Out of the courts

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The 41st update to the Civil Procedure Rules comes into effect on 6 April. Alan Jacobs explains what this will mean in terms of pursuing alternative dispute resolution

On 10 January, a preview of the 41st update to the Civil Procedure Rules was published, with the update expected to come into force on 6 April. Significant changes to many of the pre-action protocols can be expected, in an attempt to further encourage litigants and potential litigants to consider methods of alternative dispute resolution. Most significantly, amendments are made to the pre-action protocol for personal injury claims, which has lagged behind some of the other protocols in this respect. The current protocol, rather lamely, simply encourages discussion and negotiation.

The new protocol is expected to provide that: "the parties should consider whether some form of alternative dispute resolution procedure would be more suitable than litigation and, if so, endeavour to agree which form to adopt. Both the claimant and defendant may be required by the court to provide evidence that alternative means of resolving their dispute were considered. The courts take the view that litigation should be a last resort, and that a claim should not be issued prematurely when a settlement is still actively being explored. Parties are warned that if a protocol is not followed (including this paragraph) then the court must have regard to such conduct when determining costs."

Joined-up approach

Taken together with the existing relevant parts of the CPR there is arguably the possibility of a more joined-up approach to ADR being required of the parties in a personal injury claim.

So what are the implications of this change? In reality, will these new provisions have a noticeable impact on the percentage of PI claims where mediation, or other forms of ADR, is genuinely explored?

Mediation by an independent neutral mediator is the most popular and, arguably, most effective form of ADR. In 2004, the Centre for Effective Dispute Resolution reported an increase in PI mediations over the previous year of 32%. However, this still only represented 8% of all of CEDR's cases. Undoubtedly, one of the successes of the CPR has been the regulation of pre-action conduct via the pre-action protocols. This has worked due to a perception among claimant and defendant lawyers of a real risk that a breach of the protocol will result in cost penalties.

Historically, however, there has been a great deal of resistance to mediating PI claims by both claimants and defendants lawyers - and indeed by some members of the judiciary. Yet the new proposals provide a clear signal that ignoring proper consideration of ADR must be taken into account by a court when considering the question of costs. There is, therefore, likely to be a significant increase in the number of PI claims being mediated.

In terms of the current use of mediation in PI cases, its use is improving although it can still be difficult to persuade lawyers, particularly claimant lawyers, to mediate. Broadly speaking, lawyers who have previously mediated are the ones who can more easily be persuaded to do so again, having discovered the benefits of cutting down the average time to settlement, and achieving a settlement their client is content with.

One question likely to arise is how quickly the effects of the changes to the CPR are going to be felt. In terms of seeing significant change to the number of PI cases being mediated, it is very much a carrot-and-stick situation. Uptake will initially depend both on how often a party's lawyer raises an issue of breach of these provisions, and how robust the judiciary is in meting out sanctions for breach. As time progresses, actual experience of mediation should motivate too. It is hoped that within a year of the new provisions there will be a significant improvement in the number of cases being referred.

Change and comply

So are there things that claimant, defendant and respective claims handlers must deal with as a matter of urgency to prepare for this change and comply? There is still widespread ignorance among claimant and defendant lawyers, as well as insurance claims handlers, as to what cases are suitable for mediation, how to arrange a mediation, how to prepare for it, and how to conduct it. Those who remain ignorant will now do so at their peril and potential cost.

Lawyers will open themselves up to potential negligence claims and every insurance claims handler should receive an adequate level of training to understand when and how mediation should be used as an alternative resource for settling claims. Experience shows that mediation settles more than 90% of PI claims referred. Given that the settlement is non-imposed, it is also one that the parties are content with to resolve the claim.

There is often a great misconception as to the cost of mediation. Utilising a low-cost private sector scheme such as the CEDR Solve PI mediation scheme - details of which can be found at www.cedrsolve.com/pi/index.php - or one of the court-based schemes, is a cost-effective solution for any multi-track and indeed even lower value claim.

Experience tells us that the consequences of not complying with changes in the protocols depends entirely upon the attitude of the judiciary. There is clear power within the CPR to penalise parties who do not comply and, if the judiciary has the will to see cases being resolved cheaply, quickly, to the satisfaction of the parties and outside of the traditional court process, then it should use those powers fully.

- Alan Jacobs is a partner in DLA Piper's insurance group, a CEDR accredited mediator and member of the alternative dispute resolution special interest group at the Forum of Insurance Lawyers.

MEDIATION REFUSAL REASONS

Examples of bizarre reasons given by claimant lawyers for refusing an offer to mediate:

- Oral evidence is needed to decide liability. If we were to opt for mediation then mediation would have to decide the truthfulness of witnesses.

- Everything is in issue.

- We do not believe it is appropriate where the insurer has gone to great lengths and expenditure to obtain evidence heavily slanted in their favour, and used their financial muscle to fund the building of a case.

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