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    “Why can’t I settle early?!” – barriers & options


    There is no doubt that the vast majority of disputes which are the subject of court proceedings, are resolved prior to trial and judgement.  Data puts it at about 97% of matters.[1]  Nor is there much debate that disputes the subject of legal proceedings before a court (‘litigation”) are costly, time consuming and stressful for the parties.  The earlier the resolution of these disputes can occur, the better – for the parties, courts and community.

    None of this is news.  But change is slow.  What then are the barriers to and options to facilitate earlier settlement and dispute resolution?

    Litigation market surveys

    If you talk to commercial litigation lawyers (barristers or solicitors) they will tell you business is booming.  Superior court registrars and judges say their dockets are under significant pressure and if the business press is any guide, commercial disputes seem to be of higher profile, interest and magnitude.

    Usually, if a product or service is generating increasing client demand, you would say it is very successful.  Not so with litigation.

    This is a consensus view, whether it be judges, consumer survey or business clients:

    • “Legal disputes are acrimonious, time-consuming and costly.”[2]
    • A 1995 survey carried out by the UK National Business Council found that 3 out of 4 people who are involved in serious legal disputes were dissatisfied with the civil justice system, usually due to cost, delay and complexity.  This led to Lord Woolf’s interim and final reports, Access to Justice, where the defects in the civil justice system were identified as being: too expensive, too slow, lacking equality between powerful and wealthy litigants and under-resourced litigants, too uncertain in terms of the length and cost of litigation, too fragmented and too adversarial.[3]
    • A recent survey of leading Australian businesses found that reducing litigation risk had become a major focus.[4]

    Of course, the more things change, the more they stay the same.  Abraham Lincoln is widely (and wisely) quoted: “Discourage litigation.  Persuade your neighbours to compromise whenever they can …  As a peacemaker, the lawyer has a superior opportunity of being a good man.  There will still be business enough.”[5]

    Part of clients’ (or litigation consumers’) frustration is the recognition that in the vast majority of instances, court commenced litigation is compromised and resolved before it reaches trial.[6]  The other parti is that it is often on the door of the court or at a court ordered mediation (prior to the matter being entered for trial).[7]  This, though, is usually too late to avoid the significant costs, acrimony, stress and investment of time (commercial, personal and legal) which comes with litigation.

    This all leads to the question:  If the parties were able to settle their dispute prior to trial, then why could this not have occurred sooner and probably, on more successful terms?

    Readiness to resolve – why can’t I settle early?

    None of this is original observation or query.  However, the time has long passed when the legal profession could comfort itself with the thought that it is just a matter of educating solicitors and barristers, then business about the advantages of alternative resolution processes to litigation and all this would become better.[8]  It hasn’t.

    The starting point is that the history of the dispute is not just important factually.  It is also crucial to understand why the parties could not resolve the dispute amongst themselves.  The explanation is often more complex and insightful than “I am right” and “They are wrong and stubborn.”  In turn, this understanding and objective analysis helps both explain the barriers to and options for an early and successful settlement.[9]

    On this version of the dispute cycle, litigation is the process choice of last resort; but now the necessary one, for the client’s willingness to resolve consensually has so far failed.  Of course, there are also disputes where there is a need for adjudication.  However those disputes are much fewer than commonly thought.  Namely about 3% of cases commenced in Court.[10]

    Just as most disputes have a predictable cycle, so too does most commercial litigation.  The prospective plaintiff litigation lawyer issues a letter of demand, setting out the client’s grievances and demand for compensation/redress.  Rarely does such a demand prompt a satisfactory resolution.  Accordingly, the result is commencement of legal proceedings in the appropriate court.[11]    There is no dispute that the litigation process is an adversarial, competitive, if not combative adjudicative process.  This stands to reason.  Success in court is binary – judgment is for the plaintiff or defendant.  In civil disputes, it is decided on the balance of probabilities.  As an adversarial process, it is therefore all about beating your opponent, even if only by 1%.  This means constantly seeking to further your own client’s case and find fault with the Other Party’s (“OP”) case. It leads to a pretty standard (and rational) advocacy approach of making no or few concessions and projecting absolute confidence in your client’s case.

    The result is that each party’s readiness to resolve the dispute diminishes further from the time litigation commences.  But, as the diagram below illustrates, everything is relative.  The readiness to resolve might have been deteriorating from early on in the dispute, but litigation and its adversarial process will accelerate that diminution in readiness.  Not just for the clients, but lawyers too.

    Barriers to early resolution

    Several of the barriers to early resolution have already been covered.  By the time a litigation lawyer is usually consulted, the dispute and the failure to resolve it has often soured relations between the parties, if not also the trust and capacity to communicate constructively.

    There can also be the belief (or at least hope) that litigation provides the prospect of a mandatory adjudicative outcome which the parties were incapable of jointly reaching themselves.

    Another problem is the belief that the normal way to deal with commercial disputes is to take them to court.  This isn’t correct.[12]  It also reinforces the belief that to be the first party to propose settlement talks is a sign of weakness.

    The boom in litigation post the Second World War has seen litigation lawyers perceived and approached as the aggrieved party’s legal warrior, “guns for hire … ready (for a fee) to fight to the end in vindication of our [client’s] cause.  In the tradition of the military hero, off you go to fight the good fight, to overcome every obstacle, to persevere to the end, whether it be bitter or sweet.”[13]  To be less dramatic, the client has a problem – the dispute – and the good lawyer’s role is to solve it.  For the litigation lawyer though, the client’s expectation of the solution is vindication in court – at least at first.  Recommendations therefore of early settlement, scope for a deal or need for compromise do not fit the mould or client’s (perceived) need, especially when first instructed.

