Mediation for clinical negligence claims – an ATE underwriter’s perspective


Pipkin: Claimant lawyers should give mediation a fair chance

By David Pipkin, director, underwriting division, at Litigation Futures Associate Temple Legal Protection

In reading the legal press over the last year or so, mediation for clinical negligence claims has featured regularly and there seems to be a momentum from both sides – perhaps more so from NHS Resolution – to promote it as part of the mainstream menu offered by litigators.

Below is an in-depth look at these developments, viewpoints and some preconceptions on what is undoubtedly a topical subject. It includes observations from two specialist mediation experts: Tim Wallis, chair of Trust Mediation, and Terry Renouf from Renouf Mediation.

Let me start with a few findings and insights from the research I’ve undertaken.

Statistics are emerging which seek to persuade both parties to use mediation more. For example, at a recent conference, it was said 75% of mediations resolve in the claimant’s favour, whereas 60% of cases fail at trial.

Whilst over 200 cases were mediated during the first 15 months of the NHS Resolution scheme, this figure should be seen in the context of over 17,000 claims being settled in 2016/17 (source: NHS Resolution Annual report 2016/17). However, mediation is also occurring earlier in the litigation process.

It seems too early to say if mediation will prove to be a ‘game-changer’, but since NHS Resolution set up a permanent mediation service in December 2016, the NHS itself appears to have embraced mediation for workplace dispute resolution.

In speaking with a number of mediators, I perceive growing evidence that, after initial reluctance from both sides, more and more claims are being put forward for mediation. Trust Mediation, one of the major mediation organisations, report that it is handling up to 20 a month.

As an ATE underwriter I am seeing some good results for mediation – often at an earlier stage of litigation than I thought possible. One recent example is of a vigorously defended claim regarding breach of duty in a brain damage case that was resolved at mediation; a compromise apportionment was agreed followed by a significant part 36 offer.

In the past, that sort of negotiation would have only occurred shortly before trial.

It’s not all about trying to push for an overall settlement. Earlier mediation can resolve both specific and narrow issues that will reduce litigation costs – something I feel that ATE insurers and NHS Resolution will agree upon.

The cost of ATE underwriting risk in clinical negligence cases continues to rise. There is no such thing as a sure-fire winner and therefore any process, which can deliver a quicker and more efficient resolution of the risk, is most welcome.

Mediation is not a panacea, but is a good option to have in your dispute resolution ‘menu’. As a former litigator myself, I have too often witnessed a growing reluctance for parties to a dispute to negotiate; instead I see a war of attrition through correspondence.

Have lawyers lost the ability or confidence to get on the telephone, or meet to discuss and narrow down the issues?

Mediation and its relationship with litigation

Are there litigators who fear mediation and perceive they are passing too much control to a third-party mediator?

Here’s an insight from Tim Wallis: “Mediators tell me they understand the concern about losing control. But, in their experience, litigators do in fact have a greater degree of control in the mediation environment when compared to litigation. Additionally, they say, mediation is a great place for good negotiators to exercise their skills.”

My experience is that the current crop of mediators has the appropriate knowledge and experience to facilitate resolution. They are independent and focused. The data that is available supports the view they will save legal costs and can reduce the duration of litigation. Trust Mediation reports that up to one in five mediations take place pre-proceedings.

There are many who will say mediation cannot begin until and unless all the evidence is in place. I would challenge that approach: many cases settle early, following routine settlement methods, and there are plenty of examples from the mediators themselves to indicate important issues can be overcome, leading to a settlement a lot earlier down the line than might otherwise have been the case.

Stand by – fixed costs approaching

With this on the horizon, we all need to be exploring anything that makes the process more efficient. Earlier settlement is one route to a more efficient process; if practitioners are able to use mediation to deliver this, they will optimise the profit element of the fixed fee in addition to achieving clients’ objectives.

NHS Resolution is right to strive to reduce costs – costs often, but not always, caused by their own delays and obstructions.

After-the-event (ATE) insurance underwriters also want to see reduced exposure to disbursements and to resolve as many uncertainties as possible. An example would be a limitation argument that gets in the way of an otherwise strong case on breach and causation.

Who is going to pay for the mediation?

This is a frequent discussion point. Trust Mediation’s model agreement, supported by NHS Resolution, provides:

The mediator’s fees and travel/accommodation expenses will be paid equally by the parties, except in the following cases where the payment will be made in full by NHS Resolution:

  • Liability is admitted in full or in part; or
  • The claimant is unrepresented.

If the mediation does not resolve the issues, then the expense of the mediation become costs in the case. ATE insurance should cover the mediator’s fee – Temple Legal Protection’s policy does.

Apart from the risk of not recovering your own costs if the mediation and the subsequent litigation fails, there is no commercial reason to avoid mediation and every reason to use the exercise to tease out the strengths or weaknesses of the each other’s arguments.

Why not let the claimant have their day in court?

I was impressed by the recent article in the Journal of Personal Injury entitled ‘Winners and losers in the Court of Appeal: An empirical study of personal injury cases” [JPIL 2018 Issue 1], where it seems the failure rate for claimants in the Court of Appeal has been increasing significantly in the last decade.

