FREE BOOK CHAPTER: The Challenge: The SRA And the Compliance Agenda (from 'A Practical Guide to Compliance for Personal Injury Firms Working With Claims Management Companies' by Paul Bennett)

09/10/17. Compliance basics – You may think this is obvious, but every day I advise law firms who have failed to step back and challenge their own way of working. For compliance to be effective you need to take a helicopter view and view it from an external perspective.

In this chapter we will look at the challenges which are known to exist and set some of them out so you can ask yourself when considering the later chapters:

1. What does this mean for my business?

2. How would we demonstrate our compliance?

3. Who is going to take the lead on this compliance project?

4. Why are they the right person?

Like many regulators, the SRA focuses on regulation by risk management, i.e. if something is high risk they are more likely to look at it. The SRA publish their thinking on risk so personal injury firms can assess the risks and then reflect on how they apply in their own businesses.

It is worth bearing in mind at all times that guidance from regulators can change and the Courts can reinterpret legislation at any time. Nothing is certain in this field. Additionally, this book is not legal advice. My publisher wants me to remind you in each Chapter that you should instruct me to give advice on your specific situation if you want it and the factual circumstances your business faces can be assessed and advised on.

SRA OVERVIEW

What do the SRA actually do?

The SRA’s remit under the Legal Services Act 2007 (LSA2007) is to regulate in the interests of consumers. The LSA2007 states in Section 1 eight regulatory objectives. The very first of these is “protecting and promoting the public interest”.¹

The SRA state their objectives as:

“Our purpose is to protect the public

• by ensuring that solicitors meet high standards, and

• By acting when risks are identified.”²

In simple terms their role is protect the general public from solicitors’ conduct (read misconduct) and to set and enforce standards.

This agenda for a legal regulator was a radical change in 2007 and the effects are still revealing their longer term impact. The profession has therefore, since the SRA’s creation, often found itself challenged by the proposals emerging from the gloriously situated offices of the SRA overlooking prime retail and restaurants outlets and high end apartments adjacent to the rejuvenated waterways of the canals in Birmingham. The SRA’s location is relevant to the perspective of those who regulate you: personal injury law firms and those you contract with to market your firm’s services (CMCs). The location is high-end, well-funded and often far removed from the daily practice of law. It is key therefore you develop your understanding of the SRA’s thinking – as this enables you to succeed and be compliant.

The move from the Law Society Regulatory Board to the SRA under the LSA2007 was a fundamental shift and undoubtedly many issues have a higher prominence now than previously. Whilst the LSA2007 has achieved some added consumer protections, perhaps now the SRA and the other regulators under the LSA2007 (there are fourteen (14) in total) should now be abolished and merged to create a single coherent and consistent regulatory body for consumers.

The SRA undertakes the following tasks:

1. It sets the professional standards which all firms must achieve;

2. It investigates allegations of wrongdoing;

3. It brings cases against those suspected of professional misconduct;

4. It issues guidance to solicitors and law firms to assist them in complying with the SRA Handbook;

5. It campaigns on issues which it believes protects consumers.

It is remiss of any professional not to be familiar with their guidance, but unfortunately the vast quantity of guidance can be overwhelming. This makes keeping up difficult but here are some basic tips which may help.

Inconsistent Regulation

Inconsistency hinders compliance by introducing change and creating uncertainty. Therefore, inevitably the SRA’s inconsistency has been the source of some frustration within the profession since the SRA was formed and probably undermines their stated intentions. The SRA is a much maligned regulator but as the references to some of their helpful materials in later chapters shows they get many things right. Consistency is not one of them and it is a challenge they must address if they want to grow from a newly born legal regulator to a credible adult one with independence from the Law Society.

In 2007 the existing Solicitors’ Handbook was revised to reflect the changes in the regulator (from the Law Society of England and Wales³ to the SRA).

Just four years later⁴, in 2011 the SRA introduced Outcomes Focused Regulation (OFR) which was intended to move regulation of law firms from solicitor centric prescriptive rules to consumer focused “Principles”, “Outcomes” and “Indicative Behaviours”⁵ . The respected legal journalist Neil Rose wrote a piece in The Guardian which summed up the objectives and the scale of the challenge for law firms in 2011 (the article remains available online for free by typing in the address within the footnote⁶).

At the time of introducing OFR the SRA stated their aims to regulate in a manner that was:

“proportionate, transparent and consistent"⁷

In these simple sounding aims the SRA some might say the SRA have failed miserably as is evidenced by the fact the SRA Handbook introduced on the 6^th October 2011 has been amended eighteen (18) times through to version in force from the 1^st November 2016. The SRA themselves concede the current regime is flawed and plan to rewrite the rules from scratch from the Autumn of 2018 (date to be confirmed).

No Handbook for professionals should need radical change this frequently and in none of the other professions I advise in across financial services, accountancy and taxation or healthcare do their respective regulators redraft the rules with such frequency.

