LITIGATION - At last: the shorter arm of the law

Alternative Dispute Resolution, or ADR, has been described asquicker way of settling legal disputes – but hardly anyone wanted to spoil the fun of full-blown litigation. Except Lord Woolf, that is. “driving solicitors from the battlefield to the negotiating table”. Whether this means all solicitors or just those willing to be driven remains to be seen.

According to Roger Hopkins, a senior partner of London solicitors Hopsons Audley Hopkins & Wood, the fact that courts are now telling litigants to go away and make a bona fide attempt at mediation means there is now a greater chance of ADR succeeding and becoming part of the British legal system.

So what exactly is ADR? It’s a mediation process whereby the two disputing parties get together with their respective solicitors, discuss the problem, and come to an amicable agreement. If the parties cannot agree then a specially trained, independent mediator is called in. If this doesn’t succeed, the case can go through the usual legal process.

According to Tolley’s Accountancy Litigation Support, co-written by Alex Brown, senior partner of Norwich accountants Lovewell Blake: “Litigation and arbitration are judicial processes under which the parties are bound by the decision of a third party as to liability and quantum, subject to appeal. ADR is a less formal procedure where liability is not determined and the parties are not bound by the decision unless they agree to be.”

Mediation means that both parties will have an input into any decision and could each come away feeling they have won. As Hopkins says, “With ADR you avoid the war and negotiate a settlement and everyone goes away happy. Quite a lot of lateral thinking needs to take place and the client should have an open mind. The solicitor must also put himself into the mind of his client. The mediator is a safe buffer and he is in a powerful position to join up those on either side.”

Dickens fans will remember the case of Jarndyce v Jarndyce in Bleak House, “which still drags its dreary length before the Court, perennially hopeless”.

ADR is designed to make short work of such disputes.

Mark Roe, a director of the Centre for Dispute Resolution (CEDR) and a partner with London law firm Masons, says that his firm has been using mediation for around 10 years and with a great deal of success. “With large, complex and drawn out disputes, anything that helps towards reaching a settlement the case is good. Most companies now know what mediation is: some are wary and we have to persuade them of the benefits, and some are sophisticated users.

“Using a third party to facilitate a deal gets rid of all the risks.

Most of the time it is worth paying a premium to settle. The majority of companies don’t want the risk of paying costs at the end of the day, particularly in a multi-party action. It’s like playing Russian roulette on a massive scale,” he said.

Because of the reforms being driven through the legal system by Master of the Rolls Lord Woolf (pictured), aimed at streamlining the whole process of civil litigation, ADR may now be more likely to succeed. Such high-level clout, backed by the Lord Chancellor, has proved necessary because of lawyers’ – and, often, clients’ – own preference to go for the jugular: nothing concentrates the mind of “the other side” like a writ; nothing fuels self-righteous indignation like a deny-all defence and counter-claim.

“Under the new landscape envisaged by Lord Woolf and likely to become law in April 1999, solicitors will need to advise their clients, and perhaps the judiciary, whether and when ADR might be appropriate,” says Derek Sands, a Law Society Council member and chairman of its courts and legal services committee and of the Law Society’s ADR working party.

Solicitors such as Roger Hopkins who think ADR and mediation is the way forward will continue to push the case. “Decision-makers within companies will be forced to hammer out a settlement. If it’s handled properly, the client will be much more grateful than at the end of a long litigation.

Mediation is totally private and within each company’s control. Surely that is a far more effective form of law,” he says. Others will continue to be nervous until they are pushed.

Correction: In an article entitled “Accountancy’s own fraudbusters” which appeared in the November issue of Financial Director, we referred to the Norwich firm Lovewell Blake as chartered surveyors. They are, of course, a firm of chartered accountants.