regardless of the claim value and track. The Court should intervene during the case management process rather than at trial/judgment level only, possibly by including stronger cost sanctions. Potential issues with this include the Court’s willingness in choosing methods of ADR for the parties, the extent of its interference, potentially via “mid-stream hearings”, and agreement on the appropriate sanctions, e.g. a recommendation of costs penalty or a provisional fee reduction in recovery of fees. Costs sanctions under the Halsey Guidelines should be reviewed to significantly restrict the circumstances under which it is reasonable to refuse to mediate and Halsey’s post-mortem sanctions should be retained and applied more vigorously. Consideration should be given to implementing a Notice to Mediate system (such as existing in British Columbia) whereby a court appointed mediator would be automatically appointed after service of the Notice and the dispute would be referred to mediation.  However it was recognised that stakeholders would first need to be satisfied that there is a sound mediation scheme in place.

What’s next?

Whilst the Final Report concludes the findings of the Working Group, the need for continuing review and experimentation was identified and the creation and establishment of the Judicial/ADR liaison body (which has already started) is of paramount importance to ensure that all improvements required in the use and encouragement of ADR are monitored and effective.  

Whilst the Final Report falls far short of recommending compulsory ADR, substantial changes are likely to follow and in the interim, clients should continue to consider whether ADR is appropriate in all claims, to avoid potential adverse cost sanctions.  For professional negligence claims, there is also the compulsory requirement to consider adjudication.

[1]Established in January 2016

[2] Dated November 2018

[3] Dated October 2017