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These articles gives a general overview only and the legal position at the time of writing them. It cannot be relied upon in any particular case. Specific legal advice must always be considered to include consideration as to whether the legal position contained in this article has changed since going to print.

Litigate or Mediate?

Much has been said about mediation recently; it’s quick, cost-effective, flexible and allows parties to move on or maintain their commercial relationship. Clearly it should be used as an alternative to launching into expensive Court action but is it actually right for everyone?

Beware, when you have two parties who are simply never going to agree, mediation should not be entered into solely because people are worried that a costs order will be made against them because they did not try it.  Plenty of cases have hit the headlines recently as the message went out that if you haven’t tried mediation you would not be awarded your legal costs even if you won at Court and could even be ordered to pay the other side’s costs.

The story was that you should have accepted the offer to mediate whenever it was made rather than drag the matter through the Courts and incur unnecessary costs.  At Lemon & Co we advise every client of the benefits of mediation and a decision is taken on the effectiveness and suitability of bringing a dispute to a commercially acceptable resolution, especially when it is important to continue trading with the other party.  However, it is vital to recognise that it is not always a winning strategy.

Recent case law has provided some guidance as to what facts are required to be considered when deciding how to answer the question ‘to mediate or not to mediate?’  These factors (which are not exhaustive) are:-

1) The type of dispute.  If you need the court to settle a matter of law then it may not be resolved by mediation

2) The strengths of your case.  You have to show you had a good case before refusing mediation.

3) Whether the parties have tried other settlement methods.  You’ve responded to their letters, you’ve met on a without prejudice “off the record” basis with your solicitor and theirs but you’ve not gone to mediation – you need to show the reasons why.

4) Would the costs of mediation would be disproportionate?  You are very near to the case coming to court – are the costs involved in going to mediation at that late stage really going to be that different to going through with the court case, especially if the amount in dispute is low?

5) Would any delay in preparing for and attending a mediation prejudice your case? Mediation can be but is not always quick – if it is going to delay your business concerns unnecessarily then going to court for a quick decision might be better

6) Did mediation have a reasonable prospect of success? The onus is on the party proposing mediation to prove that it had a realistic chance of working.

It is important to consider mediation at each stage as well as a commercially acceptable settlement before legal costs escalate, resulting in neither side winning.  However, you do need to know when an offer to mediate should be refused and only to refuse after careful consideration of all the factors involved in the case. 

 

This article gives a general overview only and the legal position at the time of writing this article. It cannot be relied upon in any particular case. Specific legal advice must always be considered to include consideration as to whether the legal position contained in this article has changed since going to print. For further information and advice, please contact  Marianne Johns on 0800 135 7917 or alternatively by email on  Marianne.Johns@lemon-co.co.uk.

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