The aggrieved party takes their side of the story together with the contract along to their lawyers. The lawyers are honour bound to advise in the interests of their clients. The advice has to be a sound case and not too much expense that should be recovered as costs anyway. Likely as not there will be a solicitors' exchange of letters then later the more formal letter before action and one of the ninety-seven and a half percent of all Claims that do not come to trial will be taken out. Prompt action is needed in response to the Claim and business contact becomes desultory while the legal process rambles on. Cases can still take five years but the court system has been sharpened up a bit and many things that a few years ago had to wait for directions from a judge now happen automatically. Be careful - it is a disability to be in a position of not having carried out all the procedural steps required of you in a timely way.
Management is about making choices and dispute resolution has some possibilities under the title of Alternative Dispute Resolution or ADR, as it is known. The basic choice is between having someone determine what your rights are under the contract and awarding accordingly or having someone facilitate your coming together with your opponent on the basis of reaching an agreement that takes into account whatever each of you regards as your interests. Which do you want to be, satisfied on your rights or on your interests?
ADR is something of a faith message. There is not a lot of it about but those that have tried it report an 80% to 90% success rate in reaching agreement and a 100% success rate in a near 100% reduction in costs. You may like the idea but the other party is always wary of any suggestion made by their opponent; after all, they reason, the suggestion would not be made if it was to the disadvantage to whoever put it forward. However ADR is not altogether an optional choice as parties that have not made a serious attempt to resolve their dispute may be penalised on costs after a court trial.
We discuss later how to find a mediator but for now we make the point that he or she must have had training. The mediator will need to be paid and you will have signed a mediation agreement. But the agreement only commits all those involved to matters like confidentiality, liability and payment; there is not even a commitment to turn up for the meeting with the mediator. The agreement is a question of being businesslike.
Having heard what the parties have to say in each other's presence the mediator will then probably ask to discuss one party or the other's position in private. Anything said to the mediator in such sessions (the americanism "caucus" is used) is confidential and will not be disclosed by the mediator to the other side without specific permission. The mediator will engage in shuttle-diplomacy alternately caucusing with one side and then the other.
Initially the mediator will be asking questions. Firstly basic questions but gradually imaginative questions. Anyone can haggle over the money but deals can include a lot more besides. On the business principle of receiving something that is more valuable to you than what you are giving up, an imaginative mediator will explore the wider business interests of the parties perhaps far outside the immediate concerns of the dispute. The alternate interchanges with the parties will stimulate the mediator and as he or she reports "we are getting somewhere" and asks "can I put that to the other party?" an agreement starts to emerge. With some coaxing the agreement starts to expand and look worthwhile, certainly against the heavy emphasis that is put on the expense, uncertainty and long resolution time that would result from a failure to agree.
When ready, and inevitably, it seems, after normal business hours, the mediator will call the parties together to announce that he or she thinks they have got a deal. What the deal is should not come as a surprise to the parties but any unresolved points must be cleared up. A written agreement needs to be drawn up there and then. Letting anyone sleep on it or discuss it with their colleagues will quite likely make the deal unwind. The agreement needs to cover everything that settles the matter and is signed as a contract and is then but only then just as committing and binding as any other contract. Each party and the mediator take away their own copies and there is a dispute no more.
No expense can be spared if you are going to fight a half million pound Claim. It concentrates the mind to think of this claim being put forward as a counterclaim after a mere UKP80,000 Claim for an outstanding debt. London solicitors, Counsel - even a QC and his junior, expert witnesses, discovery of documents - perhaps a filing cabinet full that will all have to be copied several times and management time both as witnesses of fact and to give instructions to the solicitors and to attend the trial. Your costs are going to come to UKP250,0000 at least and once they get above that you are fighting for your costs, not the original claim or the counterclaim or for whatever your real interests might be. Whoever loses pays their own costs and between half and two thirds of the costs of the winners. This may sound like the horror story that it is but the other side are spending the same sort of money - both of you in the belief that right is on your side. That cannot be. Every case has to be judged on its merits and our advice is to make sure that it is. Too often we have seen managers defending their turf or outlandish prospects of a claim being put forward by advisors without realising the implications. Use your solicitors as your first line of defence against the cost of court actions, not as a spearhead leading into the unknown. Prefer to back off too early to backing off too late; it is almost certainly more cost effective.
Mediation is a slowly growing bandwagon; we went to our first lecture in 1983. There are commercial organisations providing mediators but the big players are CEDR - Centre for Effictive Dispute and TAE - The Academy of Experts. CEDR was sponsored by the CBI and has mainly large businesses and firms of solicitors as members. TAE is a professional body. Both run training courses. CEDR accredit mediators and the TAE admit mediators to a register.
Mediation is a professional activity that should attract CIMA Members in Practice. Be warned, the training is essential and has to be paid for. There is no guarantee of work coming forward and the pay back period must be taken to be about ten years.
The training for mediators is by lectures and role playing. Opportunities also exist for pupillage while someone else does the mediating. Expect to meet lawyers in the process. The probable effect of a court judgment has an important influence on the parties reaching agreement. The agreement needs to be legally sound as it would be a disaster to have a dispute arising from it.
The qualities required of a mediator are only possessed by rare paragons so ordinary people can undertake the training as well. Listening ability, wide business experience and imagination are all plus points. We regard our experience as a salesman invaluable. The hardest part of mediation is to get the practice accepted and then to overcome the real difficulty of getting disputing parties to agree anything at all. The prize is a win/win result for the parties which can often be achieved and is way ahead of the normal case where the lawyers will admit that they are the only real winners.
The Chartered Institute of Arbitrators regards itself as a training organisation for a second profession although they will appoint arbitrators or mediators if asked. The training is followed by examinations and after appropriate experience the Associates may be graded as Fellows. The most experienced may become Registered Chartered Arbitrators. Lists of potential arbitrators are maintained by most professional bodies so seek an arbitrator from the chartered body for the profession that is most closely allied to your dispute. The latter is the preferred method of obtaining a starting list of arbitrators. Agree on one if you can, otherwise agree that the chartered body make an appointment for you.
Approach either CEDR or TAE if you seek a mediator. Hedge your bets by paying a mediator to come along to meet you and your opponent and explain what is involved in mediation or for that matter in arbitration. In effect, stage a mediation on whether you should mediate. You may even find enough common ground to go for a settlement there and then.