‘Mediation – Thought Experiment – Pareto principle.’

As a ‘thought experiment’, a graphic way to illustrate the benefits of the mediation process, you can roughly compare the cost-effectiveness of mediation with litigation by reference to the ‘Pareto Principle’/‘80:20 rule’.

The ‘Pareto Principle’ or ‘80:20 rule’ holds that 80 per cent of the output from a given situation is determined by 20 per cent of the input.

If you think of contentious probate litigation as being a ‘product’, then what is the percentage of wasted ‘manufacturing’ costs incurred in proceeding to trial, when compared to the total costs of ‘doing a deal’ in mediation, on terms of settlement that are ‘enough’, i.e. that your lay client can live with?

If parties engage in mediation early and ‘do a deal’, then they avoid the incurrence of trial preparation and trial costs. So, say the mediation process costs each party £2,500 in mediator fees plus £5,000 in solicitors’ costs, then the mediation process costs amount to £7,500 per party in total. Now, if you assume, for the sake of argument, that in a contentious probate trial, depending of course upon the issues involved, that costs incurred by each party amount to £100,000 (and the costs each party actually incurs in an estate dispute is often far in excess of

that amount), then £7,500 as a percentage of £100,000 is 7.5 per cent. Thus, avoidable ‘direct’ production costs amount to £92,500 for each party. That figure does not include the unquantifiable and irrecoverable ‘indirect’ costs of: (i) loss of time (i.e. loss of the ‘time-value’ of money); (ii) disruption to your life; and (iii) personal stress and its impact upon your family, your health and your quality of life, i.e. anxiety and chronic sleep deprivation, which can result in clinical depression. Whilst this example is arithmetically simplistic, when you compare the cost effectiveness of mediation as a process with litigation by analogy to the ‘Pareto Principle’/‘80:20 rule’, then it is self-evident that valuable time and money can be saved by entering into mediation early, instead of marching to war, which may possibly end in mutual self-destruction.

Put another way – if you think of mediation as being a ‘time planning exercise’, then, on the arithmetic above, it can generate 92.5 per cent more free/extra time in which to live a happy and healthy life, when compared with litigation, whilst at the same time saving you 92.5 per cent of the financial cost of resolving a bitter and divisive inter-family dispute. This holds for both parties in the dispute.

The Mediation process and Mediation Advocacy are discussed in detail in my new book, see:

https://www.wildy.com/isbn/9781784462345/contentious-probate-handbook-practice-and-precedents-paperback-38-cd-rom-law-society-publishing
https://bookshop.lawsociety.org.uk/p/contentious-probate-hand-2nd-edition-paperback/

The Wildy’s page for the Contentious Probate Handbook: Practice and Precedents 2nd ed is now live,

See: https://lnkd.in/dHtHQjBz

Wildy’s deliver all around the world, and you can now pre-order the book online to be posted out to you almost anywhere in the world. Please take note readers in: India, Pakistan, Malaysia, Singapore, New Zealand, Australia, Canada and the United States.

Following publication, Wildy & Sons – which is the oldest Law Bookshop in the world, will also be displaying the book in the Carey Street window of their shop in Lincoln’s Inn Archway. This looks on to both the Royal Courts of Justice (at the back) and the Law Society building on Chancery Lane. This is a great honour for an author. The book will also be placed on display in the Law Society ‘Hall of Fame window!’ of their publications, inside the Law Society building itself – so you cannot miss it if you are a visiting solicitor.

See also – https://lnkd.in/d7SaZXsH

The book is on schedule for publication in print during the week commencing 24 February, and I will post an update following publication.

Note in particular the following comment kindly contributed by Professor Barney Jordaan –

‘While a lot has been written about mediation, mediation advocacy has been neglected, until now. This book goes a long way to filling that gap. It provides practical advice about how to become an effective mediation advocate from the author’s own rich experience as mediator and party representative. While its focus is on advocacy in trust and estate disputes, it has far wider appeal and relevance for mediation in other legal fields as well. It is an indispensable guide for lawyers who would like to expand their practice into the mediation space.’

