In September, the Ministry of Justice published court statistics for 2007. The High Court has seen a modest increase in overall claims. However, the number of cases brought in the High Court is dwarfed however by those started in the county courts, who issued more than 2m non-family claims in 2007.
There is evidence from the US that the financial crisis has prompted a steady increase in claims in its courts and we all know that what happens first in America...well you know the rest.
The US Federal Court has seen the emergence of a substantial number of cases connected to the credit crisis. The number of cases between January 2007 and June 2008 has already exceeded the number in the six year period, which led from the previous financial crisis of the early 1990s. The categories of those being sued include accountants, investment managers and other professionals.
The civil court system is straining under the weight of its current case load and many believe it would not be able to cope with an increase brought about by post-credit cruch litigation.
Does mediation, therefore, provide the only viable alternative to dispute resolution should the English court system be ground to a halt by a rapid growth in credit crunch claims?
I have previously blogged on the advantages and benefits of mediation when compared with the slow and costly court system and there is evidence to suggest that its use, whilst still minimal, is on the increase.
The very nature of the mediation process tends to concentrate the parties' minds and increases the likelihood of settlement. Whilst there are occasions where lawyers are well able to achieve settlement efficiently themselves (usually by without prejudice letters or in phone calls), there are also a great number of occasions where, through no fault of the lawyers, negotiations drag out over a number of months.
The real problem of delay in negotiations is the increased costs which result. If there is no halt to the proceedings to enable negotiation the case will continue and costs in preparation will increase. This also has the unfortunate knock-on effect that cases become far more difficult to settle because of the expectation that the payment of costs by one party should form part of any settlement.
Direct negotiations, without the influence of a mediator also tend to be adversarial, and they can drive the parties apart, rather than encourage settlement. Mediation also gives the parties themselves the opportunity to take part in settlement in contrast to direct negotiations between lawyers, in which the parties generally take no active part.
Disputes can be driven by emotion, commercial or other pressures, issues of principle rather than practical considerations and misunderstandings between the parties. These emotions often lie behind the dispute and cannot be expressed in writing. A good mediator will pick up on these issues and enable them to be aired helping the parties to reach a compromise.
The Americans were the originators of mediation and are, by no coincidence, its greatest users. Now is surely the time for us to also embrace mediation or risk the courts being ground to a halt by an increase in claims that the court system may simply be unable to manage.
Philip Gray
Kirwans Solicitors