    There is another and, often overlooked, more contemporary business barrier for lawyers. Modern marketing and business development training have all, understandably, stressed how the consumer (client) is always right. Good business practice is to please the client. If you can, give the client what she/he/it wants. If the client’s instructions are “to sue” or “prepare the defence”, then far easier to follow instructions, at least until you are better informed.

    Sometimes the threat or institution of legal proceedings can prompt one or more parties to reflect and offer a sensible resolution. It can be the circuit breaker. But only rarely. Usually, all that occurs is that the setting out the basis of the claim and defence under the applicable Court rules, serves to harden attitudes and a focus on how to substantiate one’s own case and discredit the Other Party’s. This extends to the forensic examination and disputes about the evidence, documents and each party’s proposed witness statements and credibility.

    Once legal proceedings are instituted, there is also often a sense that settlement cannot be properly evaluated, let alone discussed, until there has been the exchange of pleadings, discovery of documents and exchange of witness statements.  Then, and only then, will the party and lawyer be sufficiently across the relevant information (and evidence, for and against) to embark on informed settlement discussions or mediation.

    To this can be added the standard “defence 101” tactic of dragging the matter out to the door of court.  The tactic is to send a message of strength, confidence or even irrational stubbornness to proceed all the way, unless a very favourable settlement is offered.  Experience shows that most parties become litigation weary (see below) and will settle on discounted terms to avoid the further cost, stress, time and risk of a trial.

    An ongoing barrier to early and optimal resolution is the competitive aspects of the adversarial litigation system and the interlocutory disputes and communications it generates. In turn, this tends to corrode and undermine the capacity of the lawyers (and their clients) to maintain a balanced perspective. What is more, the natural negotiating style of litigation lawyers is hard positional bargaining. It also tends to be communicated in adversarial style: “This is our offer. Take it or let’s go back to court!” This is a far cry from the constructive, cooperative and hopefully creative mindset and communication required for most successful negotiated outcomes.

    To the same effect is our natural biological response to conflict.  Our Amygdala controls our “automatic” emotional responses, including our “fight or flight” response associated with fear of attack.  As a result, as “a species, we are not programmed to compromise, we are programmed to win … We have an innate aggression, which, when we are in dispute, transforms itself from a mere instinct to “survive” into an acute need …” to win and preferably, to crush the opposition.  It is further said that our biological evolution means: “We no longer act rationally or think commercially; instead we are driven by an emotional craving to triumph over our opponent.”[16]

    Being involved in a litigation fight is upsetting and emotional for a client.  Advice to a client or corporate officer that the dispute should be settled, rather than litigated, implies that the client is wrong.  For a corporate officer, probably better to litigate and if it is settled (or lost) that won’t be for at least another year and will probably be blamed on the lawyers.  The attraction of avoiding responsibility (and accountability) for a decision to compromise early in favour of deferring to later and with the benefit of input from a third party (mediator or judge) should not be under-estimated.

    There can also be rational commercial reasons to defer any settlement, including the value of money.  Other things being equal, a large negative line item will, if possible, always be put off to the next fiscal period.

    Of course, clients expect their trusted disputes adviser to be objective (and unemotional) in their advice, whether to sue or settle. Quite right, but early on, lawyers face similar barriers. The client’s need and instructions are for a litigation lawyer/”warrior” to win, to vindicate the client. A decision to settle early is a big one, commercially and legally. Faced with these realities, most lawyers (not unreasonably) conclude it is not a good business move to seem weak and canvas settlement options at the outset. Far easier and prudent (from a client and risk management perspective) to defer any proactive settlement initiatives till later and when the lawyer is much better informed.

    Finally, both lawyers and the client suffer from attribution bias and partisan perceptions. We all tend to take an optimistic view of any controversy and as time goes on, collect and emphasise information which supports our interests and opinions.

    Yet, as noted, the vast majority of disputes are resolved prior to trial (or adjudication) and often, consensually at mediation and/or through direct negotiation.  What changes?  Disputes before court can be resolved at any time.  However, common experience is that this will not occur till late in the piece.  Most courts will not enter a matter for trial until the parties have undertaken mediation.  This normally occurs therefore at the effective conclusion of the pre-trial litigation process.  When it does, court and other data suggests the success rate is above 60%.  A recent survey of Australia’s leading commercial dispute mediators put the success rate between 65% and 80%, with most successful mediations occurring very late in the litigation process and sometimes, requiring several attempts.[17]

    The success rate of mediation, direct negotiation and/or other forms of consensual ADR to resolve litigated disputes (collectively referred to as “settlement”) so late in the litigation process seems odd; for by now, the parties willingness to resolve the dispute has reached rock bottom.  However, there are several powerful reasons why the prospects of settlement become so much better immediately before (or if you like, in the shadow of) trial:

