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Small claims mediation – does it work?
Research into three pilot schemes offering mediation in small claims disputes was published in December 2006 by the Department for Constitutional Affairs (DCA). Headline conclusions seem to show that mediation is highly successful in resolving small claims, and that the process is popular with the parties. In fact, the results of the Manchester pilot appear so successful that the DCA has announced that it will use this model to roll out to other court areas across the country during 2007-8. However, a more detailed reading raises serious issues about whether 'too much emphasis is placed on expediting cases and too little on the safety of outcomes in terms of justice'. (1)
Background
Four research reports have now been published by the DCA into three small claims mediation pilot schemes at Exeter, Manchester and Reading. Three were commissioned by the DCA Proportionate Dispute Resolution Team, and one by the DCA research unit.
In the Exeter scheme, mediators who were also qualified as solicitors offered 30 minute mediation appointments to small claims litigants referred by the District Judge. Two research reports look at this scheme.(2)
In the Manchester pilot (3) a full time salaried mediation officer (MO) was available in court to give information and advice about mediation, and to provide free, voluntary, one hour face-to-face mediations to small claims parties. Towards the end of the pilot period he began to offer telephone mediation when parties had problems travelling to the court; this proved very popular.
The Reading pilot (4) focused more on giving advice and information about the small claims process to unrepresented litigants, with a ‘by-product’ of facilitating some settlement negotiations. The scheme has since been discontinued.
Take-up
In Manchester, 27% of the small claims cases at the court were referred to the MO, and 41% of these cases went on to face-to-face or telephone mediation. In the Enterkin & Sefton Exeter research, 44% of the small claims cases at the court were assigned (5) to mediation, and 62% of those were actually mediated. In the Prince & Belcher research, these figures were 34% referred, and 54% mediated.
Outcomes
In Manchester, 82% of face-to-face mediations resulted in a settlement, and when telephone mediation is included, the settlement rate rises to 86%. In the Enterkin & Sefton Exeter research, 69% of mediated cases settled at the mediation (65% in the Prince & Belcher research). On the face of it, this seems like a success – as well as the high settlement rates, user satisfaction with the mediation service itself was good at both courts. There was also little or no problem with enforcement. In Manchester, all the mediated settlements were complied with – in the Enterkin & Sefton Exeter research, only 4% of mediated cases required enforcement action, compared with 19% in the control sample of cases where a judicial order was made.
However, ASA believes that there are some key questions which should be asked.
1. Is the service really cost-effective?
Although the settlement rate for cases that actually ended up at mediation was an impressive 82% (or even 86%) at Manchester, in fact only 34% of the total number of cases referred to mediation were settled that way, and the percentage of all small claims cases actually resolved through mediation was less than 10%. Similarly, at Exeter (Enterkin & Sefton) the 69% settlement rate of mediated cases translates into a 43% settlement rate for the cases referred to mediation, and less than 20% for all small claims cases. The Manchester research report estimates that 172 hours of judicial time were saved over 12 months, and the two Exeter research reports estimate 216 (Enterkin & Sefton) or 121 (Prince & Belcher) hours. But these estimates of judicial time saved do not allow for cases which might not have led to a hearing anyway: for example, in Exeter (Enterkin & Sefton) 49% of non-mediated cases did not result in a hearing because the case was settled or withdrawn, or because one of the parties did not attend. Nor do the estimates allow for judicial time spent on allocating cases to mediation, or dealing with objections to the allocation. Researchers for both schemes conclude that there is simply not enough information to make an accurate cost/benefit analysis.
2. What do the parties think about their outcomes?
The Enterkin & Sefton Exeter research identifies an assumption that if settlement is reached, parties are satisfied. This is not necessarily true, for a number of reasons. In Exeter (Enterkin & Sefton), where the research compared cases settled through mediation with a control group where a judgement was issued, the mean value of mediated settlements was 63% of the claim value, and the mean value of judgments was 83% of the claim value. Claimants using mediation can therefore expect to settle for significantly less than those going to court. On average, in Manchester cases settled for around half of the claim value, and nearly a quarter of cases settled for less than a third of the claim value. In both schemes, some claimants expressed disappointment at what they perceived as low settlements, and some defendants were unhappy at having agreed to pay more than they thought was fair.
A number of parties felt under pressure to settle – partly by the limited time available, and partly by the mediator. One mediator in Exeter referred to the process as ‘a thirty-minute hustle’ (6) and a litigant in that pilot talked about the process being a ‘mild form of bullying’ (7). Another less mealy-mouthed litigant referred to mediation as ‘a load of crap – bollocks – a form of blackmail’ (8).
The Manchester researcher found that many parties’ satisfaction with the mediation process was linked to relief at avoiding what they feared would be a daunting court hearing – most had no actual experience of this. Margaret Doyle, the researcher, suggested that better information about the small claims process would help parties make more realistic assessments about the most appropriate way to resolve their dispute. Interestingly, the pilot at Reading County Court has been discontinued: this scheme focussed on giving information about the small claims process to unrepresented parties, and did not demonstrate the same potential cost savings as the settlement-orientated processes at Manchester and Exeter.