In fairness to the SRA it has also published much material to assist law firms and individual solicitors to comply. The volume and pace of change must, I would argue, reduce dramatically if consumers are to be protected. Throughout this book I will quote from the more useful elements and provide a link to the original source material which is available for free on the SRA website.

The fact is this book intends sometimes to translate from the SRA’s objectives and guidance into understandable form so it can be understood in the context of a legal practice (rather than merely by the regulator). Showing the helicopter pilots view and then perhaps the flight path, to continue the earlier analogy.

In 2016 the SRA announced a further radical rewrite of its Handbook and associated rules to shorten the guidance. These changes were originally planned for 2017 but have been deferred until 2018 whilst amendments are made after a consultation which exposed basic errors and generated a mixed debate on the effects of the proposals. Personal injury law firms already struggling with other changes will be relieved.

TOP TIPs – How to stay up to date with the SRA requirements?

1. The SRA website has a what’s new section – 10 minutes once a week will help;

2. If you are the COLP of COFA subscribe to their newsletter for Compliance Officers. It summarises key new materials;

3. At least every 6 months do a CPD course on compliance – an hour’s webinar, podcast or a short course will give you the chance to think and hear a different perspective;

4. Read the Law Society’s Professional Update E-Newsletter and if you are in a smaller firm their Small Firms Division E-Newsletters: these are free resources which can be read quickly to give an update and pick up tips.

5. Write down on the first working day of each month what you think your biggest challenge is that month and what you are doing about it.

Increasing your knowledge and challenging your thinking by spending 30 minutes a month on this will reduce the burden and enable you to have grown your knowledge and confidence to tackle issues. Inaction is never the right option with compliance.

THE WIDER CHALLENGES – LEGISLATION, FINANCIAL AND CHANGE

What are the challenges?

My clients (law firms and solicitors across all sectors) often ask why the personal injury sector has been so badly treated by the Government, through legislation and politician’s media comment and by the SRA.

The answers, like the challenges ahead, are multi-factorial and not consistent.

The Financial Crisis

The financial crisis which occurred in 2008 and led to the deepest recession in living memory affected consumers and law firms, including many personal injury law firms which relied on loans and overdrafts to pay disbursements and fund cases until the end.

The financial crisis led to unprecedented financial pressures inside many personal injury firms. It may be over but the pressures have changed firms and their operating methods.

LASPO – Funding

The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (known almost universally as LASPO) change the funding options for personal injury claims radically when it came into force in April 2013.

Damages Based Agreements (DBAs) were introduced for the first time in the personal injury sector and in theory provided an alternative funding method for claimants whereby the law firm could share in the damages (up to a limit of deductions set at 25%). The take up across the sector has been poor because the 25% limit was inadequate for many law firms. Having drafted DBAs for employment law specialists for many years I have drafted a handful of DBAs for personal injury practices but the appetite for them has been limited to specific cases in the personal injury sectors rather than being a mass market. This of course contrasts with say the employment law field whereby such was their success that Employment Tribunal fees to bring a claim were introduced in 2012 to try and reduce the number of claims. Employment law DBAs are capped at 35% deduction of damages for the legal fees.

The changes to Conditional Fee Agreements were equally radical. Success fees were capped at 25% and the change to recover a 100% uplift of the law firm’s costs was abolished. The main source of funding personal injury cases is now less financially attractive.

The aim was to reduce claims and the costs of the claims to the insurance sector. In contrast with the SRA’s stated consumer led approach it seems the insurance industry has persuaded Parliament that the personal injury claims market needed to be curtailed.

The opportunity to reclaim After-The-Event (ATE) insurance was also lost. Many law firms used commission from ATE providers to fund the buying in of more work using referral fees. The loss of the commission coupled with the other changes has given law firms a huge compliance challenge: how to keep the fees up and grow against the reforms? The later chapters set out how this can be achieved compliantly.

LASPO – The Referral Fes Ban

The effects of Section 56 of LASPO are collectively known as the referral fee ban, the term is misleading. The ban only applies to personal injury and death related matters so solicitors in any other practice area can continue to pay referral fees. This highlights this is not about consumer protection but about the targeting of personal injury firms for objectively political reasons to tackle “excessive” “fraudulent” claims and the “compensation culture”.

Section 56 is short but far from clear. The subsequent chapter on Section 56 highlights the defects in the drafting but your firm will need to review its approach when the soft tissue reform occurs in 2017/8.

In summary: specific things are banned i.e. the passing of a client’s details for money. However the legislation leaves ample room for marketing your firm effectively in conjunction with a CMC or directly. Many personal injury practices acknowledge they have neither the marketing budget nor skills to compete head on with CMCs.

The number of authorised CMCs in the personal injury sector is believed to be less than 1000, down from a high of 3200 before LASPO⁸.

