Whatever happened to the National ADR Principles: A Reply by Robert Angyal SC

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This post was originally posted on The Australian Dispute Resolution Research Network.

The post asks, “Is ADR essentially about the provision of a process which is fair, or an outcome which is fair, or both?” There are several problems with the question itself.

First, what is meant by “ADR”? To this writer, ADR means going to court because the primary dispute resolution process, mediation, has not resulted in settlement of the underlying dispute. This is because mediation is ubiquitious in modern Australian civil dispute resolution. I think, however, the author of the question meant something different by “ADR”.

The second problem with the question is this: Is it a question which calls for a description of how mediation actually is practised in Australia and an assessment whether it leads to fair results – that is, does it call for a descriptive answer? Or is it a question about how mediation should be practised in Australia – that is, does it call for a normative answer based on moral norms about how the practise of mediation should be conducted?

If the question is a normative one, it leads to two more questions: First, who laid down these moral norms, and by what authority did they do so? Second, and equally fundamental, why should we assess mediation by moral norms at all? We don’t normally assess the practice of civil dispute resolution by moral norms; no, we assess it by criteria such as efficiency, cost, access, speed, compliance with the rules of natural justice, and so on. Why should mediation be different?

The third problem with the question “Is mediation about a fair process or about a fair outcome?” is the biggest one: It assumes that mediation is fair (descriptive) or should be fair (normative). It doesn’t admit the possibility that mediation might not be about fairness in either sense. You’re saying, I know, “Hang on, of course mediation is meant to be fair; that’s why people do it rather than going to court.”

I have two sorts of bad news for you. The first bad news is that in any particular case, the question “Is mediation fair?” is unanswerable, for lots of reasons. The biggest reason is that the parties will disagree about what’s fair. That’s why they’re having a mediation in the first place. If they could agree about what’s fair, they wouldn’t need a mediation or a mediator. Given this and the fact that mediations always are conducted in private, even if a third party could find out the outcome of a particular mediation, how could they form an opinion as to whether it’s fair?

The second piece of bad news is that my empirical observation, based on mediating for 30 years, is that parties to a mediation aren’t participating in the mediation because they think it’s a fair process and/or one that will lead to a fair outcome. They’re mediating because, and mediation works because, they are worried stiff about continuing the underlying legal proceedings. They are worried because litigation is very expensive, very destructive of relationships, very time-consuming and drawn-out and – most scary of all – very unpredictable as to result, with costs usually following the very unpredictable result. Losing means you get nothing out of the proceedings except the obligation to pay not only your costs but also the winner’s costs.

So the reason they are mediating is to mitigate the huge risks inherent in conducting civil litigation. To put it bluntly: Many parties to civil litigation can’t afford to lose – but they have no way of knowing with any certainty whether they will lose or win. They are looking for a way to avoid taking the risk of losing.

Some parties are even worse off: They can’t afford to run the legal proceedings to judgment but neither can they afford to call a halt to the proceedings, because a party who discontinues proceedings almost always has to pay the costs to date of the other side. They are caught in a costs trap, from which they need to find an escape. Mediation offers hope of an escape.

What this means in practice is that fairness is not a concept that’s relevant in mediation. Typically, a party will settle at mediation if the settlement being offered to them is better than the risk-laden nightmare of continuing the underlying legal proceedings. That’s the calculus that drives mediations towards settlement in my experience. It means that a lot of cases settle on terms that might shock outsiders: Plaintiffs sacrifice their causes of action and claims for damages in exchange for being released from the obligation to pay the defendant’s costs. Defendants who could defeat the plaintiff’s claim at trial pay plaintiffs to go away – because, the defendant knows, it will cost a lot of money to defeat the plaintiff’s claim but those costs won’t be recoverable from the plaintiff. So, as long as the case can be settled for less than the defendant’s irrecoverable costs, it’s cheaper to settle than to win the case. Fairness doesn’t enter the picture.

So can we abandon questions about fairness in mediation as irrelevant? They only distract attention from difficult and important questions about mediation, such as:

  • Why does mediation work?
  • How does mediation work?
  • How can I effectively represent a client at mediation?
  • What are the ethical limits on my advocacy at mediation?