    • Cost.  By now all parties have first-hand experience of the cost of litigation – not just financial, but also the personal cost across the amount of time, energy and disruption litigation imposes on the parties (and with corporate entities, often other staff).
    • Weariness.  Litigation is very stressful and acrimonious.  By now the litigation could have been going on for well over a year and parties just want their lives (and or business) to get back to normal.
    • Fully informed.  Prior to trial, the parties and their advisers are about as well informed as they are going to be – absent the actual adjudicative hearing itself.  If they have good lawyers, they will not only know about their prospects of success, but also the risks of loss at trial.
    • Evidence.  Often the parties to the dispute will be key witnesses. They will therefore be very conscious of having to give evidence in open court and undergoing cross-examination that could challenge their recollection of events, as well as their credibility.  There is also the added complication that Court proceedings, but often not arbitration, are open to third parties and the media. 
    • Loss of control.  Another reason is the immediacy of trial and the loss of control it presents for all parties.  An adjudicative hearing and determination is imminent. If the matter is to be resolved consensually, then the remaining time to do so is very short.
    • Rationality.  Returning to our biological make up, a UK survey found that 47% of chief executives and in-house lawyers “involved in commercial litigation, admitted that a personal dislike of the other side had driven them into costly and lengthy litigation.”[18]  By late in the litigation process, the initial raw feelings of frustration, humiliation and the drive for vindication, success and public humiliation of the other side, all of which a Court trial offers, have often worn off.
    • Involvement of a more senior decision maker. The immediacy of trial will often mean in a corporation (or otherwise) that senior management (or the ultimate decision maker) will become involved. Not only will they be fully informed as to risks and prospects at trial, but they will also be much less emotionally involved in the dispute and its historical drivers. Bringing, as a result, a keen focus on a commercially sensible outcome.

    For all these reasons (and they will vary depending on each case and party) a Court order or proposal for mediation or direct discussions amongst the parties before trial comes at a very opportune time.  They enjoy a high success rate.  Even if the initially Court ordered (or voluntarily agreed) mediation is not successful, “court-annexed mediation can still make a contribution to a much later settlement …”.[19]

    All of these barriers to early settlement are perfectly rational, but query, if commercially sensible? Except in the rare case, none of them are reasons why early settlement/resolution should not be possible. Nor why, often, mediation should be the last (and only) ADR resort in the litigation process before trial?

    Early “settlement” options & solutions

    The success of mediations has led to calls and initiatives in the UK for compulsory mediation[20] or other ADR process. Either pre-litigation or pre-trial.[21] 

    It also reflects the fact that the dispute resolution wheel has fully turned (and not for the first time).  The 1976 Roscoe Pound Conference on the Causes of Popular Dissatisfaction with the Administration of Justice is often credited as the “Big Bang” of modern (so called “alternative”) dispute resolution theory and practice.  At it Professor Sander’s paper “Varieties of Dispute Processing”[22] described his vision: “of a courthouse in which not all cases would proceed through the doorway (literal and figurative) leading to litigation.  Instead, the “multidoor” courthouse would direct cases to proceed through a variety of other processes, including mediation, arbitration, conciliation, fact finding or ombuds services, depending on the nature of the case.”

    This “modern dispute resolution” approach produced a flurry of papers, dispute resolution analysis and game theory.  Amongst them was an article by Roger Fisher, “He Who Pays the Piper”,[23] in which he assessed what a business could do to avoid “the quagmire of litigation” and “skyrocketing legal bills” from a blue-chip litigation firm.  The main observations are so apt and on point, they are worth summarising.

    Roger Fisher wrote as if he is the chief executive of a corporation to their valued law firm and starts with a sentiment so often shared by clients at the end or after litigation: “From the point of view of the parties to a lawsuit, the costs are in vain; almost every litigated case is a mistake.  If we and our adversary in a given lawsuit were smart enough (or well enough advised) we could settle the case together, even before it is filed, for roughly the same amount as the final judgment….[those cases which] are settled tend to be settled late, less than optimally, and only after large amounts of time and money have been spent on …pre-trial measures.”

    The premise of the paper was that a disproportionate amount of time and focus of external counsel – litigation lawyers – was on litigation, not settlement: “although most lawsuits get settled … we spend a great deal of time trying to prove the worst case about our adversary’s past conduct but little time trying to structure a future arrangement that would be to our mutual advantage.  You develop a litigation strategy but no settlement strategy.”[24]  These flaws extend to spending vast amounts of time on devising questions to undermine the other side’s case, but no time on questions to advance a settlement.  Similarly, much time is spent calculating the amount of damages which can be sought, but rarely little time on the maximum amount which should be paid for settlement.

    Fisher’s article then proposed several initiatives to “change our practice”:

    • A new working assumption – you always initiate early settlement discussions with the other party.  Not because your case is weak but because your commercial client’s standing instructions are to do so;
    • Life and commerce is full of uncertainties.  So is litigation, even with the best of discovery.  Uncertainty is therefore no reason to delay settlement, especially given its potential advantages.
    • Independent settlement advocate (counsel) – To improve the quality of judicial decisions, judges rely on the adversary process.  Maybe clients should do the same.  One lawyer is to develop the case for litigation and another the case for settlement.
    • Emotional involvement in disputes (for lawyers and clients) is unavoidable.  A countervailing force however could be the settlement advocate – reminding both client and litigation lawyer of the advantages and opportunities for settlement.
    • Two track approach – The commercial client for every major litigated case create a second and parallel role for “the problem solver, the mediator, the conciliator? … [who] explore and develop, at the earliest possible date, the best settlement option obtainable.  This advocate for settlement would be expected to press on [the client] the reasons [for settlement] and provide a counterweight to the litigator’s partisan bias by pointing out weaknesses in our litigation position.”
    • Settlement strategy – should be developed early and reviewed often.  With the same attention and emphasis as litigation strategy.  That should include an identification of interests for all parties and the other side’s perceived choices.  The analysis of the litigation and process should extend to a decision-tree analysis of each process step, prospects and cost.  By building in cost, an assessment can be made that “from a financial point of view, the plaintiff might be well advised to accept X dollars instead of litigating, and that the defendants might be better off by paying Y dollars now rather than taking their chances on litigation.”[25]  The parallel approach can also extend to having several lawyers undertake the exercise, so as balanced and objective sense of the risks and cost can be drawn.  In turn, a specific settlement option can be developed early on.