Prison and Courts Bill 2016-2017 and the Courts Bill 2017

In February 2017 we finally saw the legislative provisions of the “whiplash” reform. Part 5 of the draft legislation deals with the proposals. However, the draft Bill reserves key decisions to the Lord Chancellor and therefore secondary legislation is going to affect how firms interpret the Prisons and Courts Bill when it becomes an Act of Parliament.

The surprise General Election called in June 2017 saw the Prison and Courts Bill 2017 abandoned by Parliament before the election. After the election elements of the proposals were included in the new Queens Speech under a new proposed act called the Courts Bill 2017. The details are awaited so cannot be dealt with here.

Change

The pace of change is the challenge for many personal injury firms. How can you take investment decisions when the rules around what CMCs can do on your behalf have changed and are still bedding in? Why would you invest in your personal injury legal business when the Government is reforming the small claims limit for personal injury reforms and whiplash (soft tissue) claims?

Uncertainty combined with change makes taking decisions difficult. The aim of some of the later chapters is to set out options for you so you can operate compliantly more easily and hence focus on the commercial effect first knowing the compliance impact is robust.

So, what is the answer?

Firms that have established a robust compliance approach and a flexible operating model which copes with change will continue to do better than most. The following chapters can help with the basics of the compliance challenge but you should also focus on the change management aspect to improve your personal injury firm’s response to the challenges. Change management is about making and communicating the right decisions. Whilst that is outside the scope of this book, where they apply, points linked to change management will be mentioned.

The answer is to be flexible, be compliant and to streamline your firm’s systems. The following tips should help:

1. Involve your staff – ideas, energy and implementation all rest with your staff. This means with any change involving them gives it a higher chance of success. It is counter intuitive for some managers to explain things rather than tell them but involving them is far more effective;

2. Create a project team – if for each change and challenge you create a project team the solutions (and your response) will evolve from the initial idea and will be more robust. In light of the current changes a team for the Courts Bill 2017, for the SRA’s new Handbook in 2018 and for assessing and monitoring CMCs and their compliance might be 3 different project teams to make sure your firm can achieve its aim and the workload of responding is shared;

3. Delegate – Do not try and do everything, you will lose focus and you will drive yourself mad. Decide what can be delegated and delegate it to the project team collectively for that task or for an individual;

4. Follow Through – All the research shows law firms leaders are inconsistent. You need to be consistent to succeed. Write down your goal and follow through by following the steps identified. For example, Goal: Due Diligence on ABC Ltd a potential CMC. Steps: 1. Online review 2. Companies House review 3. Visit CMC and review their working methods and scripts. These steps will be developed in later chapters

5. Stay Focused – You need to be focused on two things: does this work commercially? Can I prove to the SRA that it is compliant?

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FREE BOOK SAMPLE: Knowledge of the Animal’s Characteristics: S.2(2)(c) Animals Act (from 'A Practical Guide to Personal Injury Claims Involving Animals' by Jonathan Hand)

05/10/17. Paragraph (c) of s.2(2) is concerned with the keeper’s knowledge of the animal’s characteristics as identified under paragraph (b). It requires either actual knowledge of the relevant characteristics on the part of the keeper, or actual knowledge on the part of another person which is imputed to the keeper in two limited situations, as explained below. The requirement of knowledge of the animal’s dangerous characteristics is derived from the scienter action under the old common law rules, which required knowledge of the animal’s propensity to cause the damage. It seems that where necessary it would be appropriate to refer back to the common law and the cases on knowledge decided under the old rules for assistance in applying paragraph (c).¹

In practice, however, the determination of whether paragraph (c) is satisfied tends to turn more on evidential matters than on the legal interpretation of the wording of the paragraph. In this sense, paragraph (c) is rather more straightforward than the previous two paragraphs of s.2(2).

The significance of paragraph (c) as a limit on the scope of strict liability was emphasised recently in Goldsmith v. Patchcott [2012] EWCA Civ 183.² Although the policy reasons for imposing a requirement of knowledge are clear (i.e. it is because a keeper has chosen to keep an animal in the knowledge of its dangerous characteristics that he or she should be responsible for any damage which results from those characteristics), from a claimant’s perspective it can sometimes seem like something of an evidential lottery. In order to prove knowledge on the part of a keeper, a claimant frequently has to rely on evidence about that knowledge which can only come directly from the keeper (i.e. the defendant) or from someone with experience of the animal in question who will often have some connection to the keeper. It may therefore be difficult for a claimant, at least at an early stage of investigation, to identify whether or not the keeper is likely to have the relevant knowledge. A potential defendant may well not volunteer evidence about this; and other witnesses may be unwilling to assist if they have still have some connection with that defendant. As mentioned in Chapter 3 above in the section dealing with the definition of a keeper, for claimants the ability to prove knowledge is an important consideration when deciding on whether to bring a claim under s.2(2) of the Act and on the identity of the defendant(s) where there is more than one keeper.

It is convenient to deal first with who must have knowledge of the relevant characteristics, before turning to consider what knowledge is required to satisfy paragraph (c).

