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That's settled, then

18 September 06

Authors' research into commercial litigators' attitudes to alternative dispute resolution reveals general support but a belief that it could be used more

by Bryan Clark, Charles Dawson

This article presents a snapshot of some key findings from an empirical study that the authors recently completed into the attitudes and experiences of Scottish commercial litigators relative to alternative dispute resolution (“ADR”). The study was conducted against a backdrop of recent, well documented ADR developments in particular areas such as family and community matters but with relatively little known about the significance of ADR in the Scottish commercial dispute arena. Its purpose was hence to build up a current picture of ADR in that area and also ascertain key policy issues relative to expediting its development.

The study was questionnaire based. In August 2005, 459 questionnaires were sent to solicitors and advocates with a commercial litigation specialism. Some 140 questionnaires were duly completed and returned, a response rate of 30.5%.

Know your processes

The first question in the study centred on respondents’ knowledge of different ADR processes. It was phrased: “Which of the following forms of ADR could you explain to a client if asked?”, with a tick-box list of types. It emerged starkly that while all respondents who answered the question (only two did not) claimed to be able to describe mediation to their clients, other ADR processes did not fare so well. Only 24 respondents (17.4%) felt able to explain “early neutral evaluation” and a mere 14 (10.1%) “mini-trial”. One respondent, commenting on these marginal processes, even remarked “I think you are making these up!” These results tie in with other findings reported below which suggest that mediation is the only form of ADR that is employed in practice.

Organisation policy

The study then sought to gauge the extent to which firms and other organisations employing our respondents had embraced a policy or practice of considering ADR processes. From 118 solicitor and solicitor advocate respondents to this question, only one (0.8%) recorded any policy or practice of avoiding ADR processes, compared with 72 (61%) reporting a policy or practice of considering ADR. Some 40 respondents (33.9%) noted that there was no policy or practice either way while the remainder did not know. These findings at least suggest that there has been some semblance of organisational absorption of ADR processes within Scottish law firms.

Training in ADR

Some 63 respondents (45%) had attended external training courses on ADR, 17 (12.1%) were accredited as mediators and 40 (28.6%) had received training in-house. (Some of these figures overlap.) Only five (3.6%) indicated that they had received training while at university in either degree or diploma studies; but the majority entered the profession some time ago and would have studied prior to the development of ADR processes in Scotland.

Although all respondents felt able to describe the mediation process to clients, some 57 (40.7%) had no training in ADR at all. This may raise questions as to those lawyers’ perceptions of what the mediation process entails. It is also worth noting that some respondents questioned the provision of current ADR training in Scotland. One noted that there was a need for “cheap and accessible training”. Another recalled that a plan to train all partners in his/her firm in mediation was abandoned on cost grounds.

Why recommend it?

The study then sought to gauge experiences in ADR. Respondents were first given a list of factors and asked that if they had ever made recommendations to a client to attempt ADR, whether the factors listed were “always relevant”; “often relevant”; “sometimes relevant”; “rarely relevant”; or “never relevant” to the decision to recommend. Ninety-seven respondents (69.3%) had recommended participation in ADR to their clients.

Some 77 of these (79.4%) said that a reduction in legal costs for their clients was either “always relevant” or “often relevant” to such a decision. Similarly, 82 (84.5%) indicated that reaching a speedier settlement was “always” or “often” a relevant factor.

Other factors reported included privacy, the possibility of reaching a creative settlement, preserving business relationships, gaining information on the other side’s case, gauging the risk of continuing the dispute, and a weakness in a client’s case.

What happened in practice

Of the 140 respondents, only 48 (34.8%) had any experience of representing their clients in ADR processes. One respondent had acted in an early neutral evaluation, but aside from this isolated instance, there was no reported ADR experience other than mediation.

In terms of numbers of cases, the 48 reported that they had acted as party representatives in some 147 cases across a wide range of dispute areas. (There will undoubtedly be double counting here as different respondents may be referring to the same cases.)

The most common types of case mediated were breach of contract and professional negligence, while others included employment disputes, personal injury, shareholder disputes, debt,e-commerce, construction, general negligence, IP and partnership.

The survey revealed a settlement rate of 78.5% and if “partially settled” cases are included the rate rose to 84.4%. These reported success rates stand up well to the high anecdotal figures, generally in the 75-85% band, which have been bandied around by ADR service providers over the years – rates which cynics may have considered to be somewhat inflated.

