Alternative Dispute Resolution (ADR)
Mediation matters: what it is and how it can help resolve insurance claim disputes
The case for mediation
Mediation is one of the methods of Alternative Dispute Resolution (ADR). The practice of ADR, introduced from America, has been with us in the UK for over twenty five years and is a very successful means of settling disputes and conflicts without resorting to full blown litigation through the courts. It has two particularly appealing benefits. The first is that it is a fraction of the cost of litigation and the second is that the parties retain control of the resolution process. Common sense can prevail; this is not always the case in litigation. The parties can agree to agree or can agree to differ but still come away with a mutually acceptable settlement.
Mediation, as a form of ADR has a structure to it that gives certainty of process at the same time as flexibility of outcomes. The process is not legally binding upon the parties unless the parties agree, as part of the process, to be bound by the agreement they come to in the mediation. If they do a formal settlement agreement is drawn up and signed and the matter is binding upon the parties. Mediation does not prejudice the parties' legal position or their right to return to litigation.
Why mediation works
The presence of a skilled and trained mediator can change the dynamics of a negotiation from adversarial and negative to collaborative and positive.
Mediation can start at any time. Half way through a litigation mediation can be an option, or, even better, before you start litigation. It can save tens and hundreds of thousands of pounds and save untold hours of valuable business time.
The trained mediator has negotiating, problem-solving and communication skills, and deploys them from a position of independence and neutrality, making progress possible where other negotiations have failed or stalled. The mediator is not a judge or arbitrator and has n power to direct a conclusion or outcome.
The mediator adds a valuable dimension to a negotiation, having no personal stake in the dispute, by bringing neutrality to detailed negotiation discussions and adding a fresh and independent mind to a review of the case.
As a “neutral facilitator”, the mediator is potentially in a better position than any other party or representative to:
• win the trust of all parties
• facilitate communication
• focus the parties on the problem
• overcome emotional blockages
• help one party to understand the other party's case
• probe each party's case for interests, needs, strengths and weaknesses
• help parties assess their own case realistically
• suggest new avenues to explore
• overcome deadlock and help save face
• explore settlement proposals in depth
• assess realistically the chances of settlement
• win approval for settlement proposals.
Before embarking upon a course of action if you want to consider the pros and cons of mediation as an alternative to litigation or arbitration, we can help you examine your problem and give you reasoned advice.
Litigation is the most recognised form of formal dispute resolution throughout the world. It is publicly financed and administered, carried out in a public forum and is bound by detailed rules about process, evidence and testimony. It is not voluntary - parties have to appear when required or suffer penalty - and the decision is binding, although may be subject to appeal. Depending on the particular legal system, the decision is based upon law and precedent, but the system is subject to human error, and the outcome is not necessarily easy to predict and may even occasionally be perceived as unfair.
Attempts have been made, and continue to be made, to speed up the litigation process and to reduce costs, but litigation remains an expensive and time-consuming way to resolve disputes. In fact the value of many disputes is exceeded by the eventual cost of resolution, and the time taken to obtain a decision is often measured in years not months.
Arbitration was devised to overcome some of the problems encountered in litigation, and has now been recognised as part of the Alternative Dispute Resolution (ADR) repertoire.
Although arbitration empowers a third party to decide the outcome of a dispute, it is more likely that the arbitrator will have subject-area expertise, which, for some, makes the decision more palatable.
The decision is made according to the relevant law, is binding and is not normally subject to appeal.
Like litigation, the process of arbitration is adversarial and mostly formal; however, unlike a court hearing the proceedings take place in private, and the parties usually select the arbitrator or panel of arbitrators. In arbitration, the parties can make procedural choices so that the process best suits the nature of their case, and the arbitrator cannot overrule the parties on these process matters.
Where a dispute involves complex issues, extensive documentation and large numbers of witnesses, arbitration can sometimes be more expensive and more time-consuming than litigation in the courts.
Mediation has established itself as the core ADR process.
The need for an alternative to litigation is broadly accepted, in particular because of the problems of time and cost and also because the wholly adversarial approach can damage or destroy relationships and reputations.
The focus of litigation is on the past, whereas ADR processes address the future. Even when settlement is reached through negotiation, the process is sometimes narrowly focused and hurried, particularly when conducted on the steps of the court, and the outcome less satisfactory than when negotiations are assisted by a third-party neutral.