Personal injury mediation: Time for a change?

When I was asked to write an article on mediation in personal injury (PI) work, my immediate reaction was to wonder why it was needed.

Subsequently, I conducted an ad-hoc poll among my colleagues in our PI and clinical negligence departments. In recent years our 60 plus fee earners have recovered over £100m for our clients in cases ranging from minor whiplash injuries to multimillion-pound catastrophic injury settlements. Of the several thousand cases that made up this sum, it is surprising to note that only one was resolved as a result of a mediation.

Alternative dispute resolution (ADR) was one
of the cornerstones of the Jackson reforms and,
in his final report, Lord Justice Jackson made two principal recommendations regarding mediation: first, that there should be a serious campaign to ensure all litigation lawyers and judges are properly informed about the benefits which
ADR can bring, and, second, that an authoritative handbook should be prepared explaining clearly and concisely what ADR is and giving details of all reputable providers of mediation.

He envisaged that this should be the standard handbook for use at all Judicial Studies Board seminars and continuing professional development training sessions concerning mediation. It is now three years since Jackson LJ’s final report and both of these recommendations have been implemented.

Typically trenchant

In his keynote address to the Chartered Institute of Arbitrators in January 2015, Jackson LJ confirmed his views regarding the use of mediation in PI cases: ‘There is widespread belief that mediation
is not suitable for personal injury cases. That belief is incorrect. Mediation is capable of arriving at a reasonable outcome in many PI cases bringing satisfaction to the parties in the process. However, it is essential that such mediations are carried out by mediators with specialist expertise of PI litigation.’

In case any practitioners remain in doubt following Jackson LJ’s typically trenchant statement, a growing line of Court of Appeal decisions have seen penalties imposed on apparently successful parties who have refused to mediate or even failed to respond to a request to mediate.

Rolf v De Geurin [2011] EWCA Civ 78 involved a low-value building dispute where the claimant only recovered £2,500 at trial, a somewhat smaller sum than she had proposed to the defendant by way of a part 36 offer. Crucially, however, this part 36 offer also contained an offer to mediate, which was repeated after the defendant rejected her original part 36 offer.

As a result of this, the original trial judge made an apparently harsh offer of no order for costs up to the date of expiry of the offer, but ordered that the claimant should pay the defendant’s costs thereafter. The Court of Appeal allowed the claimant’s appeal and exercised its discretion to impose no order as to costs throughout the case, on the basis that negotiation and/or mediation would have had reasonable prospects of success.

The case of PGF II SA v OMFS Co 1 Ltd [2013] EWCA Civ 1288 went even further when the Court of Appeal considered the position where a party failed to respond to a suggestion to submit to ADR. In this dispute, there were competing part 36 offers to settle, but, additionally, two offers by the claimant to refer the claim to mediation, both of which were ignored by the defendant. On the day before the trial, the claimant accepted the defendant’s part 36 offer well after the 21-day period for acceptance.

Rather than impose the normal part 36 costs order that the claimant should pay the defendant’s costs thereafter, the High Court held the defendant’s failure to respond to the claimant’s offers of mediation meant a refusal of them, which was unreasonable.

The usual costs order was therefore departed from and each party bore its own costs after expiry of the defendant’s offer. The Court of Appeal upheld this decision and emphatically endorsed the need to consider ADR, stating that ‘a silence in the face of an invitation to participate in ADR is, as a general rule, of itself unreasonable, regardless of whether a refusal might have been justified’.

Finally, in the case of Laporte and Christian v Commissioner of Police of the Metropolis [2015] EWHC 371 (QB), despite finding for the defendant in every issue of the claim, the High Court reduced the defendant’s costs order by one-third on the basis of their unreasonable failure to mediate.

Robust decisions

In light of these robust decisions, it is perhaps difficult to see why mediation is so sparingly used in the PI arena. To look at the bare numbers, however, is to ignore the reality of the situation.

Despite the fact that only one case from the many thousands that we have pursued in recent years has been resolved by mediation, it is equally the case that only a very small number have been resolved by trial. The vast majority of cases are resolved by way of ADR, whether by way of negotiation, part 36 offers, or joint settlement meetings (JSM).

PI law has well-established protocols dealing with claims for personal injury, industrial disease, and clinical negligence. All of these provide for early disclosure between the parties so that
the merits of your case can be assessed, and strengthening of the part 36 regime can help
place further pressure on an opponent to settle, meaning that historically it has rarely proved necessary to fall back on mediation.

Furthermore, although any PI lawyer should have their client’s recovery and early rehabilitation as their main priority, when it comes to agreeing a settlement, it should largely be a purely financial negotiation.

Emotions will not generally be running as high as they could be in a small building or probate dispute, where mediation can serve to take the heat out of the situation. My one experience of mediation came in a difficult spinal cord injury case that I assumed conduct of from another firm. By the time we reached the mediation, we were approaching trial 12 years post accident, had already had one failed JSM, and were two years further down the line from the defendant’s £5.5m part 36 offer.

It took some time to agree on a mediator
of sufficient expertise and seniority who was acceptable to both parties, and the mediator’s
fee alone came to £6,000. On the day, however,
he fulfilled his role as a facilitator very well, settlement was achieved to all parties’ satisfaction, and his fee was less than 0.1 per cent of the final settlement. However, this is not a typical example, and involved an extra layer of costs that could simply not be justified in a run-of-the-mill PI case.

In light of the clear political and judicial will to push mediation in all cases, are things likely to change? The recent and well-publicised increase in court fees and the emergence of qualified one-way costs shifting in lower-level PI work should serve
as an incentive to insurers and claimants alike to consider mediation before commencing litigation, and it may well be that as these changes work through the system there will be an increase in
PI mediations.

What is abundantly clear is that if your opponent proposes mediation then the decisions above should be borne in mind. The suggestion must
be seriously considered, and only rejected if, after careful consideration, you feel it is inappropriate
at that stage.

Full reasons must be given, along with a counterproposal if another form of ADR would
be preferable, otherwise you may later find the chalice of victory dashed from your lips by an unpleasant costs order. SJ

Andrew Lilley is head of industrial disease at JMW Solicitors