Dispute resolution: The role of neutral evaluation in mediation

Article by Sir Paul Morgan

A series of developments in 2021 has meant that disputes lawyers must be more ready than ever to recommend mediation before or during litigation.

The courts are prepared to use a different tool, that of Early Neutral Evaluation (ENE), to assist the parties to settle their dispute.

There are shortcomings with ENE which could be overcome with a form of neutral evaluation outside the court system.

Furthermore, in some cases the best approach would be to combine neutral evaluation and mediation so that following an evaluation, the evaluator could act as a mediator to help the parties come to an agreement.

For many years, the civil justice system has encouraged parties to disputes to resolve their disputes otherwise than by pursuing litigation all the way to a trial and a judicial determination. This encouragement was contained in various Civil Procedure Rules, in Pre-Action Protocols, in the reports which led to those Rules and Protocols and in repeated statements by judges in decided cases. The various methods of resolving a dispute without there being a judicial determination were collectively referred to as Alternative Dispute Resolution or ADR. One of the main forms of ADR was mediation.

In 2021, there were some important events which emphasised the desirability of mediation as a means of dispute resolution. First, in March 2021, Sir Geoffrey Vos, MR, the Head of Civil Justice, delivered a lecture at Hull University in which he said:

“In my new role as Head of Civil Justice, I intend to try to make sure that the provision of ADR is at the heart of all parts of the civil justice firmament.”

In the same speech, he added:

“There is perhaps a linguistic problem: why do we keep on talking about Alternative Dispute Resolution? Dispute resolution should be an integrated whole. Mediated interventions should be part and parcel of the process of resolving disputes wherever they arise in our society – whether between businesses and consumers, amongst families or between the citizen and the state. There is nothing alternative about either mediation, early neutral evaluation, or judge led resolution.”

Secondly, in July 2021, the Civil Justice Council published the report of a working party which expressed the view that it was legally possible for a court to compel parties to litigation to refer the dispute to mediation.

Thirdly, in August 2021, the Ministry of Justice published a call for evidence with the title, Dispute Resolution in England and Wales. The document contained a foreword signed by the then Lord Chancellor and Secretary of State for Justice, the Master of the Rolls and other senior judges which contained the statement:

“What have hitherto been regarded as “alternative” methods of dispute resolution need to be mainstreamed within online processes, and within the culture of the legal system, those who work within it, and the consumers and businesses it serves.”

Fourthly, in October 2021, the Law Society responded to the Ministry’s call for evidence.

There is an ongoing debate as to whether mediation could and/or should be made compulsory but there is no disagreement that, in general, mediation is a highly desirable form of dispute resolution. These events in 2021 mean that any lawyer advising a client must now be more ready than ever to recommend mediation before or during litigation.

There have been many statements over the years as to the benefits of mediation as a form of dispute resolution as compared with litigation. The benefits are now well understood. The merits of mediation are by comparison with the disadvantages of litigation such as cost, delay, the time taken by those involved in the process, stress and uncertainty of outcome. Further, a mediated result can provide for matters which could not be ordered by the court, something which is of particular importance where there is to be a continuing relationship between the parties.

With many mediations, the process involves the mediator facilitating the parties to reach agreement to resolve their dispute. With this form of mediation, the mediator need not make up his mind as to who is right and who is wrong in relation to the dispute and what the outcome would be if the matter went to trial and judgment. Further, if the mediator does have clear views on those matters, he does not share those views with the parties.

However, the courts are now prepared to use another tool to assist in dispute resolution. This tool is Early Neutral Evaluation (ENE). The earliest form of ENE was used by the Family Court where it was called Financial Dispute Resolution (FDR). FDR has proved very successful. ENE is growing in importance and its growth will now be accelerated as a result of the encouragement of ENE by the Head of Civil Justice (referred to above) and by the Civil Justice Council in its Report, at paragraph 108, where it stated that there was much to be said for early ENE “in all cases save for the most complex”.