(Barney Jordaan, LL.D (Stellenbosch University), Professor at Vlerick Business School, Belgium, Extraordinary Professor at Stellenbosch Business School, South Africa, Negotiation and Dispute Resolution Practitioner, Internationally Accredited Mediator, and author of Negotiation And Dispute Resolution For Lawyers (2022),Edward Elgar Publishing).

‘What is Mediation?’

‘When parties in dispute sincerely and deeply understand each other, then they can open a hidden door to creative settlement in Mediation. That is because their “differences” have been transformed from being obstacles to communication and progress, into “stepping-stones” to synergy. In other words, [working together – the Mediator and Mediation Advocates can help the parties in dispute i.e. the participants in the Mediation], to set themselves free from the past, by [themselves] working together to bring about a better future.’ (Extract from Chapter 7 – ADR of the 2nd Edition of my forthcoming book, the 2nd Edition of the ‘Contentious Probate Handbook’, which is due to be published by the Law Society later this month).

Mediation, which as a process, can be carried out either in person or online, is essentially a forward-looking conversation.

The role of a Mediator is to manage the process and ensure that it is conducted in accordance with the terms of the ‘Mediation Agreement’ signed by everyone attending the Mediation.

The Mediator must also:

– Create an environment in which adversarial parties in a confrontational dispute can come out of their ‘positional’ trenches and walk towards the centre of the commercial problem which divides them.

– Empower adversarial parties to a dispute to become participants in a creative, bespoke and collaborative problem-solving exercise, and eventually, to walk side by side in jointly exploring and developing a commercial solution of their own design which takes into account: the facts presented in their respective position statements; the documentary evidence in an agreed bundle of documents; legal merits; litigation risks; the time value of money; and the benefits of ‘doing a deal’ now, instead of incurring further legal costs by resuming trench warfare and proceeding to trial.

This requires ‘counter-intuitive’ thinking and behaviour and can result in a ‘paradigm shift’ which results in a creative solution that a court cannot impose.

It therefore also requires a ‘commercial’ rather than a ‘forensic’ legal and procedural mind-set, and some imagination.

The challenge for a mediator is to persuade each participant to identify (in strict confidence) what is actually at stake, i.e. to drill down to what each participant’s individual objectives, needs and priorities are, and to understand why.

While it is not the function of a Mediator to speak truth to power, a Mediator can facilitate the re-framing of a dispute as an opportunity, by enabling each participant to think about what is important to them, so that the participants can jointly agree upon a ‘methodology’, i.e. a ‘road map’ for convergence and consensus.

This requires a ‘paradigm shift’, i.e. acceptance by each participant that there is a better way of resolving their dispute than proceeding to trial.

‘The approach of the court in ordering compulsory mediation post 01.10.2024 – DKH Retail Ltd & Ors v City Football Group Ltd [2024].’

The judgment of Mr Justice Miles in the recent case of DKH Retail Ltd & Ors v City Football Group Ltd [2024] EWHC 3231 (Ch), in which the learned judge considered an application made at a Pre-Trial Review, for compulsory mediation before trial (in a Shorter Trials Scheme case about a trade mark), is instructive of the approach of the court in ordering compulsory mediation post 01.10.2024.

Compulsory mediation was ordered, and the case settled.

I have invited my editors at the Law Society to include paras [28] to [44] of the judgment in my forthcoming book, the 2nd Edition of the Contentious Probate Handbook, which is on schedule for publication in 3/4 weeks time.

I would also like to thank my colleague at 1 EC Barristers in London – the ‘very very learned!’ – Mr Jacob Meagher Esq. (https://lnkd.in/eYCXyuxB), for bringing this case to my attention.

Note what the judge stated in:

[31]  The claimants submitted that [the 01.10.2024 CPR] changes recognise a sea-change in the approach of the courts to ADR. They said that another important aspect of the overriding objective is to ensure that the court’s resources are properly allocated not only to the parties but to other court users.

[32]  The claimants referred to the findings of the Civil Justice Council ADR Working Group that mediation has worked in complex and entrenched disputes, including where the ADR process appeared to be unlikely to succeed and where one or other party believed that he or she had a strong case.