Who must have knowledge of the characteristics?

Paragraph (c) requires that the relevant characteristics:

• Were known to the keeper; or

• Were at any time known to a person who at that time had charge of the animal as that keeper’s servant; or

• Where that keeper is the head of a household, were known to another keeper of the animal who is a member of the household and under the age of sixteen.

The first of these three provisions is straightforward. It refers back to the start of s.2(2) which states that “a keeper of the animal is liable for the damage” caused by an animal. So there can be more than one keeper of an animal, and knowledge on the part of the keeper against whom the claim is brought is required.

The other two provisions allow actual knowledge on the part of someone else to be imputed to the keeper. In these two situations the keeper is fixed with knowledge, even if he or she has no actual knowledge of the relevant characteristics.

The second provision applies to someone who both (i) had charge of the animal and (ii) did so in their capacity as an employee of the keeper at the time that person acquired the knowledge of the relevant characteristics.³ What amounts to being “in charge” of an animal is not defined in the Act, but would seem to denote an element of close control which is more than transient. The time at which the knowledge is acquired, and is imputed to the keeper, does not have to be at or immediately before the time of the claimant’s injury. It seems clear that it would not matter if, by the time of the claimant’s injury, the employee was no longer in charge of the animal or indeed had left the keeper’s employment altogether.

The third provision applies to someone who (i) is also a keeper of the animal, (ii) is a member of the household of which the other keeper (to whom the knowledge is imputed) is the head, and (iii) is under the age of sixteen. Thus, outside this quite narrowly defined situation, relevant knowledge on the part of members of a family or household will not be imputed as a matter of law to a keeper who is a member of the same family or household, and will have to be proved. In practice, this might of course not be very difficult to prove by inference alone. Under the old common law rules there was authority for a presumption to this effect in certain circumstances, which would seem still to be applicable.⁴

North makes the point that where an animal is sold and the previous keeper parts with possession, the previous keeper will no longer have any liability under s.2(2). But the previous keeper may have knowledge of the animal’s dangerous characteristics which he or she chooses not to pass on to the new keeper. No liability can attach to the new keeper in this situation unless and until he or she acquires knowledge of those characteristics. A claimant who was injured during this time would thus have no recourse under the Act against either the previous or the new keeper.⁵

What knowledge is required?

It is clear from the wording of paragraph (c) that actual knowledge of the relevant characteristics is required. Thus a claimant cannot seek to get around any deficiency in the keeper’s actual knowledge by relying on constructive knowledge (i.e. knowledge which is presumed by law on the basis that it could have been obtained with the exercise of reasonable care).⁶ So it is not enough for a claimant to say that a keeper ought to have known of the dangerous characteristics of the animal in question.

The question of what knowledge is required to satisfy paragraph (c) is best considered by reference to whether the relevant characteristics relied on by the claimant relate to the first or the second of the two limbs of paragraph (b). As a general proposition, it is usually easier to prove knowledge of characteristics which relate to the second limb of paragraph (b) than those which relate to the first limb. This is something that claimants need to have in mind when considering how to formulate a claim under s.2(2) and specifically the characteristics relied on for the purpose of paragraph (b).

Knowledge where the first limb of paragraph (b) is relied on

Where characteristics under the first limb of paragraph (b) are relied on, it is necessary to show knowledge of the animal’s characteristics which are abnormal for its species in general. For example, the horse in Flack v. Hudson [2001] Q.B. 698 which (unlike horses generally) had a propensity to be frightened and take off when it encountered agricultural machinery. The best evidence is likely to be one or more similar incidents in which the animal has behaved in the same way and someone has been injured. It will also of course be necessary to show that the keeper was aware of the incident(s) either at the time or learnt of them prior to the subsequent incident which forms the subject of the claim. In Flack there had been a similar incident in which the horse took off on coming across a large agricultural machine. The defendant was present at the time, and her husband who was leading the horse was dragged and suffered a broken leg. Not surprisingly, the trial judge regarded this incident as being of “the greatest significance”.

But knowledge of previous incidents which demonstrate the animal’s abnormal characteristics may also be sufficient, even if these did not result in any damage. In Wallace v. Newton [1982] 1 W.L.R. 375 there was evidence of a number of previous incidents when the horse had shown its unpredictable and unreliable behaviour, even though it appears that no one suffered any injury as a result. Nonetheless, knowledge of these abnormal characteristics arising from the previous incidents involving the horse was sufficient to satisfy paragraph (c).

The absence of any previous incidents demonstrating the animal’s abnormal characteristics (or at least any incidents of which the keeper is aware) will though be fatal where a claim is brought under the first limb of paragraph (b) (it may also present difficulties in relation to other aspects of s.2(2)). This is illustrated by Dennett v. Wain (18 March 2004, Preston County Court: unreported) in which the defendant’s horse, which she was loose-schooling in an indoor arena, suddenly jumped over a gate to the arena and landed on the claimant, who was injured. The claimant alleged that the defendant had cracked a whip and that it was this which caused the horse to jump out of the arena, but this allegation was rejected. Having regard to the expert evidence, the judge concluded that the horse must have had an abnormal propensity to behave in this way, such that the first limb of paragraph (b) was satisfied. But there was no evidence that the horse had ever behaved in this way before. The claim under s.2(2) therefore failed because paragraph (c) was not made out.

