After over 20 years as a litigation lawyer I trained as a mediator in 2008 and have seen at first hand the benefits and cost-savings of mediation, particularly for SME’s who can ill afford to spend hard-earned profits on costly litigation.
Having seen those benefits for organisations at all levels I launched a new service in June 2015 called ‘The Better Way’
– www.thebetterwayto.com – a unique service aimed at preventing, diagnosing and resolving disputes through education, facilitation and mediation. The name was obvious – it is the better way – and I’ve seen it from all angles.
Resolving Business Disputes: A no-brainer for businesses
Consider this recent report in the media – a ‘spike’ in commercial litigation in the UK, thought to be due to the fact that a surge in litigation emerging from recession claims began 5 – 6 years ago, but only now coming to court.
In the same week another report said that private sector firms in Northern Ireland reported a marked acceleration in the rate of growth in both business activity and new orders in April. Indeed, April’s figures represented the fastest rate of expansion in both business activity and new orders since the survey began nearly 13 years ago.
How much of this reported growth in income for SME’s in NI will end up being allocated to the type of commercial litigation in the first report? How many of them will have to devote valuable resources including people, time, money, to dealing with that litigation?
There are no clear statistics on this, but what we do know is that another recent report – the sixth mediation audit undertaken by the Centre for Effective Dispute Resolution (CEDR) – estimated that mediation saves businesses around £2.4bn a year in wasted management time, damaged relationships, lost productivity and legal fees.
Even better, 85% of cases taken to mediation are successfully resolved.
It’s not hard to see how these figures are calculated since cases can take 5-6 years to reach court, but it’s not just the time; as the CEDR audit highlighted, it’s the collateral damage that drains businesses at a time when recovery is vital. Traditionally the winner in any litigation gets their costs paid, but even in this scenario it only means the legal costs; it does not reimburse the business for the hours of work spent by personnel preparing witness statements, bundles of documents, meetings with lawyers, copies of correspondence …..the list goes on.
Cheaper, faster and more flexible solutions
The reality is, crucially for businesses, that mediation is significantly cheaper than traditional court action. A commercial case listed for two days in the High Court could easily be expected to cost £50,000- £100,000, whereas mediating the same case will cost in the region of £5,000.
In a recent commercial mediation I conducted, the parties estimated the total costs in running the case, including a ten day high court trial, to be around £2.5m whilst the maximum value of the claim was £1.5m. Unsurprisingly, a day’s mediation and several follow-up meetings resolved the case for a small fraction of that cost.
There’s more than just a financial advantage; in court, solutions can be quite binary. There is an opportunity in mediation to preserve business relationships and come up with creative options that the courts cannot propose because of their limited remit.
It’s faster, cheaper and preserves business relationships – a ‘no brainer’ for businesses.