[33]  The claimants contended that this is a case where the court should exercise its power to order a mediation. …

[34]  … [T]here has been no mediation to date, although there have been unsuccessful settlement negotiations. The parties are about to incur hundreds of thousands of pounds of further costs. A short, sharp, mediation of one day before the end of December may well allow the parties to avoid at least some of those costs. This would also potentially save court time and resources.

[38]  … [I]n many cases the parties’ positions in the litigation are diametrically opposed and it may easily be said that each party requires a judicial determination. But nonetheless the parties come through ADR to recognise the desirability of settling for less than their strict legal rights and compromising their positions. Experience shows that mediation is capable of cracking even the hardest nuts. The process sometimes succeeds in cases where the parties appear at first to have intractable differences.

[40]  … The purpose of mediation is to remove roadblocks to settlement. …

[41]  A mediation of this case will be short and sharp, and the documents needed for it would be brief. The defendant did not suggest that mediation would significantly disrupt the parties’ preparations for trial.

Notes added:

‘The ‘too late in the day’ paradox’ –

The defendant submitted that it was too late for ADR:

‘[37] Counsel for the defendant also says that it is very late in the day to seek the order, that the parties have already spent hundreds of thousands of pounds, and that the trial is imminent. He also says that his client had very limited availability for a mediation in December. In short, it is too late in the day; it is not a case where his client is being obstructive; mediation will fail; and this is a case where a ruling is needed.
[39] I see some force in the defendant’s submission that it is late in the day to be seeking an order, but it may also be said that there is some advantage in the parties’ positions having been crystallised through pleadings and the service of witness statements. It is indeed sometimes an objection to mediation that it is premature, proposed at a stage when the parties’ positions are unknown. That cannot be said here.’

The ‘too late in the day’ paradox is that if preparation for trial is nearly complete, then ADR cannot significantly disrupt i.e. impact upon the ‘critical path’ for completion of preparation, i.e. the Defendant’s argument was based upon a false premise.

‘Barrister Assisted Mediation’

Mediation meeting: Greatest Criminal Minds in the World Inc v Catwoman.

9am:            Opening plenary session.

Venue:         The Commissioner Gordon and Police Chief Miles O’Hara conference suite (located in the basement of a law firm somewhere in Gotham City!)…

The Joker (representing ‘Greatest Criminal Minds in the World Inc’) and the Penguin are seated on one side of the table, and Catwoman (a formerly purrfect employee) and her representative – the Riddler, are seated on the other. They are face to face, eye ball to eye ball, and nobody has touched the chocolate chip cookies.

It’s an unfair dismissal claim.

Catwoman’s complaint is that she was unfairly dismissed because she had whacked the Penguin on his beak with her Il Marchesato designer umbrella, when he turned up for work (yes you guessed it) dressed as a penguin, and waddled toward her making a loud quacking noise and flapping his arms, which she took to be an insult.

The company (‘Greatest Criminal Minds in the World Inc’) allege that it was dress down Friday in Gotham City and that Catwoman had behaved inappropriately.

They are meeting in an attempt to resolve the dispute through ‘Barrister-Assisted Co-Mediation’.

Batman, who is an accredited Mediator, but neither a lawyer, nor an expert on dress codes in the workplace of a criminal organisation, has been jointly appointed by the parties to mediate the dispute.

The parties have also jointly appointed Robin (otherwise known as the ‘Boy Wonder’), a very smart Barrister who specialises in this area of the law, to help Batman, i.e. as an expert/specialist Co-Mediator:

1.       understand the facts, technical issues in the case, and underlying legal principles, and

2.       facilitate the negotiation of a settlement (jointly developed by the parties) through a process of road-mapping and creative problem-solving that results in the agreement of a formula for settlement and terms.

I call this process ‘Barrister Assisted Mediation’ (‘BAM!’).

Through the process of Barrister Assisted Mediation (‘BAM’), can the caped crusaders help the parties agree terms of settlement before 5.30pm?

Well folks you will have to wait until the next episode.

Meanwhile, there is a lot of work going on behind the scenes, and the chocolate chip cookies have mysteriously disappeared!

