Alternative Dispute Resolution (ADR) is generally welcomed as an option. Few would object to it in principle, and if lengthy and expensive litigation could be avoided, most would see it as a beneficial route to explore.
However the prospect of compulsory ADR is less welcome, and could be considered contrary to fundamentals within English law. Many feel that they should be entitled to their day in court, and that this should not be denied them. In the context of professional services liability claims, the certainty of a decision may be welcomed, with the hope of vindication that this may bring.
It is certainly a discontent of professional indemnity policyholders that many allegations of negligence are not finally decided, and a good number of cases are commercially settled. In practice unless the prospect of defending a case is very probable, the litigation risk created by any weaknesses in the position coupled with the six figure cost of litigation means that mitigating the costs through commercial settlement is the preferred route of insurers. This inevitably means that mediation and other ADR routes are used.
Compulsory ADR is a step closer however following the decision in Lomax v Lomax (2019). This was a case concerning a dispute over a will between a widow and her stepson. As such the details of the case are not of direct concern to construction consultants, but the relevant aspect of the case is this. The widow had suggested Early Neutral Evaluation in order to resolve the dispute. Her stepson was not willing to participate in this (although he was willing to mediate).
Early Neutral Evaluation is a process whereby the parties submit a concise summary of their case to a judge or other nominated third party, who provides a preliminary decision on the matter. The process is not binding, and cannot be referred to in any later proceedings. It is intended to give the parties objective input into their strength and merits of their positions.
The judge in the present case said that the Lomax’s dispute “screamed out” for “robust, judge-led” dispute resolution but decided “on the finest of fine balances” that she could not order an Early Neutral Evaluation without the parties’ consent.
The case went to Appeal, and the Court of Appeal ordered that an Early Neutral Evaluation take place. As such, the stepson was ordered to participate in a form of ADR to which he had objected – and indeed, strongly enough that the case had reached the Court of Appeal.
Commentators on the case have seen this as a significant decision. Concerns around compulsory ADR had previously been expressed in the case of Halsey v Milton Keynes (2004) as an unacceptable obstruction of a party’s right of access to the courts, and the practical observation that forcing an unwilling party to participate in ADR would simply add to costs.
The Halsey objections were considered in Lomax but the Evaluation was nevertheless ordered. Concerns have been expressed at the direction of travel of the courts and that this may be a wider step away from the principle that ADR must be consensual.
An immediate observation would be that if any practitioner sees compulsory ADR as wholly unpalatable, they could try to reinforce their position through provisions in their appointment contract. These could state preferred routes of dispute resolution, or reinforce freedom of choice for example.
Notwithstanding that a number of commentators have identified this case as a paradigm shift, perhaps from the professional’s point of view very little has changed in practice. The pre-action protocol for construction & engineering disputes requires the parties to discuss their claims in a without prejudice meeting, and as a matter of practice if one party offers mediation, it is often feared that to refuse would be seen as breaching the protocol and create exposure to cost sanctions as a result. Similar considerations apply to the pre-action protocol for professional negligence.
Moreover, underlying these considerations remains professional indemnity insurers’ willingness to explore commercial settlements if the prospects of defending a case are not rock solid.
As such a court ordering ADR may not feel very different to the professional to an insurer telling them that they want to explore settlement options. On the ground this may not be such a paradigm shift after all.