Ken Clarke announces plans for compulsory mediation of small claims

On Tuesday afternoon, Ken Clarke unveiled an overhaul of no win no fee rules – watch it here.

This blog post does not intend to ccomment much upon the changes to success fees currently fuelling (along with insurance) the no win no fee claim “lawyers” that plague daytime TV. Its a double edged sword. Take away the recoverability of success fees and insurance premiums means that more people wont be able to recover compensation deserve. On the other side, claims companies and the “claims culture” means that some (a minority admittedly) employees bring claims against their own employers for silly little things, that ultimately will cost jobs. I’m not sure the measures help or not, but as I say, this post is not about that.

Mr Clarke also announced a consultation aimed at making the civil justice system more “efficient and effective” following “15 years of stagnation”. These plans include encouraging more people to settle their claims through mediation and raising the maximum damages awarded in small claims courts from £5,000 to £15,000..

Clarke said “We are trying to deliver a civil justice system which is more equitable, accessible and just. Resorting to the law need not be the long, drawn-out nightmare that so many ordinary people experience today.”

I’ve said for the last two years that this would happen and it’s partly the reason why I retrained as an Accredited Mediator. In practice as a solicitor, I could easily see that the Courts were overwhelmed with disputes that could, and should, be settled through ADR. It takes months and years to progress a case in the Courts, and it’s something that clients really hate (and often blame their lawyer for if it’s taking too long!). ADR, which includes mediation, means a dispute could be resolved in days or weeks, cut out lots of unnecessary lawyery stuff and get to the bottom o disputes quickly. I’m a huge fan of the benefits of mediation.

Some people say you cannot force people to mediate, as mediation is supposed to be voluntary and without pressure, so that the parties see the benefits of resolution for themselves.

I can understand this point of view. If a party suing with “a cut and dried case” was forced to mediate then why should he settle? The Defence is spurious and we’re only mediating so the defendant can drag things out or seek a discount!

But this is a minority. Most cases have two sides, hence the adversarial system we have in the UK.

Mediation allows a good mediator to get to the why of the dispute quickly and get the parties to resolve their own dispute themselves, rather than have a Court impose a decision neither party wants.

However, the only way compulsory mediation can work is to have a cost incentive of settling. At present, only very limited costs can be claimed in Small Claims Court. It’s meant to dissuade people from instructing lawyers, but it never happens. Instead, each party know they have to pay their own costs and so it matters little if they settle or go to court. The alternative is to have the loser pays the winners costs, as this gives some incentive to think about settlement.

The rules on costs can however be unfair at court, and of course at a mediation both parties win and so each pay their own costs anyway.

I think more mediation is important, but I think the best way to go about it is to encourage it rather than enforce it. There needs to be public education on the benefits of mediation and that instead of suing the ass off of people in court, there is another way. Educating the public about mediation is incredibly important and it would save the MoJ a huge amount of money in the long term.

My method would be to have a certificate of mediation before claims are even issued a court. The claimant would need to produce a statement from an accredited mediator saying that the parties had tried mediation or that the case was not suitable for mediation. Doing it before court would help to avoid costs, entrenched positions and would make everyone happier.

However this pans out, it’s great that the Government recognizes the role that mediation can play alongside Court litigation and it’s a story that’s well worth watching closely!