    Early thorough advice on prospects, risks & resolution options – It is good practice for clients to seek (and for lawyers to provide) early advice on the dispute/litigation’s risks and prospects for success. Early on, such advice is naturally and heavily qualified on the basis of the facts, information and evidence which is unknown. Such advice though, should also extend to the alternative dispute resolution options beyond litigation. In doing so, the ADR portion can (and should) address options to both manage the risks of losing and how to seek to resolve the dispute on a commercially successful (or optimal) basis.

    Decision-tree – The advantages of a decision tree as a thorough way to assess critical events, probability and consequences, is well known.  However, modern technology developments not only make this easier, but also take it further.  Programs such SmartSettle[26] can model and compare alternative outcomes on each of the issues, as well as providing decision support and a suite of other products/algorithms.  These assist negotiators test strategy, analyse issues, interests and options, as well as the scope to be more creative (or if you like, commercial) and therefore achieve better outcomes.

    Technology – There is no doubt that developments in technology and AI (artificial intelligence) have the potential to make a profound difference to settlements and dispute resolution generally.[27]  Media and law firms rightly trumpet the advances made and how technology with AI allow programs to ingest massive amounts of information and produce an analysis of past relevant settlements, resolution options and guidance to avoid common errors and achieve the optimal settlement.[28]  To date however, beyond theory, there is scant evidence of any profound change in dispute resolution practice or outcomes.  These changes will come, but probably not soon enough to warrant deferring other desirable changes to dispute resolution practice.

    Mindset (some might say culture) Many of Roger Fisher’s comments and suggestions were designed to address the problem of the litigation lawyer’s necessary adversarial mindset and approach.  Namely: a new working assumption, settlement advocate, lawyers to account for fees to address the inherent financial conflict and disincentive to settle, regular cost reports, audit of litigation results and settlement log. 

    Consistent with a litigator’s natural mindset being a major obstacle to early and successful settlement, a recent survey (2022) of a number of leading litigation lawyers and firms were asked to identify the mediators they usually recommended to their clients for commercial disputes.  The survey produced a number of common recommendations.  Of the 16 recommendations, 15 mediators participated in the survey, along with representatives of the Federal and two Supreme Courts (Judges and Registrars) on the topic of: what lawyers could do to better achieve a successful outcome at mediation?   (The “Survey”).  The three main comments on this topic were:

    1. Litigation lawyers need to be more reasonable and balanced in their assessment of the merits of their client’s case.  In short, they were almost invariably too optimistic about trial prospects;
    2. A second, almost unanimous response was that litigation lawyers approach mediation as if it is a mini-trial, rather than the opportunity to look for solutions and settlement; and
    3. There needed to be a change in mindset and the “win” mentality which comes with the adversarial system, both before the mediation and in the preparation for it. Litigation lawyers not only needed to leave their adversarial litigation persona and approach behind, but become more open and creative in their approach and dealings at mediation.

    The adversarial process means litigation lawyers are very good at analysing the legal/factual content of the dispute and the arguments which can be made as to why they are right and/or the other party is wrong. If the mediation is occurring late in the litigation process (as is often the case) then the lawyers for each party will be able to draft good position papers on this aspect, just as they could write good opening submissions for the trial.

    The misconception (still) is that mediation is just another step in the litigation process towards trial. But this is wrong.  It is quite different.  It is a consensual process.  Any successful outcome is therefore dependent on the OP reaching agreement with your client. This requires a different mindset and approach. Mediation (or direct settlement negotiations) also offer a much broader canvas of resolution options than trial.  This too requires careful consideration and preparation for, both in terms of options (content) and how and when they are best put (process).

    Fig 2[29] – Antagonists turned negotiators or the inherent settlement conflict for litigation lawyers.

    In other words, coming along to a mediation, setting out in considerable detail in your position paper and then in lengthy opening statements all the reasons why the other party is at fault, wrong and should pay (or if the defendant, not be paid) is great advocacy before an impartial decision-maker; but not when the person you need to persuade is the OP who you are saying is wrong and at fault!  This is because, at this last stage of proceedings, no matter how erudite and thorough the position paper and submissions, it is very unlikely the OP and/or lawyer will have a sudden epiphany and conclude: “They are right.  I am wrong.  I must settle on their terms.” 