In addition to the high settlement rates reported, respondents held generally favourable views on different attributes of the mediation processes they had been involved in, including speed and cost, skills of the mediator, and ability of the process to reach an outcome that met their clients’ needs.

Mediation failure was reported as almost always caused by client factors such as intransigence, bad feeling and parties being polarised in their positions. Additionally, any refusal to engage in ADR offered by the other side was generally attributed to rejection by clients. A typical view was given as “one of the biggest stumbling blocks to ADR is the desire by practitioners to do enough investigation into their client’s case... By the time this is done, parties are entrenched and have spent a reasonable sum of money... the case keeps trundling along thereafter”. Another said: “the problem is timing; by the time mediation is considered parties become polarised and dig their heels in”. It was also reported that clients were often “extremely pessimistic about the other side’s good faith”.

ADR and the lawyer

Respondents were then asked to indicate their views on a number of statements relative to ADR’s development. Given space constraints only a few issues are discussed here. The interaction of lawyers with ADR processes has long been controversial, with suggestions that lawyers might see ADR as a threat, may seek to “milk” ADR and may not be appropriate in any case to be involved in ADR. Against this backdrop, respondents were asked to react to the statement: “lawyers will lose money if ADR becomes popular”. The response was stark. Of 135 respondents to this question, none “strongly” agreed with the statement, 21 (15.6%) “somewhat” agreed, 51 (37.8%) “somewhat” disagreed and 36 (26.7%) “strongly” disagreed. Taken at face value, this casts doubt on the idea that Scottish commercial lawyers are seeking to stifle ADR on the grounds of a potential resulting reduction in income.

Similarly in respect of the statement “ADR is an opportunity for lawyers to offer further services to their clients”, 46 respondents (out of 135: 34.1%) “strongly” agreed with the statement, 72 (53.3%) “somewhat” agreed, while only 6 (4.4%) “somewhat” disagreed and 4 (3%) “strongly” disagreed. One respondent put it this way: “mediation is another string to my bow”. Given that respondents were lawyers, it may be of little surprise that on balance they also viewed legal professionals as the best ADR neutrals. While only eight out of 137 (5.8%) “strongly” agreed with the statement that “legal practitioners make the best ADR neutrals”, some 59 (43.1%) “somewhat” agreed. Only 29 (21.2%) “somewhat” disagreed and three (2.2%) “strongly” disagreed.

In respect of whether mediation is being stifled because it is anathema to a “macho”, adversarial culture of litigation lawyers, the following statement was put: “if a lawyer participated more often in ADR his/her standing amongst colleagues would suffer”. A very clear response was obtained here. Of 135 respondents, none “strongly” agreed while only five (3.7%) “somewhat” agreed. By contrast, 39 (28.9%) “somewhat” disagreed and 85 (63%) “strongly” disagreed. Clearly then the vast majority of respondents were comfortable with the adoption of consensual forms of dispute resolution within the traditional litigation environment.

Other issues

Respondents were generally supportive of increasing judicial referrals to ADR in commercial matters, although most eschewed mandatory mediation. One typical comment was: “until the courts recommend ADR it seems unlikely to take off… I feel, however, that to make mediation compulsory is contrary to its ethos – mediation should be an entirely voluntary process”. Additionally, despite the high awareness of mediation recorded in this study, respondents in general viewed their fellow lawyers as unaware about ADR processes. In an effort to help expedite the process, the majority were keen to see increased training and awareness-raising of ADR throughout the Scottish legal fraternity. One put it this way: “lawyers should be trained in a balanced way in all [dispute resolution] options rather than any one form of dispute resolution becoming the orthodoxy”.

In short, the research uncovered a small but significant measure of generally successful mediation practice across a range of commercial dispute areas, as well as a generally positive legal profession, well disposed towards both the development of ADR processes (in particular mediation) and its role within them. As one respondent noted, “mediation is no panacea but it may be appropriate in a wide range of cases in which currently the process is not considered”. In addition to further judicial support of such processes, further propagation of mediation in both the legal profession and the client base is undoubtedly required. Only then may ADR rhetoric become a reality and Scottish commercial mediation move from the sidelines into the mainstream.

Dr Bryan Clark is a senior lecturer and Charles Dawson a research assistant in the Law School, University of Strathclyde. The full findings are to be published in due course. For more details contact the authors at bryan.clark@strath.ac.uk