Professional Regulation of ADR

A. The Legal Profession’s Early Engagement with Regulation of ADR

Many professional groups tend to be involved in ADR processes. Their level and type of engagement varies depending on the area of work.

¹²⁶ Law Commission Family Law: The Groundfor Divorce (n 26) at para 5.34.

¹²⁷ ibid; and see Roberts, ‘Who is in Charge? (n 14) at 373.

¹²⁸ La Roche v Armstrong (1922) 1 KB 485.

¹²⁹ Children Act 1989, s 1(1) and see Practice Direction (Family Division: Conciliation) [1992] 1 WLR 147.

¹³⁰ See Lords Hailsham and Simon in D v National Society for Prevention of Cruelty to Children [1978] AC 171.

¹³¹ Henley v Henley [1955] 1 All ER 590.

¹³² McTaggart v McTaggart [1949] P 94; Mole v Mole [1951] P 21; and Theodoropoulas v Theodoropoulas [1964] P 311.

¹³³ McTaggart v McTaggart, ibid.

¹³⁴ In re D (Minors) [1993] Fam 231.

other groups offer services and the type of services clients in that field prefer. Whether lawyers are involved may depend on whether they offer additional value to the dis­pute resolution process. When firms are instructed in high value, specialist matters, multi-disciplinary teams may be formed.^[3297] This is particularly likely when different perspectives, for example on gender^[3298] or cultural issues,^[3299] are required.

Lawyers’ interest in mediation can be traced to Solicitors in Mediation, a body formed by five family law solicitors and the former training officer for the National Family Conciliation Council in 1985.^[3300] This offered mediation in child and property disputes. The Bar responded to this by offering an early neutral valuation scheme.

The Law Society formed a Family Mediators Association (FMA) in 1988. In 1991, reports for the Bar and Law Society considered ADR. The Bar Committee, under Lord Justice Beldam, and the Law Society report, prepared by Henry Brown, acknowledged the potential importance of ADR.^[3301] The Beldam Committee report recommended that facilitative mediation be offered in civil disputes, with experi­enced lawyers acting as mediators.^[3302] The Law Society report was more measured. It suggested that ADR would be inappropriate in cases where issues of principle of a public nature were involved, where there were power imbalances between parties or where ADR was used as a tactic, for example to delay litigation.^[3303]

Lord Woolf ’s proposal to extend the use of mediation precipitated an increase in numbers of mediators and providers of mediation services. The number of providers increased from less than 10 before 1999 to around 60 after.^[3304] The established provid­ers continued to flourish, however. For example, the major provider of commercial ADR, the Centre for Effective Dispute Resolution, increased its caseload.

In the run-up to the introduction of the CPR, mediation pilot schemes in the Central London County and other centres reported initial signs that lawyers would be hostile to the introduction of mediation. Many apparently believed that mediation was only suited to litigants in person,^[3305] preferring their ‘known litigation strategies’ for their own clients.^[3306] They were reluctant to recommend mediation and the take-up was low.

A pilot for an out of court mediation scheme in Bristol, backed by the Law Society, had only 24 cases in its first year. Only two of the cases actually reached the mediation stage.^[3307] Some solicitors thought, perhaps quite reasonably, that investment in mediation was not justified by the returns, particularly in view of the fillip the Woolf reforms gave to inter-parties negotiation.^[3308]

Following the introduction of the CPR in 1998, the Law Society introduced a Civil and Commercial Mediation Panel in autumn 2001.

B. The Need for Regulation

i. The Advantages and Disadvantages of Regulation

The disparity between mediators and cases was predictable. As often happens in new markets in mediation, a group of super mediators, lawyers and male, emerged, snap­ping up the plum cases.^[3310] The apparent proliferation of services, and lack of work, led to calls for stricter regulation to control numbers and supplement the providers’ kite mark quality systems. The Law Society was uninterested in regulating mediators generally, probably because this would involve regulating non-lawyers.^[3311] The lack of central professional organisation for mediators had some theoretical advantages, but also carried some risk.^[3312]

The theoretical advantage of an unregulated mediation market lay in the potential for expansion of ‘the universe of recognised conflicts’ to produce new groups of prac­titioners with new ideas, approaches and methods.^[3313] The problem was that, without common standards, there would be considerable scope for difference in approach, with localised approaches emerging for different areas of work.^[3314]

There was a further risk that an unregulated mediation market could lead to arrangements that hindered development of a free market. An example of this was an agreement between the Forum of Insurance Lawyers and the Association of Personal Injury Lawyers (APIL).