Batman: ‘Come on, Robin, to the Bat Cave! There’s not a moment to lose!’

Boy wonder: ‘The way we get into these scrapes and get out of them, it’s almost as though someone was dreaming up these situations; guiding our destiny.’

Batman: ‘Let’s Go Robin’.

Boy Wonder: ‘Atomic batteries to power, Turbines to speed.’

Batman: ‘Roger. Ready to move out.’

BAM! …

As Commissioner Gordon might have said to Police Chief Miles O’Hara as they gazed upwards at the Batcopter flying overhead (que Batman music) – ‘Doesn’t it give you a warm glow just knowing that they are up there!’

TO BE CONTINUED …

Meanwhile wishing all readers of my posts a Happy and Peaceful New Year!

‘Ethics in Mediation Advocacy.’

My next online talk to members of the SCMA worldwide later in the year, is entitled – ‘Mediation Advocacy & Ethics in Claims for the Return of Ancient Art.’

In my available free time this month, I will be reading ‘What’s Fair – Ethics for Negotiators’, which is a publication of the Program on Negotiation at Harvard Law School, edited by Carrie Menkel Meadow and Michael Wheeler. It is the leading textbook for students and practitioners on the subject.

Today I also discovered this article about honesty and integrity in Mediation –
https://lnkd.in/ePnbSEEq

Note also my post – ‘Truth in key pre-action documents is a litigation “cultural” game-changer!’ (23.08.2024) at ‘Carl’s Mediation blog’, in which I wrote:

‘P.89 of the 92 page CJC Review of Pre-Action Protocols Final Report Part 1, August 2023, states that the parties should at all times be truthful and open in their pre-action dealings and communications with each other about their dispute.

“As the matter progresses, you will be required to give signed confirmation of the truth of certain matters in the dispute. There are serious criminal consequences for anyone providing false information in a document which contains a statement of truth, whether the document has been prepared before court proceedings have started or during court proceedings. A statement of truth confirms that a party believes that the facts in a document are true.”

So, if in a key pre-action communication/document which requires a statement of truth, a party knowingly makes a false representation e.g. by alleging a revised factual narrative that is demonstrably false, i.e. because logically, it is self-contradictory, then it would appear to follow that this may result in a criminal investigation and prosecution. If my understanding is correct & if these proposals are implemented, then this will deter unmeritorious claims before significant costs have been incurred, i.e. nuisance value/try-on claims.’

Depending upon how rigorously judges apply these principles, will determine whether the underlying ‘policy’ of the court, i.e. its ‘ethos’, becomes a ‘cultural’ game-changer in litigation.

Meanwhile, I suspect that any lawyer working under a CFA, would not want to go near such an unscrupulous claimant with a barge-pole, as in effect these proposed changes will result in a new and more rigorous standard of pre-action diligence, not only by the parties themselves, but also by their legal advisors – which of course will be an ongoing process throughout the conduct of the litigation.

So, let us see just how strict the judges are, about applying the letter of the CPR in accordance with the underlying ethos, in 2025.

My final post of 2024 – ‘Art and Civilization TV’

In July 2025 I am planning to launch a YouTube Channel – ‘Art and Civilization.’ Meanwhile, today I have created and registered the domain name –’www.artandcivilization.tv‘.

The ‘Art and Civilization’ page at www.carlislam.co.uk (to which this domain name will become attached on Monday – until which time the url will not function), states:

The theme of the channel is international cultural heritage and humanitarian law, including the protection of cultural heritage during war and armed conflict.

Planned programmes:

– What is art?
– Why does art matter?
– Heritage, culture & rights.
– Rights & civilizations.
– Intersections in international cultural heritage law.
– Protection of cultural heritage under international humanitarian law.

Essays:
– Cultural Heritage Diplomacy & IHL – Are Principles of Humanity under International Humanitarian Law a diplomatic tool in mediating a peace process and agreement?
– Mediation Advocacy & Ethics in Claims for the Return of Ancient Art. [To be written in 2025 – see the ‘Claims for the Return of Ancient Art’ page of this website].

Wishing all readers of my posts, wherever you may be, a Joyous Christmastime and a Happy and Peaceful New Year – may all of your dreams come true!