Knowledge where the second limb of paragraph (b) is relied on

Where characteristics under the second limb of paragraph (b) are relied on, it is necessary to show knowledge of what are normal characteristics for the species at the particular times or in the particular circumstances when the damage was suffered.

This makes an important difference, as compared to a claim where characteristics under the first limb of paragraph (b) are relied on, because a claimant does not need to rely on previous incidents involving the animal (in the way outlined in the previous section) in order to prove the necessary knowledge under paragraph (c). Instead, the requirement of knowledge may be made out by showing that a keeper knows that in general animals of the species normally behave in a certain way at the particular times or in the particular circumstances when the damage was suffered.

Welsh v. Stokes [2007] EWCA Civ 796 is authority for this proposition, although knowledge was established on this basis in previous cases, including in Mirvahedy v. Henley [2003] UKHL 16. In Welsh the relevant characteristic was rearing in circumstances where the horse did not want to go forward and the rider lacked the necessary to skill to control it. The question arose about how knowledge on the part of the defendant keepers should be proved. The trial judge found that paragraph (c) was satisfied based on their knowledge, as experienced keepers of horses, of the behaviour of horses in general, i.e. that it was normal for horses to behave in this way in these particular circumstances. The Court of Appeal rejected the defendants’ argument that the necessary knowledge can only be proved by showing that the keeper knew the particular animal had previously behaved in that way, and that knowledge of the behaviour of the species in general was not sufficient to satisfy paragraph (c). Dyson L.J. said this at [71]:

“I do not see why a keeper’s knowledge that a horse has the characteristic of normally behaving in a certain way in particular circumstances cannot be established by showing that the keeper knows that horses as a species normally behave in that way in those circumstances. … It makes no sense to require a keeper, if aware of that general characteristic, to have some additional and more particular knowledge.”

There are two important practical points that follow from this. First, a claimant can expect to find it easier to establish knowledge on this basis where a defendant is experienced in keeping animals of the species in question than where a defendant is not. As Lord Scott put it in Mirvahedy at [119]: “a professional keeper of animals will have a more extensive strict liability than an ignorant amateur.” ⁷

Second, there are though some limits on the assistance that this approach to proving knowledge may provide to a claimant. For the more unusual the characteristic the more difficult it may be for the claimant to establish knowledge based on a keeper’s general knowledge of the species; and a defendant may say that, notwithstanding some experience with animals of the relevant species, he or she has no knowledge of the relevant characteristic. Thus in Smith v. Harding (26 November 2013, Manchester County Court: unreported), where the claimant was injured when the defendant’s horse kicked out as she went to clip its head, the claim failed under paragraph (c). It appears that the defendant had some experience with horses but his evidence, which the judge accepted, was that he had never experienced a horse kicking out when about to be clipped. The judge made the point that, whilst it is no doubt true that all horsemen know that all horses will kick in some circumstances, that was not the test. The question was whether all horsemen know that all horses will kick out in the particular circumstances pertaining in that case. Having accepted the defendant’s evidence that he had never experienced a horse kicking out when about to be clipped, the necessary knowledge under paragraph (c) was not established.

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FREE BOOK SAMPLE: from 'Practical Mediation'' by Jonathan Dingle with John Sephton

03/10/17. Mediation is now is a key form of what many commentators call Alternative Dispute Resolution (ADR). The ‘alternative’ here is to having a decision imposed by a judge in court. Thus mediation is advanced as a consensual process, based on self-determination, that involves the participants (or ‘parties’) in the dispute meeting (generally in person but sometimes through various online technologies) with a neutral third person. These participants may or may not be joined by their lawyers, advisers, or various supporters.

The supposed mutual aim of mediation, or indeed any ADR, is to find a resolution to the dispute or problem that the parties face. Whether that is the real aim, or whatever the motive, around 80% of the time those coming to mediation leave with an agreement of some description. More than 90% of people leave mediations expressing satisfaction with the process – a consumer rating that would be envied in most sectors of commerce.

Mediation is a confidential and ‘without prejudice’ neutrally moderated conversation that allows participants, should they wish, to explore potential solutions in what should be a safe environment. The neutral person, or mediator, may be active or passive, creative or a blank canvas: seemingly a guide, philosopher and friend on some occasions or perhaps little more than a post box on others. Usually the aim will be to find a mutually acceptable solution.

That solution need not be, and often is not, an outcome that a judge might or could properly impose through a decision in a court, which may be limited by legal constraints, rights, and precedents. Whilst it must not be immoral or illegal, unconscionable or oppressive, a solution can be quite distinct from an arbitral award. It is simply the unique resolution found by the parties in the mediation that is 'good enough' for them in all the circumstances.

