Posted: 15 / 02 / 2024

What is mediation?

Mediation is a voluntary and confidential form of Alternative Dispute Resolution (ADR) used in the UK as a precursor to full court proceedings.  Both parties appoint an impartial individual to act as a mediator, generally an experienced barrister or a former judge.

Unlike arbitration, mediation allows parties to have control over the outcome. Additionally, given that mediation is confidential, any settlement offers made through this process can be made without fear of it influencing subsequent judicial proceedings.

It appears that the recent ruling in Churchill v Merthyr Tydfil CBC [2023] may result in parties being compelled to explore ADR methods, including mediation.  We await the effect this ruling may have on future litigation matters.

Why mediate?

Often, parties will start a dispute miles apart in terms of their views on the quantum of the dispute and the issues at hand.  Commonly, particularly in terms of quantum, the gap between these numbers can narrow somewhat as the process evolves, as a result of factors including (but not limited to) disclosure, witness statements and expert reports.  However, this narrowing of the issues often may only occur after significant costs have been incurred.

Having an estimate to hand of those legal costs prior to mediation can in many cases focus the mind of the parties.  Given the numerous procedural stages before a trial, these costs can be extremely high, particularly in complex cases.

A large number of cases in which we have been involved did not go to trial and ultimately settled beforehand after incurring substantial costs.  A successful mediation process could have helped those parties avoid those costs.

Potential downfalls of mediation

Mediation is not always successful.  Like most processes in a civil dispute, this can be a balancing act between the associated risks and costs.  Choosing to mediate too soon can result in a mediocre and lacklustre outcome due to limited information.  However, if parties leave mediation too late it could mean that high levels of costs have already been incurred.

There should be an element of willingness from both sides to reach a resolution.  Occasionally parties may attempt to use mediation as a fishing expedition, especially if there has been a lack of full and frank disclosure of key documents that are required during the pre-action process.

Why use a forensic accountant?

Forensic accountants can be brought in to assist during mediation by one party or be jointly instructed.  Whilst this might seem like an additional, unnecessary cost, a successful mediation can result in significantly reduced costs and better outcomes for all parties.

A forensic accountant can assist in a number of areas:

  • Adding credibility to any pre-action correspondence, demonstrating that quantum has been given due consideration by a relevant expert;
  • Providing calculations of the claim value at an early stage in proceedings;
  • Critically review and assess the other side’s calculations;
  • Modelling and considering alternative scenarios, assumptions or inputs;
  • Detailed document review and investigation, where appropriate;
  • Preparing advisory reports or calculations on a without prejudice basis to be submitted at mediation; and
  • Attendance at mediation.

Our experience

We have experience with a number of matters which used a mediation process.

We were recently instructed on a matter that resulted in a successful mediation. This was a breach of warranty dispute with a potential quantum of over US$15 million.  We were able to provide expert support to the legal team in the lead-up to the mediation, as well as onsite support on the day of mediation.  We were able to present to both parties and adapt our modelling throughout the day to provide our instructing party with timely, agile figures.  The two parties subsequently reached a settlement agreement.

We have also been involved in a number of mediation processes, including those involving compensation negotiations with a major banking group.

For more information, please contact Head of Civil Forensics, Mark Strafford.