‘UKSC judgment in Hirachand – Success fees do not constitute ‘financial need’ under the Inheritance Act.’

On 18 December 2024, the UK Supreme Court handed down its judgment (Hirachand v Hirachand & Anor [2024] UKSC 43 (18 December 2024). The court unanimously ruled that success fees do not constitute ‘financial need’ under the Inheritance Act. The leading judgment was delivered by Lord Richards. The Supreme Court Press Statement highlighted:

Lord Richards begins by dealing with whether the meaning of “maintenance” in s1(2)(b) of the 1975 Act is wide enough to include a sum to meet a liability for litigation costs. The Appellant argued that “maintenance” is restricted to everyday living expenses and could not therefore include litigation costs. Lord Richards rejects this submission, noting that it is well-established that payments to fund legal costs may constitute “maintenance” in proceedings under the Matrimonial Causes Act 1973 (the “MCA”) and finding that there are no grounds for excluding the payment of legal costs from the meaning of “maintenance” under s1(2)(b) of the 1975 Act [23]-[26].

Lord Richards provides a background to the rules and principles governing the recovery of costs in civil proceedings. The general rule, established by a consistent line of decided cases over a long period, is that the liability of one party to pay some or all of the costs incurred in the proceedings by another party is treated as a separate matter from the substantive relief sought in the proceedings. In other words, litigation costs can only be recovered by way of a separate costs order, not as part of a substantive award. This basic rule will apply unless a claimant can rely on a separate cause of action against the same respondent to recover costs [27]-[41].

This appeal concerns the recoverability of success fees under CFAs. CFAs have been allowed in all proceedings, other than criminal and family, since 30 July 1998 [43] but the approach towards recovery of success fees has varied since then. In 2010, Sir Rupert Jackson published a report identifying CFAs as “the major contributor to disproportionate costs in civil litigation” and recommending that, on public policy grounds, success fees cease to be recoverable. This led to the prohibition on the recovery of success fees by the addition of s58A(6) to the 1990 Act. [45]-[51].

Lord Richards considers the recovery of base costs in proceedings under the 1975 Act. Such proceedings are subject to the costs regime contained in the Civil Procedure Rules (the “CPR”). The recovery of base costs is dealt with under the CPR by way of an order for costs. It would undermine the costs regime and produce an incoherent result if a party could recover base costs as part of the substantive award [55]-[60].

Lord Richards proceeds to discuss the recovery of success fees in proceedings under the 1975 Act. The logical position, which serves to give effect both to the general principle as to the treatment of costs and to the policy underpinning s58A(6) of the 1990 Act, is to say that success fees are not recoverable as part of a substantive award in any civil proceedings, including those under the 1975 Act [61-66].

This position is supported by a consideration of Part 36 of the CPR. Part 36 is designed to encourage parties to make settlement offers and is based on the proposition that the parties’ costs are to be dealt with only through the operation of the costs regime. The provisions of Part 36 are virtually unworkable in accordance with their purpose of achieving settlements if success fees are recoverable as part of the substantive award [67]-[74].

Counsel for the Daughter argued that the prohibition in s58A(6) of the 1990 Act only applies if provision for payment of a success fee is made in “a costs order”, leaving it open for such provision to be made as part of the substantive award [77]-[78]. The Supreme Court finds that this submission fails for several reasons, including the fact that the order made by the judge in this case was a “costs order”, to the extent that it made provision for payment of part of the Daughter’s success fee [80].

In its judgment, the Court of Appeal drew an analogy with awards in financial remedy proceedings under the MCA, where a party can recover its legal costs as part of the substantive award, notwithstanding a general rule in such proceedings that the court will not make an order requiring one party to pay the costs of another party. This general rule is known as the ‘no order principle’ [86].

The Supreme Court does not accept that a valid parallel can be drawn between proceedings under the 1975 Act and financial remedy proceedings under the MCA. The costs regime in civil proceedings governed by the CPR is substantially different from that applicable to financial remedy proceedings.[93]. The analogy is also inapplicable as success fees are prohibited in family proceedings [94].