    Absent this, the different mindset and approach required for a successful negotiation/mediation (or any other form of consensual settlement) is therefore not how to win against the OP, but whether and how to resolve it with the OP on an optimal/successful basis.[30]

    This is easier said than done. Most lawyers who represent their clients at mediation are the same lawyers who have represented the clients throughout the litigation. The adversarial and competitive nature of the litigation process means that the natural and easiest negotiation approach to adopt at mediation is a competitive, hard positional approach. Understandable; but often counterproductive.[31]

    Accordingly, a lawyer needs to give careful thought to how best to approach the negotiation and mediation. As a matter of content and process (communication style and tone) both for the lawyer, their client, as well as the OP and their lawyer. This therefore means thinking about the OP and client as much around content and process as the lawyer’s own case. What is their likely negotiation and communication style and approach going to be?  Conflict management styles can range from co-operative to assertive and vary from avoidance, to accommodation, to collaborative to competitive. Which one are you? Which one is your client, the OP, the OP’s lawyer? What is more, a typically collaborative person can become competitive, assertive, even adversarial in the face of a competitive and assertive opponent.

    The same exercise needs to be undertaken in respect of the OP’s case, risks, interests and options for a deal.

    As mentioned, an additional dimension of mediation (or direct negotiation in settlement discussions) is it provides a much broader palette of resolution options across all the parties interests, not just those the subject of the disputed issues before the Court.  A successful outcome can also be much more than a simple (and often desperate) compromise to achieve resolution before trial.[32] Much better to develop a very thorough settlement plan (looking at options, interests and issues) as well as a negotiation/mediation strategy to seek to achieve the optimal commercial outcome for the client, as opposed to simply “Plan A or W” which assumes and resembles something like a Court “win.”  As Roger Fisher says, far better to begin developing a settlement/resolution strategy at the same time and with as much attention as the litigation strategy – namely at the outset.

    Settlement counsel – The concept of settlement counsel or advocate has in the last decade been taken further by Fortune 500 companies in the US.  The reasons and advantages advanced for this approach are not just as covered above.  Another is that the psychological orientation is quite different between a litigator and problem solver. A litigator is looking to find fault and defects in the other party’s case.   A good deal maker and negotiator is looking to understand the other party’s interests.  Additionally, with a two track approach, the litigation lawyer is no longer under any pressure to pull punches for fear it might jeopardise the prospects of settlement.  Indeed, the more the litigation lawyer pushes the client’s case and damages the other party’s, the more the settlement advocates hand is strengthened.  It is the classic “good cop, bad cop” negotiation approach, but there is nothing artificial about it.  The litigation lawyer’s constant focus is on success at trial; the settlement counsel solely on exploring the interests and options for all parties on the optimal terms for settlement.  The client benefits either way.

    Clients also talk about the fact that freed of the adversarial dealings of litigation, the settlement counsel is much better positioned to think both creatively and communicate constructively with the OP about settlement. The settlement counsel is also not hampered by the relationship and communication baggage inherent in the litigation process.

    How settlement counsel operate varies.  Fortune 500 companies in disputes have agreed that they should each appoint independent settlement or “Dispute Resolution Counsel”, engaged to problem solve focussed on each client’s interests.  Any resolution is typically achieved through direct negotiation, mediation or other non trial means.  Often Settlement Counsel come from a different firm from litigation counsel, but not always.  The extent to which settlement and litigation counsel interact also varies, but usually with litigation counsel updating settlement counsel of the issues and status of the litigation, but not always vica versa. Concerns about additional or duplicate cost seem to have evaporated in the recognition that dispute lawyers should always be considering the scope for resolution (including alternative dispute resolution options) and any early, successful resolution or narrowing of issues by settlement counsel will usually generate a substantial cost saving.[33]

    Summary judgment – Turning to the reality of litigation, it is often only the shadow of imminent adjudication which can force lawyers and/or clients to seriously contemplate the options and advantages of settlement.  Query if early settlement might not be facilitated with a more robust summary judgment regime?  If truly weak cases (or defences) were at risk of summary judgment without the option of leave to amend; then frivolous cases might not be brought/made and parties might be forced to consider more realistically the litigation prospects, cost and options for a “good enough” early settlement.  Also, in the US, dispositive motions resolve about 13% of cases filed[34]; but this suggestion is made much more with an eye to the effect which a more robust summary judgment regime may engender in terms of early settlement.

    Case management conference – Pre mediation conferences, it was not unusual for the parties to litigation to be required to attend a pre-trial without prejudice settlement conference, often before a Court registrar.  The fact that it was procedurally required or expected, removed the barrier of either party having to suggest a settlement meeting and in so doing, appear weak or worse, desperate.  A third party making sure the parties engaged in sensible pre-trial settlement discussions also assisted the process.  Query therefore once pleadings have been exchanged, whether there is a role for the Court to host an early case management/resolution conference, with the focus to explore the prospects of early settlement and process options to assist early resolution.  

    Experienced mediators talk about the invaluable benefit of the decision maker from each party (client) being present during a mediation.  Query if this should also be required of the early case management/resolution conference, so the decision maker(s) from each party are present at the outset to hear the discussion about the prospects for and process options to explore early settlement/resolution?

    Med-arb – Mediation-arbitration (“med-arb”) is a hybrid alternative resolution mechanism.  First through mediation and then if that is not successful, through arbitration.  How this is done varies.  Indeed, this can extend to starting with an arbitration, but with no announced award, pending the mediation and if the parties consensually resolve at mediation.