The proliferation of mediation schemes could lead to there being no common ethic for practice.^[3315] Such a field could become more and more difficult to regulate fairly. One group, for example, lawyers, might be subject to professional and court jurisdic­tion, while others could be outside any regulatory framework. It could also present difficulties for educating and training potential mediators, including those within professions.

ii. Potential Regulators

The difficulty inherent in one profession regulating ADR does not prevent it regulat­ing members’ participation in these fields. This would presumably involve formation of rules of conduct for participants and, possibly, requirements for education and training. The standards of non-professional providers tend to coalesce around pro­fessional standards. For example, the ADR Group, a leading ADR service provider, requires non-lawyer members to subscribe to the Law Society Civil and Commercial Panel Code.

C. Education and Training

Until recently, ADR did not feature significantly in legal education and training. ADR or one of the methods, such as arbitration or mediation, is sometimes an optional course on degrees or professional courses. Both of the vocational courses have acknowledged that there is more to dispute resolution than litigation. This has not made any radical difference to the curriculum on the LPC, which tends to be based on adversarial assumptions. The BPTC has, however, adopted an ambitious ADR component.

i. Solicitors

Despite having a proposed syllabus for an introductory course on ADR in 1992, the LPC never included a relevant compulsory or skills component. In the current ver­sion of the course, Civil Litigation became Civil Litigation and Dispute Resolution.^[3316] Of the nine competencies for the subject only one refers to ADR as opposed to litigation.^[3317] This requires that prospective solicitors ‘identify the appropriate forum for the resolution of the dispute, including appropriate methods of alternative dispute resolution’.

The need for consideration of the implications of the absence of any alternative dispute resolution paradigm is highlighted by the criteria for interviewing and advice. Both elements are geared to the collection of information in preparation for advice giving in a way conventionally associated with lawyers. There are aspects of the inter­viewing element that are intended to develop rapport with clients. These include being able to listen actively and use appropriate questioning techniques. These are expressed to be for the purpose of establishing a professional relationship. There is no reference to a need to explore underlying interests.

The outcome concerned with advice giving envisages the lawyer assisting the client to make a decision. This is in the light of possible courses of action and the legal and non-legal consequences of a course of action. These consequences include the costs, benefits and risks. The implication of these priorities is that discussion of a course of action is a once and for all decision concerning the direction of the matter, which is then in the hands of the solicitor. Such an approach does not lead to the formation of the kind of relationship that should, in theory at least, facilitate effective ADR.

ii. Barristers

Among the more radical recommendations of the Wood Report was to omit negotia­tion as a separately taught and assessed subject and to introduce the Resolution of Disputes out of Court.^[3318] This subject includes negotiation, alternative dispute resolu­tion and mediation. The detailed specification of the new subject in the BPTC course specification is potentially extensive.^[3319] It includes knowledge and understanding of the theory and processes underpinning the range of methods of dispute resolution that lie outside the normal judicial processes, including arbitration, negotiation, mediation (through a neutral third party), collaborative law and conciliation.

Students are required to develop the practical skills required to advise upon, prepare for, and represent, parties at all stages of these processes. Students should also under­stand the role of the mediation advocate or representative. They should understand the ethics and conduct issues arising in mediation, negotiation or other forms of dispute resolution. BPTC students are also required to use the skills of negotiation and media­tion in-course. The specified outcomes include the ability to select cases appropriate for each process and to advise professional and lay clients about them. Students must be able to prepare clients for mediation and represent them. Following qualification, the Bar Council offers family mediation training to barristers in collaboration with ADR Group.

D. Conduct

The creation of conduct rules governing ADR can be problematic. If such rules are included in the profession’s main code they may contradict the rules for more estab­lished activities, such as advocacy. Once the need for different rules has been conceded for one activity, it may lead to calls for other exceptions. Therefore, mediation has not tended to feature in the main codes but in ancillary codes and regulations.

The stand-alone ADR codes tend to focus on topics reflecting the consensus regarding the ‘correct’ form of ADR at a particular time. In England and Wales, the codes reflect academic consensus regarding the consensual nature of ADR.^[3320] They take positions against evaluating options or pressuring parties to accept them. Such actions tend to be seen as ethically compromising behaviour in pursuit of the ‘right’ result.

i. Barristers

Barristers are involved in providing a wide range of ADR services. These include arbitration, where many have international practices, but also mediation, in which some chambers specialise. Despite this, neither the old or new Bar Code of Conduct pays much attention to ADR or mediation. The old Code provided that ‘[a] barrister instructed to appear in a mediation must not knowingly or recklessly mislead the mediator or any party or their representative’.^[3321] This merely transferred one aspect of the duty to the court to mediation.