There is, I believe, much uncertainty when it comes to the selection of an appropriately experienced Judge at first instance.

I have already alluded to the 60% failure rate at trial at first instance. There is good reason to consider mediation in as many cases as possible, because leaving it to the judiciary is becoming a lottery for both sides.

There is a growing number of ADR facilitators and the PIcArbs Arbitration model looks interesting – promising a consistent process with competitive pricing. I have yet to have any practical experience of it, but look forward to seeing PIcArbs’ data when available

Trust Mediation seems to have taken a front seat in its partnership with NHS Resolution. As with the majority of mediators in the clinical negligence sector, it offers a commercially acceptable fee tariff. Tim Wallis acted pro bono as consultant in setting up the APIL, FOIL, and MASS register of appropriately experienced personal injury and clinical negligence mediators.

The fact that these three organisations have combined to signpost their members to mediators is quite interesting in its own right. In addition, CEDR – which has a long-established track record – also provides many suitably experienced mediators.

So what role does an ATE insurer have in the mediation process?

I have already referred to the insurer’s stake in the risk. Underwriters will be keener to see that claimant lawyers are considering the merit of mediation, especially where there appears to be strong evidence of a case not making suitable progress.

Assuming mediation remains a voluntary option, I can see ATE insurers questioning why mediation has not occurred in many cases. Why should we wait until close to trial before any negotiation takes place?

Further, mediation can be viewed as a risk assessment tool – and an opportunity to manage risk, if the mediation reveals that the defence is significantly stronger than was supposed.

Conversely, if the mediation shows the defence to be even weaker than you thought, and no sensible offer is forthcoming, your risk assessment at mediation supports your decision to proceed to trial.

I cannot see much practical purpose in ATE insurers being present during the mediation. However, if NHS Resolution could be persuaded to include costs consideration in the mediation, it might be prudent to have the insurer at the end of a phone to discuss premium issues or global offers as to costs.

Why do we have to wait many months after a claim is settled for costs to be resolved?

If liability, causation and quantum can all be settled at mediation, why can’t the costs be agreed as well?

Terry Renouf from Renouf Mediation (an accredited CEDR mediator) gives this view: “Mediation offers the opportunity to mitigate risk. The process is without prejudice and confidentiality is carefully protected by the mediator. Information can be exchanged in a safe environment, giving you the opportunity to have a better understanding of your opponent’s case and in consequence of your own.

More information means a better and earlier assessment of risk (on both sides) which can only assist settlement. Even where resolution is not achieved, the quality of communication is improved and areas of difference can be narrowed; all of which can only help to mitigate the litigation and consequently the costs risk for the client.”

From the perspective of your law firm as a business, Terry goes on to say: “In my previous roles as a managing partner, the settlement of a case meant that recorded WIP crystallised to become a more certain recovery of cash for the business. Carrying less WIP is good business that keeps the finance director and the bank manager happy.”

Last, but by no means least, there is the client’s perspective

We should not forget the importance to the client in allowing an opportunity to obtain answers as to what happened and why, or to elicit an apology.

On this point, Tim Wallis observes: “The desire to ensure that the same mistake is not going to be repeated in the future is also a common element in the cocktail of factors that have motivated the claim”. It is often really not all about the compensation.”

For many claimants, a very significant objective is to bring the claim to an end sooner rather than later. Litigators become battle hardened, willing to accept a measure of risk and be impervious to a defendants’ delays.

This is all easier for a lawyer with a basket of cases than for a claimant with their one, potentially life-changing, claim. Whilst a 75% prospect of success sounds good to the lawyer, a one in four chance of losing sounds bad to a claimant.

For claimants, they really want the matter to be over as quickly as possible. They get the fact that they could go on for another year to maximise damages – but the vast majority would much prefer three-quarters of a loaf and an end to the litigation now. And isn’t that their decision to make? Client satisfaction and recommendations are a powerful source of new business, as we all know.

These points are echoed by Terry Renouf: “Mediation does bring the client to the heart of the process. They will be involved in the joint meeting, they will hear the apology, the explanation of the other side, and the expression of regret: they will receive their legal advice in that context and it all helps to unlock the settlement.

“Time and time again in difficult cases, settlement can be achieved. Clients want settlement. Using mediation as one of your settlement tools will achieve an earlier settlement and satisfied clients.”

Final thoughts

Tim Wallis: “If there is a tool that usually provides earlier settlement, shouldn’t claimants be offered the option to use it? Think of it this way: would your advice to your client about mediation satisfy a Montgomery test?”

Terry Renouf: “I have little doubt that the judiciary will be more actively encouraging mediation in the future. The CEDR 2018 Biennial Audit confirms a 20% growth in mediation in the last two years, with organisations such as the NHS also promoting mediation. The Civil Justice ADR Final Report is due in October and we should anticipated that recommendations requiring changes to court rules would follow in April 2019.”

Summary

From my perspective as an ATE insurance underwriter, I would like to see claimant lawyers giving mediation a fair chance. I believe there is a sincere intention from NHS Resolution for this to become a firm item on the negotiation menu with clear benefits in terms of reducing both time and costs.

It also makes sense in the bigger political and regulatory picture, and in particular to those that have suffered as a result of a medical accident.

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