    The advantage of mediation is that it is consensual.  Its disadvantage is that it can end in impasse, with no agreement.  If the parties have agreed to med-arb, this problem is solved, for the mediator either becomes the arbitrator or an arbitrator takes over after and adjudicates an outcome.  The disadvantage is that the parties no longer control the outcome and there are concerns that the mediation process is compromised if the same person is both mediator and arbitrator.  This is valid, for parties are then more reluctant to be open to compromise, concede issues with their case and to divulge confidential information, when they know the mediator could become an adjudicative (or evaluative) arbitrator.  As a result, mandatory med-arb with the same person performing both roles has not been that commercially popular.

    Yet, the Survey confirmed how often in commercial mediations, the parties when a voluntary agreement seems beyond them, will encourage the mediator to provide an evaluation of merits, prospects and/or assessment of what the dispute should sensibly be settled for.  This is often done without some advance agreement that if mediation failed, the mediator should switch to an “evaluative/adjudicative” model.  Rather, it occurred mid mediation. 

    Such an evaluative process, as an informal (but non binding) second step, means the parties have the benefit of an independent assessment, but still get to decide the outcome.  For resolution is dependent on consent.  Of course, the prospect of or especially an advance agreement of an evaluative model, faces the same process problems as med-arb (though the evaluation is not binding, as in the med-arb model).[35] 

    Returning to Fisher’s sentiment that all should be done to encourage a more active consideration of merits, risks and settlement options early on in the litigation; another more radical option is the utility of convening early on in the litigation process a preliminary mediation (facilitative or perhaps evaluative)?  Of course, there have also been calls and initiatives that commencing legal process before Court, firstly requires direct settlement discussions or ADR processes.[36]

    Mandatory mediation – The success of mediations have led to calls for mandatory mediation in Australia and overseas.  One such form is that every dispute has to be automatically mediated.  Another has a discretionary aspect to it, in that it only becomes mandatory when ordered by a Court.  This approach is widely available to Courts in Australia.[37]

    One of the tenets of mediation and foundation for critics of mandatory mediation, is that it is a voluntary process.  There is no doubt that the process of mediation is much easier, natural and creative if all parties come to the mediation willingly (“front-end mediation consent”[38]).  However, a party coming to mediation under compulsion (or reluctantly) has the fallback that consent is essential to outcome within the mediation process.[39]

    Advocates for mandatory mediation point to the fact that it is not as if the Courts and legislature (as well as public) have not been sending a message of encouragement to legal practitioners (and parties) that ADR processes such as mediation are an integral part of the Court’s processes (in NSW, since 2000) and are so, to facilitate the: “just, quick and cheap resolution of disputes”.[40]  Yet, nothing much has changed.  Hence the calls to make it mandatory.

    Advocates for mandatory mediation also point to studies which show “there are still comparatively high rates of settlement and the parties benefit from the process.”[41]  Overseas studies vary, but some show that, if given the choice, “disputants will normally choose to opt out of mediation, however there are high rates of settlement for both voluntary and mandatory mediation when it is engaged early on in the process.”[42] 

    The former Chief Justice of the Supreme Court of NSW experience and view seems to be in a similar vein:

    “… people are reluctant to admit that they might have some weaknesses in their case and therefore don’t offer to settle or mediate …. Whereas if they are forced into it, experience is that reluctant starters often become participants”  … “often leading to a successful resolution of the dispute.”[43]

    The frequency with which Australian superior courts do make orders for mediation, no doubt, reflect these experiences and, of course, there are always exceptions to every good rule and practice (which the discretionary aspect allows for).

    Mandatory pre-action mediation or dispute resolution process – The debate and calls continue for mandatory mediation (or other ADR process) before a party can commence litigation before a Court.  Most recently, the UK Civil Justice Council has recommended substantial changes to pre-action protocols, including mandatory requirements under the Civil Procedure Rules to engage in a pre-action dispute resolution process.  This could involve a third party neutral (such as a mediator) but with a default requirement for at least an inter-party meeting, if the parties cannot agree on any other ADR process.  Not surprisingly, there was a chorus of concern from commercial lawyers not to make mandatory obligations to engage in pre-action dispute resolution process too prescriptive.  The UK consultation process continues.  In Australia, of course, there are pre-action obligations to take genuine steps to seek to resolve the dispute[44] and once commenced, there is an overriding purpose to facilitate “just, quick and cheap” resolution of the proceedings.[45] Whether these obligations go far enough and/or are enforced sufficiently, is a broader question and consideration.


    The time is long overdue for change.  Especially when most lawyers know most disputes are run up until the door of the court, even though most will be settled before trial and judgement.  Experience has shown there is no easy solution and the barriers to early settlement are significant.  Still, there are various steps which clients, courts and in particular dispute lawyers could and should take to facilitate earlier and better settlement of disputes.

    – Michael Mills

    [1] In August 2012 the Law and Justice Foundation of NSW’s report “Legal Australia-Wide Survey: Legal Need in Australia” found a rate of 3.4% of disputes solved by adjudication in a Court or tribunal.  In the US the adjudicated rate of disputes at trial is said to have fallen from 11.5% in 1962 to 1.8% in 2002: M. Galanter, “The Vanishing Trial: An Examination of Trials and Related Matters in Federal and State Courts” (2004) 1(3) Journal of Empirical Legal Studies 459.  A more recent study in the US put the adjudicated rate of filed matters before the Southern District Court of New York at 2.4%, with matters settled at 91% and abandoned at 6.1%: Hellend, Klerman, Dowling, Kappner Contingent Fee Litigation in New York City Vol 70, No 6 Vanderbilt Law Review (Nov. 2017) page 1971.  This data accords with conventional wisdom and experience that the vast majority of even disputes the subject of Court proceedings are settled prior to trial and judgment.

