Sensible option must be part of process

We all know the arguments in favour of mediation and we all nod knowingly when it is suggested that mediation is the quick and cheap way to resolve personal injury claims. Yet low-value PI claims still dominate the court lists (disposals hearings and fast track trials), so this sensible method of dispute resolution is failing.

Professor Dame Hazel Genn blamed the lawyers for this failure in her study of voluntary and automatic referral mediation schemes. Her sentiments were echoed by Sir Anthony Clarke, the Master of the Rolls, in a debate on mediation held by the Forum of Insurance Lawyers (FOIL) in January this year.

Some defendant lawyers have suggested in the past that mediation may not suit all cases. Terry Renouf of Berrymans Lace Mawer called on the profession to “work together to provide a proportionate and cost-effective dispute resolution service” (Law Society Gazette, 28 June 2007). Lea Brocklebank, former president of FOIL, has suggested that there is “no strong evidence to suggest that that a case that was referred to mediation would settle any quicker than a case that was not” (Insurance Times, 26 June 2007). The cost of mediation in lower value cases, she argued, may simply add a layer of costs without adding any value to the process.

The cost of mediation is a stumbling block in most PI claims. With about 80% of PI claims falling within the present fast track limit of £25,000, adding £1,000-plus to the overall costs won’t tempt insurers who in the end foot most of the bills. For example, Trust Mediation (a non- profit-making organisation) has a fixed fee of £1,150 just for providing the mediator.

Even if the costs came down, I would suggest that the take-up would still be low. The real reason for lack of mediation is the simple fact that options are not built into the litigation process. I am not suggesting any form of compulsory mediation, however. On the contrary, it should remain an option that the parties pursue because they see it provides both sides with tangible advantages.

Creating those advantages within the lower- value claims process is the key to making mediation a tool of choice and not just an aspiration. Solicitors and their insurance clients need to create mechanisms that ensure mediation is considered and used.

Timing cannot be left to the whim of case handlers: processes on both sides need to flag up relevant cases and provide routes for intervention. A claim with a value of, say, £7,500, will incur the following fees as it progresses through litigation: issue fee £225; allocation fee: £200; listing fee: £100; hearing fee £500; barristers’ fees: £1,380 (£690 x 2).

Solicitors’ costs on both sides and, in many cases, success fees for the claimant’s barrister of up to 100% add to the expense. The claimant has to pay these as they are incurred while the unsuccessful defendant ends up with the final bill. Both sides incur the time and expense of running the actions.

Many such claims do settle along the way, but many more could settle, and at an earlier stage, if there was a means to monitor progress and highlight the need for intervention.

Too many claims continue to slip through and a method is needed to prevent this leakage and provide quicker settlements. Crucial to this approach is the building of solid relationships, repeated contact, use of IT and a willingness on the part of the insurance industry to embrace the required processes.

Paul Ashurst is secretary of the Forum of Insurance Lawyers.