Mediation is a quicker, less expensive way of settling troublesome claims. But people still seem reluctant to employ it. Insurance Times and Weightman Vizards asked a round table of industry experts to comment

The panel
Patrick Gaul Weightman Vizards

Bill Radcliffe Weightman Vizards

David Simpson Bar Mutual

David Taylor International Underwriting Association

Alison Clarke NHS Litigation Authority

Peter Salt Echelon Claim Consultants

Bev FitzGerald Fitzgerald Consulting

Last week the government leaked details of its plans to save the NHS billions of pounds spent annually on settling medical negligence claims. Along with measures to reform the laws of negligence and alter the way awards are paid out, the government outlined proposals to reduce litigation costs by adopting mediation.

Mediation is a way of settling disputes before they escalate into claims that will be taken to court. The method, which involves the appointment of a qualified mediator to broke a negotiated agreement between disputees, was born of the Woolf reforms and is a form of alternative dispute resolution (ADR). Along with adjudication, it is used to reduce the legal costs associated with settling claims.

In fact, mediation is the first step in the ADR process. It is voluntary, confidential, informal and without prejudice.

Insurance Times, in association with Weightman Vizards, brought together a panel of experts to discuss the future of mediation in the insurance industry,

Why is mediation so important?
David Taylor: Disputes are part of life. The most popular way of settling disputes at the moment is going to court and courts bring settlements. But it is very expensive. Mediation is quick, simple, and therefore cheap by comparison.

David Simpson: It is also about emotions. Because mediation is without prejudice, it allows people to vent their real feelings. The power of apology is great in these situations.

Bev FitzGerald: I reckon you can cut costs by half through mediation.

Bill Radcliffe: Mediation also avoids the risk of appeal. That's not only the extra costs, but also the danger of setting precedents. But it is no panacea - not immediately. The timing has to be right. I agree that, as a rule of thumb, mediation can save 50%.

Peter Salt: An added bonus is that the disputees take ownership of the problem. I've heard of a case where £5m was spent on legal costs for a £300,000 claim. Some people abuse litigation, just to buy time, hoping that something turns up.

I've had experience of `creative disputes' where parties have created the disputes to serve their own needs and often their means are delay, prevarication, hoping to turn up information that may ultimately help them in the final negotiation. I've also had active experience of even the top London insurance litigation firms seeing mediation as part of their creative end-game, where they have to sell a settlement to their market.

Some of the international markets are not sophisticated or not as sophisticated as the London Market, they don't understand the technical issues, let alone getting their heads round the process of dispute resolution.

David Taylor: Litigation is the best way sometimes. When you need a decision on principle. Or sometimes if you have a poor case, all you risk is winning.

If mediation is so good why isn't everyone using it?

Peter Salt: It's probably because the insurance market can't afford any process that could lead to settlement now. Paying out is something they would wish to avoid.

Bill Radcliffe: It did catch fire after Woolf. I think it then plateaued and may even be dipping a little bit. One of the key drivers has to be the legal profession. Most clients are not sophisticated enough to know of the mediation options. I think lawyers have yet to embrace the mediation ethos. Therefore, I think the court has to drive the legal profession. Now we are seeing courts ask lawyers: "Why is this case not suitable for mediation?"

The Plymouth County Council and Dunnett pronouncements are filtering down now to the lower levels of the courts [mediation was highlighted in both cases]. Certainly in Manchester, which is a court I am most familiar with, there are a number of district judges who are very pro-mediation and will question you about mediation - asking especially why you haven't used it. Currently only about 10% of cases across the board use mediation. It is higher in insurance, perhaps 30% to 40%.

Bev FitzGerald: I sit on the committee of the Society of Fellows in London and that recently organised a day-long conference on mediation, attended by 100 people. So we seem to have hit the right spot; people came from across the market, there were a lot of insurers there. We had the sense that they were still on their learning curve; that they really hadn't bottomed this out. But it was encouraging.

David Taylor: It's appearing in more and more, and certainly more and more in the market in which I'm in, the marine market. For example, we're just reviewing the basic hold clauses and, without question, mediation clauses are in there. And some new sets of clauses produced independently have mediation clauses, so I'm seeing mediation clauses appearing in international trade contracts, which the client has put in.

David Simpson: Our experience is that mediation is on the increase and certainly I think our experience of late has been positive, very positive. As far as I'm concerned, any misgivings that I might once have had are now dispelled.

Alison Clarke: In clinical negligence, we have seen an increase in the uptake of mediations, but I think it's still very small numbers of cases.

The problem is that lawyers are not trained in mediation. They're trained to litigate and quite often, particularly in my area, a lot of lawyers, claimant lawyers, aren't used to negotiating with their clients at their shoulder. They're very nervous of that and they're very nervous of exposing themselves and their client, and there are also great fears about when to mediate, so quite often when we offer mediation we get the answer back: "Well we haven't had an experts' meeting, we haven't exchanged experts reports, we're not ready."

We have found some difficulties with district judges. We've said, "Well look, we think we should be considering mediation," and the district judge has said: "Well no, why?" They have been easily persuaded by the other side.