    [2] The Honourable Justice Julie K Ward, The Arbitrator & Mediator, (May 1923) 34 at 36

    [3] Peysner and Seneviratne, ‘The Management of Civil Cases: A Snapshot’ (2006) 25 Civil Justice Quarterly 312

    [4] Michael Pelly, “Corporate Counsel ditch routine work to focus on risk” Australian Financial Review (March 16, 2023) reported on a Thomson-Reuters survey of general counsel at $50 million plus organisations in Australia and how post the coronavirus pandemic, their strategic focus has changed and they are putting: “more emphasis on risk management and preventing litigation” than keeping a lid on spending.  Reducing litigation risk was treated as the third highest risk after cyber-risk and ESG (environment, society and governance).

    [5] RH Mnookin, SR Peppet and A Tulumello, Beyond Winning: Negotiating to Create Value in Deals and Disputes (Boston, Bellknap Press of Harvard University Press, 2000) at p. 3.  See also Ward, op cit 1 at p. 36

    [6] See footnote 1

    [7] UK experience puts mediation as “80% effective in resolving matters” at first and higher at later attempts: David Bilbe, “What are the Pros and Cons of Compulsory Mediation,” Litigation & ADR Lawyer monthly Interview (August 31, 2022).  Australian feedback suggests it is over 60% in Australia – Hon. JJ Spigelman AC “Judicial Mediation in Australia” (Paper presented at the National Judicial College, Beijing, 25-28 April 2011) and in WA at also about 60%: Justice Ralph Simmonds, “The Practicalities of Mediation in the Supreme Court of Western Australia” (2005) 7(7) ADR Bulletin 16.  More recently, The Chief Justice of the New South Wales Supreme Court noted that over 60% of disputes which go to mediation are reported as having been resolved successfully:  Honourable James Jacob Spigelman AC, “Judicial Mediation in Australia” (paper presented at the National Judicial College, Beijing, 25-28 April 2011).

    [8] To paraphrase Paul Randolph, “Compulsory Mediation” New Law Journal (2 & 9 April 2010) at p.499 about the UK experience.  It is the same in Australia.  LEADR (Lawyers Engaged in ADR, now Resolution Institute of Australia) began 20 plus years ago seeking to educate lawyers and the community to the advantages of ADR (alternative dispute resolution processes to traditional court proceedings).

    [9] Many mediators and dispute resolution professionals have a focus on “best, better or good enough” outcomes for mediation. This is quite distinct from saying that a party must compromise. They might, but the proper benchmark should be around the client’s interests and objectives, measured against the best alternative to a negotiated agreement. Which in this context is often trial and its likely outcome. Hence the common reference for a successful consensual resolution of an optimal outcome; rather than the binary and absolute measure in litigation of win: lose.

    [10] See footnote 1

    [11] Of course, the litigation proceedings could also be arbitration proceedings, but for ease of reference, all adjudicative forums will be simply referred to as Court.

    [12] Nor is this helped by negotiation, mediation and other alternative processes to litigation being referred to as alternative dispute resolution, as if court resolution is normal and anything else is alternative.  This is incorrect, even for disputes the subject of legal proceedings, to say nothing of the vast majority of disputes resolved by the parties before a lawyer is even consulted.

    [13] Roger Fisher, “He Who Pays the Piper” Harvard Business Review magazine (March 1985)

    [14] A key to effective negotiation is perspective taking and empathy, namely the ability to communicate neutrally, without compromising the capacity to be assertive for one’s (or client’s) own needs, interests and perspective: RH Mnookin, SR Peppet and A Tulumello, Beyond Winning: Negotiating to Create Value in Deals and Disputes (Belknap Press, 2000) pp 46, 47.

    [15] Experienced commercial clients often later reflect how far removed their litigation lawyer’s negotiating style and approach was from the collaborative and creative mode of communication and human interaction which they know, often characterises successful deals and negotiations.  It also leads to the concern, whether a more constructive approach to the dispute and exploration of the options for compromise, may have produced a better (and earlier) outcome for all parties, than the compromise reached on the eve of trial on the basis of stated or court pleaded positions.

    [16] Paul Randolph, “Compulsory Mediation” New Law Journal (2 & 9 April 2010) at p.499

    [17] Michael Mills, “Successful Mediation Advocacy” (2022) 32 ADRJ 35.  For the other data cited, see footnote 7

    [18] Randolph, op cit 12, citing a survey in October 2007 by Field Fisher Waterhouse.

    [19] Justice Ralph Simmonds, “The Practicalities of Mediation in the Supreme Court of Western Australia” (2005) 7(7) ADR Bulletin at 16.

    [20] Earlier this year (2023) the UK Civil Justice Council recommended substantial changes to pre-action protocols, including mandatory requirements under the Civil Procedure Rules to engage in a pre-action dispute resolution process. This could involve a third party neutral (such as a mediator) but with a default requirement for at least an inter-party meeting, if the parties cannot agree on any other ADR process.

