Dispute Resolution
Computer Expert Evidence

Best Not Have a Dispute

A review of Negotiation, Choices, Mediation, Litigation, Arbitration, Expert Adjudication.
by Cliff Dilloway




The telephone is the most widely used instrument of dispute resolution. All salesmen know that their most loyal and supportive customers are those who have had a serious problem which has been resolved to their satisfaction. That kind of customer is there for the asking if you pick up the telephone, listen carefully and really solve their difficulty. Painful though the cost of turning them into a satisfied customer may look in the early days of a dispute, seeing the thing through to the end can be literally ruinous. It is quite common for the "winner" of a dispute to go into liquidation on account of exhaustion of energy and funds.


Starting Point

Common sense warning or not, problems can turn into disputes. We would define a dispute as starting when either party thinks of getting out the contract to see what their rights are. If business were done solely on the parties' rights things would be slack indeed but, when it comes to it, what the contract says is what matters.

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.



While the generic term is Alternative Dispute Resolution the practice is to follow the leading variant that is usually called mediation. Mediation is non-binding so anyone can walk away at any time and you can go back to (sometimes into if that's where you already are) Court to get your rights. Neither can anything said or done in a mediation be held against you. Lawyers call this "without prejudice" which boils down to the fact that if the courts did not regard attempts to settle disputes outside the courtroom as being "off limits" within the courtroom nothing would ever be compromised between the parties and the courts would be overwhelmed.

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.


Mediation Procedure.

When you get together the mediator will start by explaining the basics of mediation. Most of what he or she might say is covered in this article. A particular point is that the mediator will make it clear that in no sense will he or she give a decision or even make a recommendation on settlement to the parties. Ideally, a simple statement of the parties' positions will have been circulated in writing beforehand. In any event the mediation will start by each party giving an uninterrupted explanation of the dispute as they see it. The mediator will hold the ring and do his or her best to see that the parties can air their disagreements without being disagreeable.

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.

Getting Started

Once you have agreed to mediate you need to get on with it quickly. Find a mediator who is immediately available, within two or three days at the most. Plan the mediation for one day with the possibility of a one day overflow. Very few mediations go on for longer than two days. Remember that while mediating you are doing business; you want to come out ahead of where you might be if you went in for a court trial. So do the other side. You will not have got everything you asked for and probably not even everything that you hoped. Console yourself with the saved throwaway costs of a trial and all the profit you can make on the business you can now do with the party you were in dispute with and on all the business you would have lost while fighting in court.



If we have painted a glowing picture of mediation that is partly because it is fashionable to do so but mainly because when a comparison is made with litigation the reason for the fashion becomes clear from the relative costs involved. As we have said, only two and a half percent of Claims taken out get as far as a trial. There are no statistics to show what percentage of the Claims are merely part of debt collecting mechanisms and what percentage go as far as the courtroom door before they settle. We will use as an example a claim for half a million pounds and show that in terms of the cost involved it is hardly worth pursuing, while if a risk factor is applied any but the largest companies may well be better off calling in the receivers straight away.

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.


Another method of having your rights determined is by arbitration. Handled under the 1996 Arbitration Act arbitration will be cheaper than litigation. This is very different from past practice, when following court procedures, arbitration often turned out to be a lot more expensive. If you hire an arbitrator that knows something about the subject of the matter in dispute and then engage lawyers to tell him by evidence what he already knows and call on the arbitrator to decide the matter "on the balance of probabilities according to the evidence put before him" you are wasting talent. Make the arbitrator work, for sure he or she is being well paid. Tell him or her to find outwhat relevant evidence they can identify and to tell you what it is in writing. All evidence can be controverted so do so if you do not agree with it. If the arbitrator possesses the technical ability he professes then you have a good engineer's report for your own people to pull apart. Challenge the arbitrator on where he got his evidence from and let him or her debate the pros and cons with both sides. If you are right you will win and you will not need telling if you are wrong. Shop around if you want to save money with a participative arbitrator; most of them feel more comfortable in a judge-like role and any arbitrator thrust on you both after you have failed to agree on one with your opponent will certainly act like a judge.


Expert Adjudicators or Determinators

We would not recommend trying to resolve disputes using an "expert not an arbitrator" particularly if at the same time the contract requires that matters of law are to be decided by a lawyer. The courts have not yet finally decided how these forms of dispute resolution work and you may find yourself at the expense of a public service trial (and even appeal) for the benefit of those that follow. The law loves precedents and there are few regarding expert adjudications. Why should you pay for a court case to establish a legal principle rather than to resolve your dispute?



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.


Princes House
95 Gresham Street
London EC2V 7NA
Tel +44 (0)20 7600 0500
Fax +44 (0) 7600 0501
email: info@cedr.co.uk

The Academy of Experts
2 South Square
Gray's Inn
London WC1R 5HT
Tel 020 7637 0333
Fax 020 7637 1893
email: admin@academy-experts.org

The Chartered Institute of Arbitrators
International Arbitration Centre
12 Bloomsbury Square
London WC1A 2LP
Tel +44 (0)20 7421 7444
Fax +44 (0)020 7404 4023
email: info@arbitrators.org

This article first appeared in Management Accounting the journal of The Chartered Institute of Management Accountants November 1994 and is reproduced with permission. The article has been updated here to reflect the changes that have come about since 1994.