The written standards of work, issued as an annex to the old Code of Conduct, con­tained a provision requiring barristers to ensure that advice was ‘practical, appropriate to the needs and circumstances of the particular client, and clearly and comprehensibly expressed’.^[3322] As the practice of the courts has developed, the provision of such advice must include consideration of the potential benefits of ADR and the risks of not rea­sonably engaging with any offer to participate in ADR processes.

The other provision relating to ADR in the old Code of Conduct was an exception to the rules prohibiting making payments to receive professional instructions. This provided that reasonable fees could be paid to an alternative dispute resolution body appointing persons to provide mediation, arbitration or adjudication services.^[3323] It also permitted reasonable fee-sharing arrangements required by such a body, pro­vided they were similar to those entered with others providing such services through the body. Only a version of this second rule was reproduced in the BSB Code of Conduct 2014.

ii. Solicitors

a. ADR Principles in the Guide

There was pressure from some sections for the Law Society to be involved in the regulation of mediation. The Law Society Family Law Committee proposed draft standards of practice for lawyer mediators.^[3324] They also favoured establishment of a family court, with annexed conciliation services.^[3325] The seventh edition of the Guide, published in 1996, tackled the increasing significance of ADR by including a new chapter.^[3326] This advised that solicitors could offer ADR services, that is, act as third party neutrals, as part of their practice or as a separate business.^[3327]

Three other principles were laid out in the ADR chapter. Solicitor mediators were required to inform clients that they would be independent and impartial and not advise either party.^[3328] They were told that they must avoid conflicts of interest by not acting as third party neutrals in disputes where they acted for either party.^[3329] Nor were they allowed to act for a party after provision of neutral service in relation to that matter. A third and final principle in the chapter recommended that solicitors follow a code of practice.^[3330] It also suggested that ‘solicitors wishing to offer ADR services should undertake appropriate training and work with one of the bodies providing training and a regulatory framework’.^[3331]

b. The Law Society’s Specimen Mediation Code

The ADR chapter in the seventh edition of the Guide also included a specimen code.^[3332] This was said to be for civil and commercial mediation, but required adap­tation for family matters.^[3333] It provided that the mediator’s role is to ‘help parties to work out their own principles and terms for the resolution of the issues between them’, continuing:

[T]he mediator may meet the parties individually and/or together and may assist the parties for example: by identifying areas of agreement, narrowing and clarifying areas of disagree­ment; defining the issues; helping the parties to examine the issues and their available courses of action; establishing and examining alternative options for resolving any disagreement; considering the applicability of specialised management, legal, accounting, technical or other expertise; and generally facilitating discussion and negotiation, managing the process and helping them to try to resolve their differences.^[3334]

The process described by the 1996 Guide was a fair description of a facilitative media­tion, self-consciously non-directive, rather than an evaluative mediation.

The Law Society’s specimen code boldly claimed, on the confidentiality issue, that:

[A]ll discussions and negotiations during the mediation will be regarded as evidentially privileged and conducted on a ‘without prejudice’ basis, unless such privilege is waived by the parties by agreement, either generally or in relation to any specific aspect’; nor is such information to be referred to in any ‘subsequent proceedings.^[3335]

The code optimistically stated that no party could require the mediator to give evi­dence, or have access to a mediator’s notes.^[3336] A court refusing to recognise ‘mediator privilege’ would, however, have put a mediator relying on this at risk of contempt of court.

The codes have consistently constrained solicitors’ use of legal expertise in the role of mediator. For example, the original specimen code provided that parties could be assisted in understanding the principles of law applicable and their application to their circumstances. It went on to state that parties should not be advised on their rights or how they might be translated into settlement terms.^[3337]

c. The Law Society’s Panel Mediation Codes

In the eighth edition of the Guide the specimen mediation code was replaced by two panel codes, one for Civil and Commercial Mediation and one for Family Mediation.^[3338] Despite being described as codes, they were optional. Both were pre­ceded by a recommendation that solicitors abide by the code when offering the kinds of services covered by the codes. Both codes were non-specific about the role that solicitors engaged in mediation would be fulfilling, whether third party neutral or representative. The content of the codes made it clear, however, that they addressed solicitors acting as mediators. By 2006, members of the Law Society’s specialist panels had to agree to be bound by the codes when undertaking mediation.^[3339]