Mediation may provide a Fisher & Ury¹ "win-win" outcome for the participants. As part of the search for a solution a skilled mediator will often look for the kind of added value which is often missed in mainstream negotiations, but can be a way of removing deadlock.

1.1 An Idea of Mediation

Practical Mediation is thus intended generally to be a forward-focussed conversation. It is preferable to avoid backward-looking recriminations and analyses. Some mediations require such introspection and implosions. Others do not. The past cannot be changed, but it can be cathartic to explore important experiences, even if the mediator is the only audience, and then, from the ruins, set out to rebuild relationships – if this is needed for resolution.

But the authors are clear: mediation is not an arbitration. Nor a trial. Nor yet a quiz. It does not require the mediator to know or to tell the participants the solution ­– or generally even to venture suggestions, although in evaluative mediation there may be options for this to happen as discussed later. Normally, the solution is for the participants to find. One that suffices to meet their needs, concerns, and interests. Control therefore remains with the participants. Mediation does not involve the mediator telling the participants what a judge may or will do, or who is right or who is wrong. Nor does it usually involve the mediator assessing the merits of the case: after all, the mediator may not be aware of all of the relevant information, or law.

Mediators are commonly not lawyers and, because participants generally bring their own advisors, mediators do not need to be experts in the law behind the dispute. Where mediators are invited and permitted to evaluate, under a clear contractual framework, they will still decline to do so if they do not believe that they have adequate information or knowledge.

There are many misconceptions of the role of the mediator, which may hinder participants agreeing to mediate. Those commonly encountered are:

• Mediation requires compromise from one or both participants – it does not: very often the outcome is unexpected and one that allows growth.

• The mediator is an evaluator – there should be no material evaluation by a mediator: any assessment of risk or merit is for the participants to decide.

• The mediator is an arbitrator – arbitration is a wholly different statute-based process involving legal assessment by, in effect, a private judge.

• The mediator will impose a solution – a mediator has no such power, or desire.

• The mediator will knock heads together – a mediator has no such role.

• The mediator will apply pressure on the participants – the only pressure that participants experience is that from their own assessment of risk.

• The mediator will advise the participants what to do – no, the participants must rely on their own judgment, or that of their advisers.

1.1.1 Mediation and adding value

The concept of adding value is demonstrated by the apocryphal anecdote known as The Mediator's Orange. It has been fondly told to generations of training courses and begins with a parent going into the kitchen to find two children arguing over the last orange in the fruit bowl. The parent intervenes, taking the fruit from the children and cutting it in half. Each child is given half of the orange. One child goes into the lounge and sits down to peel that half of the orange. The child does so, throws the peel in the bin, and eats the fruit. The other child stays in the kitchen, carefully removes the peel from the fruit, throws the fruit away, and uses the peel to flavour icing and bake a cake.

The knife represents the law: the equal division was a legal solution. But the outcome could have been very different had the parent asked: "Why do you want the orange?". Had that happened, and had each child answered honestly, then both could have had 100% more. The parent could have added value at no cost – with perhaps the chance to gain even better involvement with the hungry offspring.

Apocryphal, maybe, but a key tool for the mediator to use, in open or private sessions, is the question “why”? That question can, even if unanswered, cause participants to begin or further a process of reflection that allows at the very least some direction for the mediation to be established.

The authors suggest, and adopt as a theme throughout this work, that by floating questions mediators can add value to the process and so engage with the participants. Difficult or challenging questions, or reality testing, when conducted neutrally with no compulsion to answer, is part of that catalytic chapter in mediation that can be so enervating.

1.1.2 The origins of the species

Practical Mediation is not new. The authors acknowledge Sir Brian Neill’s paper² which a decade ago noted that many outside the law, and in particular historians, were surprised that ADR processes have taken so long to come to the fore in contemporary Western society. Other civilisations embraced mediation long ago. There are references to mediation in Justinian, and before that historians speak of the Phoenicians using mediation in commercial disputes. In Greece a mediator was termed a προξενητης, or matchmaker.

In China there has been a long tradition of compromise where Confucian philosophy favours persuasion rather than coercion. In Kerala there is a similar history of negotiated settlement and appropriately the Indian Institute of Arbitration and Mediation is based in Cochin. There are many traditions where a neutral third party has helped disputants reach an accord: the Quakers, as merely one example, have played a distinguished role.

