Do lawyers help or hinder mediation?
Data published in 2012 showed that among mediation cases conducted in Hong Kong, more than 50 per cent reached a settlement when no lawyers were present, compared to less than 30 per cent when both parties had legal representatives.
Does this mean that the involvement of lawyers in mediation actually hinders parties from reaching a settlement?
Obviously, a lawyer's legal knowledge and technical skills help parties to better understand and prepare for mediation. However, there are some reasons why lawyers' involvement may hamper a settlement.
In the case of Studer v Boettcher, heard in Australia's New South Wales Court of Appeal in 2000, the plaintiff sued his lawyer for allegedly inducing him to make a compromise agreement after a 10-hour mediation. He claimed that if his case had gone to trial he would have achieved a better outcome.
While the plaintiff lost his appeal, the unnecessary trouble will make lawyers more cautious when they suggest their clients compromise or reach a settlement agreement, especially when lawyers believe their client's legal position is strong and the chance of success is high.
Although a good lawyer can bring different options for clients when making decisions, the weight given to each option by lawyers and their clients may be different. For instance, in commercial cases, clients can be more ready to reach a compromise when they want to keep a long-standing business relationship with the other party - even if their lawyer advises them that they have the stronger legal position.
However, it may be difficult for lawyers to judge whether it is in the best interest of clients to do so. Under the circumstances, lawyers may sensibly emphasise and insist on their client's legal positions and interests.
Lawyers fees will necessarily increase clients' costs in mediation. When the claim amount is small, and if a lawyer is involved, it may be much harder for a party to give up his economic benefits and compromise due to the increasing legal fee. This may be another factor which causes a lower settlement rate when lawyers are involved.
Mediators sometimes may prefer to have private discussions with the parties only, even if they have legal representation. However, this does not mean that the involvement of lawyers in the mediation process is not fruitful. On the contrary, mediators appreciate the importance of lawyers in the mediation process.
The disputing parties will be given a chance to briefly explain the disputes from their perspective, and in their own words, in their opening statements. Although mediators encourage the parties to brief the facts by themselves, lawyers can add a legal perspective. In complicated cases, lawyers' assistance in pointing out the main issues, analysing the strong and weak points of each, and finding the best solutions, is especially useful when preparing an opening statement.
According to the Hong Kong Mediation Code, the mediator is not allowed to give legal or other expert advice to either party. However, a direct path to settlement is often paved with good legal advice. Therefore, where a party is without legal representation, the mediator can encourage the party to obtain legal advice.
No settlement reached at the mediation will be legally binding until it is set out in writing and signed by each of the parties. If lawyers are present, they are likely to draft the settlement agreement. Without the involvement of lawyers, the responsibility may then fall on the mediator to guide the drafting of the agreement.
However, mediators need to ensure they don't act as legal adviser. Therefore, they prefer the presence of the lawyers at this stage.
Lawyers have the legal knowledge and skills to make sure the settlement agreement encapsulates what the parties have agreed. This helps avoid later disputes due to any omission or misunderstanding.
Although there are some reasons behind the lower settlement rate of cases where parties are represented by lawyers, the importance of their assistance in mediation is obvious and well recognised by clients and mediators. The usefulness and necessity of the involvement of lawyers in the mediation process should not be overlooked.
The information contained in this article should not be relied on as legal advice and should not be regarded as a substitute for detailed advice in individual cases. If advice concerning individual problems or other expert assistance is required, the service of a competent professional adviser should be sought.
Man-sing Yeung is vice-chair of the Hong Kong International Arbitration Center's Hong Kong Mediation Council