3. Does mediation offer added value to the parties?
One of the claims made for mediation is that it can offer creative settlements which are not available through court orders – apologies, changes in policies and procedures, donations to charity. However, in the Manchester pilot, only 12% of mediated settlements included an outcome that could not have been ordered by the court, and several parties felt that the focus was on compromise and bartering rather than achieving a win/win solution. The percentage was even lower in both Exeter reports.
4. Is this really 'justice'?
There are a number of significant questions about whether these small claims mediation schemes really offer justice to the parties.
Voluntary or compulsory?
In Exeter (Enterkin & Sefton), although the scheme was nominally a voluntary one, interviews reveal that two thirds of the participants felt they had no choice, and that their case would be compromised if they failed to mediate. In addition, three of the ten mediators in the scheme were unclear about just how voluntary it was. A key element of mediation is its voluntary nature, and the Halsey judgement (9) stressed that mediation should not be a compulsory part of the court process – the Enterkin & Sefton research indicates a worrying lack of clarity about this. Despite changes to the pilot scheme following the period of this research in 2003-4, this was still an issue for Prince & Belcher in 2005-6.
What is the role of the mediator?
In Manchester, the MO does not advise the parties, but he does talk to them about what he considers to be the advantages of mediation compared with a court hearing and judgement. He also provides what he calls a ‘reality check’ to parties who might have ‘unreasonable’ expectations. The MO is an ex-policeman with three days of mediation training, and Margaret Doyle, the researcher, comments on his lack of supervision during the pilot. She also makes the point that “if parties perceive that [the MO’s] job is to obtain mediated settlements, it might affect their perception of his impartiality” (10). In Exeter, Enterkin & Sefton found evidence that the mediators sometimes slipped into their role as solicitors and gave advice to the parties. The research also found a competitive element among the mediators in Exeter, who saw failure to achieve a settlement as a slight on their reputation (11). A second key principle of the mediation process is the neutrality of the mediator; the appearance of neutrality certainly appears to be compromised in these pilots.
What about the rights and wrongs of the case?
A number of the interviewees in the Enterkin & Sefton Exeter research, particularly where the case was about the non-payment of a debt, felt aggrieved that no legal arguments were accepted, and that often the mediators didn’t seem to know anything about the case at the start of the session. The apparent compulsion to use the scheme, the short time available, the pressure to settle applied by some of the mediators, and the lack of ‘a legalistic approach’ (12) meant that some felt that they were having their arm twisted in order to arrive at a compromise agreement (13), and that justice was not being done (14).
Is the process transparent and accountable?
Mediation is confidential, and there is no independent scrutiny of the process. There is also no procedure for reviewing the content of the mediated settlements. If judges did spend time checking settlement terms, potential savings in judicial time would be lost. Although both schemes nominally had complaints procedures, the researchers found little evidence that users were aware of them. The Enterkin & Sefton Exeter research makes the point that ‘the streamlined nature of these proceedings and their lack of internal checks leave litigants with little or no recourse to challenge, appeal or simply complain about procedures or outcomes’ (15).
What about the future?
In a postscript, the Enterkin & Sefton Exeter research notes that changes have been introduced to address some of these concerns. However, the problem may not be amenable to simple procedural change: many of the same issues, in particular the confusion about voluntariness, are noted in the 2005-6 research into the Exeter scheme undertaken by Prince & Belcher for the DCA Proportionate Dispute Resolution team.(16). The Manchester report also makes 13 recommendations to improve clarity and accountability. If the DCA proceeds with its plan to roll out small claims mediation in other courts, these concerns should be taken seriously.
Notes
1 Jill Enterkin and Mark Sefton, DCA Research Series 10/06 page 86
2 Jill Enterkin and Mark Sefton, DCA Research Series 10/06 (as above). See also an evaluation of the
Small Claims Dispute Resolution Pilot at Exeter County Court 2006 by Dr Sue Prince and Sophie Belcher. For convenience These will be referred to as 'Enterkin & Sefton' and 'Prince & Belcher'. The Enterkin & Sefton research refers to the period 2003-4, and Prince & Belcher to 2005-6.
3 Evaluation of the Small Claims Mediation Service at Manchester county court September 2006 by Margaret Doyle.
4 Evaluation of the Small Claims Support Service pilot at Reading county court September 2006 by Craigforth.
5 See comments under "Is this really Justice?" for comments on ‘assigning’ cases at Exeter.
6 www.dca.gov.uk/research/2006/10_2006.htm page 71
7 As above page 75
8 As above page 76
9 adrnow/halsey
10
www.dca.gov.uk/civil/adr/index.htm page 33
11 www.dca.gov.uk/research/2006/10_2006.htm page 73
12 As above page 76
13 As above page 75
14 As above page 75
15 As above page 77
16 An evaluation of the
Small Claims Dispute Resolution Pilot at Exeter County Court 2006 by Dr Sue Prince and Sophie Belcher.
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