But in the West, and despite Abraham Lincoln’s enjoinder:

‘Discourage litigation. Persuade your neighbors to compromise whenever you can. As a peacemaker the lawyer has superior opportunity of being a good man. There will still be business enough’

the practice until the 20^th century was to use a third party as a judge in formal court proceedings – or more recently an arbitrator or adjudicator – to determine a dispute, rather than to enlist a neutral to assist the disputants to reach a conclusion themselves. The legal route, and the philosophy behind litigation, was adversarial, costly and time consuming

Gradually, however, with the rising complexity of law, increasing delays and the international nature of business, people began to question whether there might not be a more effective alternative to litigation. Conciliation procedures began to spring up in industrial relations, notably in the cotton and mining industries and in the US in 1896 the Conciliation Act was passed. Not long after that the US Department of Labor set up a panel of Commissioners of Conciliation to handle disputes. It is generally recognised, however, that it was not until the last third or so of the 20^th century that serious attention was given to the settlement of disputes by mediation. The early drivers towards ADR in the New World were not, however, directly a response to the needs of clients for control or choice.

Rather the precipitators were the clogged court systems and prohibitive costs associated with traditional litigation. It became fashionable to criticise the use of courts and their Victorian values when a more Aquarian option was developing.

ADR organisations in Canada, for example, emerged 30 or so years ago to become major clearing houses³ for litigation through combining the skills of forward thinking QCs, recently retired judges and ADR practitioners keen on promoting access to justice – with the demands of the insurance industry. This cost-aware industry began effectively promoting the use of mediation in personal injury and clinical negligence claims to avoid leakage and reserve overruns. Lawyers and clients were initially suspicious of the spread of ADR. Volpe and Bahn reported in 1992⁴ that lawyers in particular felt threatened or discomforted by a process they did not understand⁵⁶. Some felt they may not be able to charge the usual fees, or that reasonable expectations of profiting from costs may be thwarted⁷.

There is still some resistance to mediation in a number of outlying countries which, on examination, appears to say more about the litigators involved, or their financial interests, than the merits or otherwise of mediation. The UK Government, in contrast, came into mediation with the Government Pledge announced on 23^rd March 2001 to embrace ADR and mediation, followed by the Dispute Resolution Commitment⁸ a decade later. The savings and effectiveness are reported and reviewed therein, and wide-ranging resources including the Small Claims Mediation Service⁹ and (the now unfunded) National Mediation Helpline that have been used to promote mediation.

A continent or more away, in South Africa, the Court-Annexed Mediation Rules which apply in the District and Regional Courts form part of Government's effort to transform the civil justice and enhance access to justice. The Rules of Voluntary Court-Annexed Mediation (Chapter 2 of the Magistrates’ Courts Rules) were approved by the Minister and came into operation on 1 December 2014. The pilot project sites in (as of 2017) Gauteng and the North-West Province have met with some success in conjunction with the rationalisation process.

The objective of these Rules is to assist Case-Flow Management in the reduction of disputes appearing before Court and to promote access to justice. The Rules make provision for the referral of disputes for mediation at any stage during civil proceedings, provided that judgment has not been delivered by the Presiding Officer. Mediation adopts a flexible approach compared to the rigid and tedious legal processes which most often require services of a lawyer to present before court. Disputes are usually resolved in a reconciliatory manner and mediation, therefore, promotes restorative justice.

To assist with the implementation of the Mediation Rules the Minister appointed an Advisory Committee which will advise the Minister regarding the norms and standards for mediators and for the accreditation of mediators for enlistment to the panel as required by the Mediation Rules¹⁰.

Back in the United Kingdom, the Ministry of Justice offers (for England and Wales) direct access to mediators on a voluntary basis – through http://civilmediation.justice.gov.uk/ on a fixed fee basis. The site tells users (as of 1^st September 2017) that:

Table 1: The cost of mediation via the online directory service

* The mediator/mediation provider should agree in advance whether this should be dealt with in one or two hours. For the one-hour rate the option is available to facilitate settlement over the telephone if appropriate, and if the parties agree.

** If the claim is for more than £50,000, the fees will need to be agreed with the organisation providing the mediation.

Why has this happened? Cost and speed are certainly factors attracting governments and individuals, organisations and litigants to mediation worldwide in this age of austerity. Privacy and confidentiality are others.

It is important to understand the scope of mediation and how it can and should work. It is equally important to grasp that the process must be structured yet flexible, with a clear contractual framework that allows parties and mediator to know what can be done.

1.1.3 The scope of mediation

Mediation is a voluntary process for resolving disputes by mutual agreement. It differs fundamentally from both arbitration and judicial determination at a trial in that no decision is, or can be, imposed by the mediator. Any settlement arising at mediation will be one which the participants own, and have created for themselves. The mediator is a midwife rather than a parent.

Mediation can be applied to all, or to just a discreet part, of a dispute. Brown and Marriott¹¹ observe that a dispute is a class or kind of conflict which manifests itself in a distinct, justiciable issue; a disagreement over issues capable of resolution by negotiation, mediation, or third party adjudication. Mediation offers an impartial, mutually acceptable and neutral guide to help disputing parties through the tangled thicket of their conflict¹² to a resolution of their own crafting.