Bill Radcliffe: I think it's quite interesting that the commercial court made 241 orders for mediation and the success rate, the settlement rate, was 83%.

Patrick Gaul: I don't think it'll really catch fire until it affects the general insurance market and personal injury claims. That is still the biggest litigation market.

I do think it will come. It hasn't happened so far because there is a perception that mediation is an expensive way of settling what are considered to be relatively straightforward claims. Your actual mediation day, all in, which the insurer would probably end up paying for, might be £10,000, and the reaction afterwards might be: "Well couldn't we have settled it just by a phone call?"

What can be done to increase the use of mediation?

Peter Salt:Woolf created a lot of knee-jerk reaction in the insurance industry, recognising the need to comply with simple time limits and response times, and that wasn't really embodying the true meaning. So that probably is underlying the mindset. Mediation is the way of solving the unsolvable, but it's also an opportunity in most cases for both sides to really evaluate their position, and you don't come to the table to mediate unless you really believe you have some points to argue with.

Bill Radcliffe:I think what is going to have to happen, and I think it has started, is a change in culture. Up until recently the litigation culture had been very macho and there are a number of firms and individuals who still have that mindset. It's all throwing grenades at each other in trenches-type of warfare. That culture has to change, so that everyone embraces the culture of dispute resolution.

It's going to take time. We shouldn't be too worried that it's not going to happen overnight. It is going to be an evolution rather than a revolution. The culture is beginning to change. I think the Woolf reforms are helping that. It's bringing forward the investigative stage, it is getting people to focus more on how they're going to resolve the dispute. And mediation is not necessarily going to be needed in a lot of these situations where you have exchange of information, people understand the issues, expectations are managed, it's going to move naturally to a settlement. That hasn't been happening in the past, it's: issue the writ, go through the procedure, go through disclosure and prepare for trial. Nobody has stepped back from this process and thought: "What are we doing? What are we trying to achieve here? What does the client want?" Nobody asks clients what they want.

I don't think enough is happening at graduate and undergraduate level. Education is obviously the beginning of the process. If it is ingrained in students' lives that litigation is about dispute resolution rather than about the litigation process, that's going to help, but it's so important that when they join a profession they don't see these macho firms and think that is how they should behave. It is the younger generation who are going to start the change of culture and push it through, perhaps driving out the older generation, which will then move on to pastures new.

Patrick Gaul: I really do think the key is personal skills and I'm not actually sure that you need somebody expert or even knowledgeable in the field. The important thing is the qualities of the individual, and this is an entirely new subject and I don't want to stray into it, but I'm actually a little bit worried about the formal training of mediators. That conversation would take another hour.

Alison Clarke: I was actually proposing mediation in a case. It was quite a prominent firm of claimant's lawyers and we wanted to organise a mediation very quickly, because in fact the claimant was terminally ill and unfortunately died before we could have the mediation. But when I said: "Well look, I propose that we go to CEDR [consensus mediation group]." I was met with: "Well, who or what is CEDR?" I think quite often people haven't heard of providers and are really unsure about how to go about setting up mediation.

David Simpson: There is an understandable reluctance to appoint a mediator, unless they're comfortable that that mediator understands, knows the market, knows the tone and knows the business, and perhaps the mediators that have those qualities are too well hidden. They are there, and I think that is one of the inhibitions, that there was a concern over whether there are people who've got that skill and experience.

Conversely, I've had a situation where the other side to industry have wanted a mediator who didn't know what the dispute was about, because they felt more comfortable expanding their very difficult situation to defend in front of someone who's non-expert, because they ultimately wanted him to come down somewhere in the middle of the dispute in terms of monetary value, rather than on the merits of the arguments.

Bev FitzGerald:It pays quite well if you get a regular stream of mediations, but some of the people I met at the conference were mediators and were ex-engineers, or ex-construction people, and they had no instructions or one instruction a year or something, which obviously doesn't pay very well. I think people are going to trust people with high reputations, and so those characters are going to do very well

David Taylor: I speak as someone who previously was very wary of the whole thing, having now in recent times had the opportunity to be involved, and none more fervent than the recent convert, but the point is, I think, that once you've been involved you're not going to turn your back on it.

Alison Clarke: I think that education is very important both for lawyers and also educating the public at large. You really will make progress when you get the claimant going to his solicitor and saying, "Look, I've heard about mediation, would my case be suitable?" That clearly isn't happening at the moment because there's really not enough out there for an individual to realise that mediation is an option. I have dreams of writing a script about `the mediator' - once we get a TV series featuring a mediator, I think you'll probably find there'll be a great uptake.

David Taylor: Just before we close, you're talking about fears, and I've got this little red book produced by an American law firm - "How to wreck the mediation" - and I fear that it will be adopted as a good tactic, with parties turning the tables on the mediator; and when the mediator isn't able to move the plaintiff, advising the mediator, investigating his background, saying they thought he had a better reputation for resolving disputes, telling him they're placing confidence in him to get a better deal to move a plaintiff, expressing disappointment at his own skills, advise the mediator you have a high expectation of his abilities and he's letting you down, and point out when he fails to meet those standards etc. I mean that's the other end of the spectrum.