In oral submissions, counsel for the Daughter also made a submission by reference to Schedule 1 of the Children Act 1989. For the avoidance of doubt, the Supreme Court considers this is also a flawed analogy [95]-[99].

(Please note that references in square brackets are to paragraphs in the judgment).

See also my earlier blogs – Inheritance Act – 25% CFA cases – Hirachand v Hirachand (CA)(2021), in which  on 15 October 2021, I wrote:

‘The uncertainty this decision has created is not limited to just a future merits based analysis of Inheritance Act claims, and its impact upon the drafting and effect of settlement offers, it also leaves both practitioners and judges adrift about how in principle a contribution is to be calculated, as quantification of the contribution in this case was based upon supposition. Making an educated guess in any case is an unreliable method of quantification, because a belief may subsequently turn out to be based upon a false premise. By contrast with an empirical method, ‘best thinking’ based upon supposition is both subjective and arbitrary. Consequently, it is prone to bias, which could result in an appeal.

Has this decision increased the litigation risks involved in these claims, by adding yet another element of uncertainty into what is already a rather muddled, incoherent and unstable equation?

If this decision results in the making of inconsistent judicial decisions, what damage has it caused to the integrity and rigour of the Jackson Reforms?

Has the court just pushed up the price of doing a deal in mediation, i.e. where mediation is preceded by the making of a Part 36 Offer?

See also my blog on 25 May 2023 – ‘CFA fees in Inheritance Act claims’

The judgment of the Supreme Court therefore provides welcome clarity. The impact on Law firms whose ‘bread and butter’ is CFA work, is likely to be seismic. As a result, perhaps there will be an increase in the early mediation of these disputes.

Resources:

‘Making allegations of fraud & wrongdoing’

I am proof-reading the 2nd Ed of my book, the ‘Contentious Probate Handbook’, which is scheduled for publication by the Law Society in mid to late February 2025.

I have updated the manuscript to refer to the principles stated in El Haddad v. Rostamani [2024] EWHC 448 (Ch) at [177] – [182] & set out below a short extract. I will ask my editor to reproduce the entire text of these paras in the book:

Mr Justice Fancourt stated:

[178]          Rule 16.4(1) of the CPR requires a claimant to include in their particulars of claim a concise statement of the facts on which the claimant relies. In this regard, the Chancery Guide states that the particulars of claim must be ‘as concise as possible’ (para 4.2(a)), and that in rare cases, where it is necessary to give lengthy particulars of an allegation, these should be set out in schedules or appendices (para 4.2(k). It also imposes a page limit … The court will expect a party to be able to justify the need for any statement of greater length.’
[179]          The Practice Direction to Part 16 of the CPR provides that
‘8.2   The claimant must specifically set out the following matters in the particulars of claim where they wish to rely on them in support of the claim (1) any allegation of fraud; (2) the fact of any illegality; (3) details of any misrepresentation; ….’
It is well-established in the case law that the requirement to set out an allegation of fraud means that particular facts relied upon as demonstrating the fraud must be pleaded.
[180] The Chancery Guide explains what is required at para 4.8 … [NB the book will set out the text of the revised para 4.9 in full, which refers to the El Haddad principles].
[181] The last sub-paragraph is of particular significance. In a claim where there are no available facts that directly prove dishonesty or fraud, a claimant relies on inferences to be drawn from other facts. These facts must be stated, including those on the basis of which it is to be inferred that a defendant knew that what they or someone else said was false. As para 4.9 of the Guide says, a party must not make allegations of fraud or dishonesty unless there is credible evidence to support the allegation.
[182] The more serious is the allegation of wrongdoing, the greater the need for particulars to be given that explain the basis for it: Three Rivers District Council v Governor and Company of the Bank of England (No.3) [2003] 2 AC 1, per Lord Hope at [51]. The inference of dishonesty from the primary facts pleaded must be more likely than one of innocence or negligence: JSC Bank of Moscow v Kekhman [2015] EWHC 3073 (Comm), approved by the Court of Appeal in Sofer v Swissindependent Trustees SA [2020] EWCA Civ 699; [2020] WTLR 1075, per Arnold LJ at [23].