    [21] Richard Susskind in his recent book, Tomorrow’s Lawyers (3rd ed., Oxford University Press, 2022) talks about the fact that we are at the beginning of fundamental and irreversible change through technology.  He recently observed at the Legal Innovation & Tech Fest in Sydney (May 2023) that new developments in technology run side by side with a new perspective on legal services by clients.  “Clients don’t actually want lawyers.  They want the outcomes lawyers can bring.  And we’ll see fundamentally new ways of meeting the outcomes of clients.”: The Law Society Journal, July 2023, p 136

    [22] See The Handbook of Dispute Resolution, edited by Michael L Moffitt, Robert C Bordone (1st ed., 2005) at p. 19

    [23] Roger Fisher, “He Who Pays the Piper” Harvard Business Review magazine (March 1985)

    [24] Ibid

    [25] Ibid

    [26] https://www.smartsettle.com

    [27] Of course, it is never easy to tell a client what they do not want to hear. Far easier to qualify on the basis of all which is presently unknown. Which is why Roger Fisher of Getting to Yes and Harvard teaching fame, always used to counsel lawyers that the hardest negotiation they will have to undertake, is not with their opponent, but with their client, on what is and is not possible. This “expectation management,” he stressed, was the key to many successful negotiation outcomes.

    [28] For example, see the instances noted in the Financial Times special report “Innovative Lawyers, Europe, 2023” (September 22, 2023).

    [29] Roland Fiddy: Punch Magazine UK (February 1968)

    [30] See footnote 9

    [31] An example often raised by Participants in the Survey was the “point scoring” which accompanies adversarial litigation, but which is so often unhelpful in a mediation. A view not confined to mediators – see, eg, Nicholas J in Gehrke and Buch v Freedom Foods(s ECI 2020 04505) concerning the fact that self-serving correspondence between solicitors usually will not be “forensically significant”; and Murphy J in Gall v Domino’s Pizza Enterprises Ltd (No 2) (2021) 304 IR 300; [2021] FCA 345 about how the lack of co-operation caused judicial blood to “… boil because the parties don’t seem to be taking a responsible approach to the resolution of the case”.

    [32] Of course, how this is achieved is a different and vast topic.

    [33] See generally: M Rose and P Feldman “Two heads are better than one: A Settlement Counsel Primer” (2017) 47 The Advocates Quarterly 36 and W Coyne “The Case for Settlement Counsel” (1999) 14 Ohio St J on Disp Resol. 367 The latter rightly referenced the Roger Fisher article quoted above and Gary Mendelsohn, “Lawyers as Negotiators” 1 Harv. Negotiation Law Rev (1996) 139

    [34] T Eisenberg and C Lanvers, “What Is the Settlement Rate and Why Should We Care?” (2009) 6 Journal of Empirical Legal Studies 111

    [35] For a further discussion about this and the debate about mediator impartiality, neutrality and evaluation, see generally, for example: Robert Angyal, “Is Party Self-determination a Concept without Content?” (2020) 15 Newcastle Law Review 68; Hilary Astor, “Mediator Neutrality: Making Sense of Theory and Practice” (2007) 16(2) Social and Legal Studies 221; and Bernard Mayer, Beyond Neutrality: Confronting the Crisis in Conflict Resolution (Jossey Bass, 2004) 17.

    [36] The National Alternative Dispute Resolution Advisory Council supported “a mandatory pre-action requirement to attempt ADR” in its Report of September 2009: The Resolve to Resolve – Embracing ADR to Improve Access to Justice in the Federal Court Jurisdiction: A Report to the Attorney General

    [37] For example, Civil Procedure Act 2005 (NSW) s26 (1 and 2)

    [38] J Nolan_Hardy “Mediation Exceptionality” (2009) 78 Fordham Law Review 1247 at p.1251

    [39] See for example, Dorcas Quek, “Mandatory Mediation: An Oxymoron?  Examining the Feasibility of Implementing a Court-Mandated Mediation Program” (2010) 11 Cardozo Journal of Conflict Resolution 479 at pp 485-7.

    [40] S. 56, Civil Procedure Act (CPA) NSW and J Spigelman, “Mediation and the Court” (2001) 39(s) LSJ 63

    [41] Quek, above n 35, p 483 and see also M Hanks, “Perspectives on Mandatory Mediation” 35(3) UNSW Law Journal 929 at pp.932-939 about the mixed results of overseas studies.

    [42] M Hanks, “Perspectives on Mandatory Mediation” (2012) vol 35 (3) UNSW Law Journal 929 at p950, citing: p Cortes “Can I afford Not to Mediate?  Mandatory Online Mediation for European Consumers, Legal Constraints and Policy Issues” (2009) 35 Rutgers Computer & Technology Law Journal 1, p 18-19

    [43] Chief Justice Spigelman made these remarks on several occasions, including as an “Address delivered to the LEADR Dinner” on 9 November 2009 and quoted in an article by Chris Merritt “Mediation in NSW Supreme Court works: Spigelman” The Australian (online) 1 October 2010

    [44] For instance, section 6 of the Civil Dispute Resolution Act 2011 requires an applicant who institutes civil proceedings to  file a genuine steps statement at the time of filing the application.  The statement must specify the steps taken to try to resolve the issues in dispute before service of the proceedings.  If no steps have been taken, it must specify why.

    [45] See sections 56,57 and 59 of the Civil Procedure Act (as well as UCPR) in their application to civil proceedings to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

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