We have now reached the position where parties are actively encouraged to engage in mediation or in neutral evaluation.

However, the current system of ENE has some shortcomings. The courts offer ENE in the course of ongoing litigation. The ENE is carried out by a judge in a court building. The ENE appointment is listed as another part of the court’s business. The judge is selected by the court. The timing of the appointment depends on the other demands on the court.

There is a real need for neutral evaluation which is not limited in the way that ENE is. It ought to be possible for parties to obtain a neutral evaluation outside the court system and, in that way:

• to have a neutral evaluation before they commence litigation;
• to have a say in the selection of the evaluator, based on the relevance of his experience;
• to have a neutral evaluation without the delay created by the pressure of the court’s other work.

In addition, mediation and neutral evaluation need not be considered as alternatives so that the parties can only have one of them. I consider that it would be helpful to many parties if they could have a neutral evaluation by an independent evaluator who could then act as a mediator to help the parties come to an agreement in the light of the evaluation. This would combine the benefit of mediation with the benefit of neutral evaluation.

This combination is not in practice available in the court system. With FDR in the Family Court, although there is guidance which suggests that the judge conducting the FDR should follow his evaluation with some attempt to mediate a settlement, this is not what happens in practice. What seems to happen is that the judge invites the parties to continue their discussions in the court building for the rest of the day and to report back to him as to any progress. With ENE in other courts, the standard form of directions does not contemplate that the judge will act as a mediator after giving his evaluation.

In a great range of cases, the parties would benefit from a process, outside the court system, which:

• offers a combination of neutral evaluation and mediation;
• is available before or during litigation;
• is available without the delay caused by the pressure on the courts;
• allows the parties a say in the selection of the evaluator/mediator.

Happily, it is now possible to improve on ENE as practised in the courts and it is possible to combine neutral evaluation with mediation. This has been made possible by an organisation called Independent Evaluation. The full range of the services offered by Independent Evaluation is described in detail on its website here. There are two stages in the process: the Directions Phase and the Evaluation Day. On the Evaluation Day, the evaluator/mediator explains to the parties the strengths and weaknesses of their cases and the likely outcome if the case went to court. He then announces his evaluation of the proposed settlement for the parties to consider. This is followed by a facilitative mediation to give the parties the best possible chance of reaching a settlement of the dispute.

The evaluators at Independent Evaluation are barristers, experienced in litigation. Many of them have judicial experience. The parties can discuss with Independent Evaluation who would be the best evaluator/mediator for their particular dispute.

I consider that neutral evaluation combined with mediation is suitable for a wide range of cases. The Civil Justice Council recognised this although they suggested that it might not be suitable for the “most complex” disputes. In my view, the process is perfectly suitable for complex cases. The benefits of neutral evaluation and mediation (by an evaluator/mediator who can handle whatever complexity there is) should in principle be considered for all cases.

In the past, Independent Evaluation has been most active in the field of clinical negligence and personal injury but it was not limited to that field as its website shows. There are many different types of case where the parties become entrenched so that they are unable to make progress towards a settlement and/or where the dispute has become acrimonious and the parties run the real risk of ending up with an unaffordable bill for costs. Neutral evaluation combined with mediation will help many parties in a wide range of commercial disputes such as disputes between shareholders, partners and joint owners and non-commercial disputes such as disputes over wills and succession or the ownership and occupation of property.

I was a barrister for 30 years (15 of those as a QC) and a Chancery High Court judge for 14 years. I am now an arbitrator and mediator at Wilberforce Chambers. My experience has convinced me of the real need for the services which Independent Evaluation offers. I have now joined Independent Evaluation as an evaluator/mediator. I consider that my judicial experience ought to help me to form a realistic and independent view of what would be likely to happen if the dispute went to court for judicial determination. Further, the views of an evaluator with judicial experience ought to carry greater weight with the parties.

For more information on Independent Evaluation, please see here.