In contrast to a trial, mediation is a private process, normally paid for by the participants, conducted at a time, at a place, and by a mediator of their choice. It follows the principles of self-determination and works under an ethical code. See Section 10 (below) for the AoA(SA) Code of Conduct.

1.1.4 Mediation: A legal or contractual process?

For now, at least, in the United Kingdom mediation is a contractual process.

Spain (as from July 2012¹³ ), Austria (as from June 2003¹⁴ ), Ireland¹⁵ and many other states have a mediation law, or court rules for mediation, but in the United Kingdom there are presently none. Ireland has recently gone further than its Court Rules. In 2017 it published the Mediation Bill which is expected, at the time of writing to become law.

The Bill’s objectives¹⁶ are to:

• introduce an obligation on solicitors and barristers to advise parties to disputes to consider utilising mediation as a means of resolving them and, where court proceedings are launched, requires parties to proceedings to confirm to the court that they have been so advised and have considered using mediation as a means of resolving the dispute;

• in family law cases, parties will be required to attend an information session on mediation;

• provide that a court may, on its own initiative or on the initiative of the parties, and following the commencement of proceedings, invite the parties to consider mediation as a means of resolving the dispute;

• provide for the suspension of court proceedings in such cases to facilitate the mediation process;

• contain general principles for the conduct of mediation by qualified mediators; 

• provide that communications between parties during mediation shall be confidential;

• provide that the parties to the mediation determine among themselves the enforceability of any agreement reached during the mediation process;

• provide that the costs of mediation must be reasonable and proportionate and not linked to the outcome of the process;

• make specific provision for the involvement of children in mediation in family law disputes;

• provide for the introduction of codes of practice for the conduct of mediation by qualified mediators.

In South Africa¹⁷, as discussed above, there are pilot scheme rules¹⁸ for Court Annexed mediation but more widely used are organisation’s bespoke rules such as those of the Association of Arbitrators (Southern Africa¹⁹).

Thus, the participants will normally sign a Mediation Agreement with the mediator which defines the procedure and sets out what the participants and the mediator can and cannot do, before, at, and after the mediation. It is therefore not a creature of statute, and can exist entirely outside the current Civil Procedure Rules 1998 (CPR²⁰) which defines the legal process.

There are several advantages to mediation being a non-judicial process. It follows that because the process is voluntary, contractual, and independent of statutory restriction, the solutions which the parties decide to adopt do not need – in most cases – to have anything in common with the orders to which a court or arbitrator are restricted.

Apologies, explanations, meetings with consultants, amendments to policies, staff retraining, changes in procedures, therapy, counselling, admission for further or new treatments and second opinions are just some examples of highly creative solutions which mediations devise and which judges cannot aspire.

1.1.5 Mediation and English Rules of Court

Although there is neither proscription nor regulation, the English CPR does seek to encourage ADR, and so by implication mediation:

Rule 1.4(1) obliges the court to further the overriding objective of enabling the court to deal with cases justly by actively managing cases. Rule 1.4(2)(e) defines active case management as including encouraging the parties to use an alternative dispute resolution procedure if the court considers that appropriate and facilitating the use of such procedure.

Rule 26.4(1)²¹ provides that a party may, when filing the completed allocation questionnaire, make a written request for the proceedings to be stayed while the parties try to settle the case by alternative dispute resolution or other means. The court/judiciary can also stay the case if considered appropriate.

Rule 26.4A²² says in the case of Small Claims (up to £10,000 in non-personal injury matters):

(1)Referral to the Mediation Service

26.4A

(1) This rule applies to claims started in the County Court which would normally be allocated to the small claims track pursuant to rule 26.6.

(2) This rule does not apply to—

(a) road traffic accident, personal injury or housing disrepair claims; or

(b) any claim in which any party to the proceedings does not agree to referral to the Mediation Service.

(3) In this rule, 'the Mediation Service' means the Small Claims Mediation Service operated by Her Majesty’s Courts and Tribunals Service.

(4) Where all parties indicate on their directions questionnaire that they agree to mediation, the claim will be referred to the Mediation Service.

(5) If a claim to which this rule applies is settled, the proceedings will automatically be stayed with permission to apply for—

(a) judgment for the unpaid balance of the outstanding sum of the settlement agreement; or

(b) the claim to be restored for hearing of the full amount claimed,

unless the parties have agreed that the claim is to be discontinued or dismissed.

Rule 44.4(3)(a)(ii)²³ requires the court, in deciding the amount of costs to be awarded, to have regard to the conduct of the parties, including in particular the efforts made, if any, before and during the proceedings in order to try to resolve the dispute.

The pre-action protocols²⁴ contain standard wording on ADR, to the effect 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 claims should not be issued prematurely when a settlement is still actively being explored. Parties are warned that if this paragraph is not followed then the court must have regard to such conduct when determining costs."

There is therefore much for the practitioner to consider and this is supported by, as has been mentioned earlier, the encouragement of the referral website²⁵ and the work of the Civil Mediation Council²⁶ as well as the Society of Mediators...

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