The introduction to both codes stated that ‘[t]he concept of not giving advice to the parties, individually or collectively, when acting as a mediator permeates this code’.^[3340] The facilitative tone established in the original specimen code was retained in the panel codes. Both the Law Society’s panel codes stated that the primary aim of mediation is to help the parties to arrive at their own decisions regarding the disputed issues.^[3341] They acknowledged that

resolution may not necessarily be the same as that which may be arrived at in the event of adjudication by the court. That allows the parties to explore and agree upon a wider range of options for settlement than might otherwise be the case.^[3342]

The Civil and Commercial Code of Practice, which despite revision in 2011 is sub­stantially the same, is now prefaced by the statement ‘[m]embers of the Law Society’s Civil and Commercial Mediation Scheme must agree to be bound by this code’. This is interesting, because the Law Society no longer has regulatory powers to enforce such codes. It would presumably have to refer breaches to the SRA. The Civil Code also contains a statement that solicitors are bound by the Solicitors’ Code of Conduct while mediating. This, as noted above, does not deal with mediation as such.

The Law Society’s panel codes reflect well-established principles governing the con­duct of mediation. The Civil Code states that impartiality is a ‘fundamental principle’ and mentions, in commentary, that personal views relating to the substance of the negotiations must not be allowed to affect this.^[3343] Both the panel codes have a section on ‘dealing with power imbalances’, which envisage a proactive role for mediators in addressing such situations. The Family panel code states that ‘if power imbalances seem likely to cause the mediation process to become unfair or ineffective, the media­tor must take appropriate steps to try and prevent this’.^[3344] It continues by stating that, if ‘power imbalances cannot be redressed adequately’, the mediator must end the mediation.

The Law Society’s panel codes avoided the risk courted by the former code on the issue of confidentiality. They provided that mediators will not disclose information discovered in the course of mediation except with the consent of the parties.^[3345] They may also disclose, however, where such matters are already public, where persons are at risk or where there is an overriding obligation in law to disclose.

d. The Solicitors’ Code of Conduct 2007

The 2007 Code of Conduct provided that solicitors could act as mediator between the parties in family matters, but should not thereafter act for one of them if a dispute arose.^[3346] The mediator’s role was conceived of as helping the parties to reach their own solution to the dispute, not to impose a solution upon them. The mediator was to be impartial and the process confidential. It was not the role of the mediator to give professional legal advice to the parties, either individually or collectively. This would be difficult to avoid in cases where one or both of the parties did not have a solicitor. However, Rule 3.06 stated that a solicitor must not act for any party for whom the solicitor or the firm has acted as a mediator or vice versa.

The Solicitors’ Code of Conduct made specific but limited provision for ADR as an issue of advice giving and as causing a potential conflict of interest. The guidance to the chapter on client care dealt with solicitors advising clients in a dispute with a third party. It advised that they should discuss whether mediation or some other ADR procedure may be more appropriate than litigation, arbitration or other formal processes.^[3347]

The rule on conflict of interest provided that solicitors providing ADR services could not advise, or act for, any party in respect of a dispute in three circumstances. They could not act where they, or any person in their firm, was acting, or had acted, as mediator. The second and third rules stopped them providing ADR services, which were defined as acting as a third party neutral.^[3348] They could not do so in a matter in which they, or any person at their firm, had acted for a party. Nor could they pro­vide ADR services when they, or any person at their firm, had acted for any of the parties in issues not relating to the mediation. All of these prohibitions were curable. It was permissible to act where the facts had been disclosed to the parties and they had consented. ^[3349]

e. The SRA Code of Conduct

The SRA Code of Conduct 2011, as amended, contains no outcomes specifically relating to ADR. Section 1, ‘You and Your Client’, does not require solicitors to advise on the availability of ADR. Solicitors are therefore left with three rather broad, non-specific outcomes as their conduct guide for mediation. The first of these is that they must provide services to clients in a manner which protects their interests.^[3350] The second is that clients are in a position to make informed decisions about the services they need, how their matter will be handled and the options available to them.^[3351] The third is that clients receive the best possible information, both at the time of engage­ment and when appropriate as their matter progresses, about the likely overall cost of their matter.^[3352]

As the approach of the courts has developed, these outcomes must include respon­sibility to give quite detailed advice about the benefits and costs of different forms of ADR. Such advice may well need to be reviewed as cases develop. It may be that approaches that were originally ruled out become appropriate as circumstances change, perceptions of a case change or the parties’ attitude to litigation changes.

VI.