This is the first of two articles which examine the future of Alternative Dispute Resolution (ADR).
In this piece, I explore political and social factors which are changing the way people, businesses and even governments think about ADR and its socio-economic value.
The second article will examine how technology is rapidly impacting on the way ADR is delivered and questions whether we can prevent technology from causing injustice.
The development of ADR in the UK has evolved slowly and its use has grown incrementally. In recent years, however, its use has gained immense traction, and it has become normal in the business community to use ADR. What was once quiet evolution has turned into an accelerating revolution. Seven cultural and commercial factors appear to be driving this transformation.
The first is the major shift in the way lawyers and other professionals view ADR. Until relatively recently, many commercial lawyers considered ADR as a threat, with the acronym jokingly reinterpreted as standing for “Alarming Drop in Revenue.” Today, however, many lawyers and other professionals working in land, property and construction readily embrace ADR. Large numbers choose to be trained in mediation and other ADR measures. Many more routinely recommend ADR to clients and employers and give advice on how to use it to manage and determine commercial disputes.
Secondly, the transformation of ADR into a normal dispute management method will continue because of growing dissatisfaction with the time, cost and complexity of litigation. Taking a dispute to court and achieving an outcome can take many months, and in some cases years. For parties involved in property or construction disputes, where delays often translate directly into financial loss, a long time spent in litigation is unsustainable. Going forward, business will continue to view prolonged court proceedings as commercially disruptive and disproportionate and be even more ready to embrace ADR.
Compared to litigation, ADR offers several advantages that align closely with business priorities. It is typically faster than litigation, it is more cost-effective, and it is usually confidential. ADR is often less formal, and easier to access. In sectors where long-term relationships and repeat business are important, ADR also offers the potential to resolve disputes without causing irreparable damage to commercial relations.
Thirdly, government and judiciary will continue to push the ADR agenda. The backlog within the civil courts will serve to reinforce the transformation. The 2023 Court of Appeal decision in Churchill and Merthyr Tydfil,[1] demonstrated that the courts are empowered to order litigants to engage in ADR, and failure to do so can carry costs consequences. Alongside this, the government has continued to explore mandating ADR as an integral part of the litigation process across the civil justice system. In June 2024, mediation became mandatory in small claims actions. It is conceivable that potential litigants will soon be obliged to use mediation and other forms of ADR, instead of going to court.
Fourthly, it is evident that, in the business community, there has been a general move towards pragmatic and collaborative dispute resolution. Many modern businesses seem to now be less concerned with “winning” disputes in a traditional adversarial sense and more focused on achieving commercially workable outcomes. ADR processes such as mediation, CAP, and early neutral evaluation align well with this approach, allowing parties greater flexibility, confidentiality and control over the resolution process, and outcomes.
A fifth factor is the increasing sophistication of corporate governance and risk management. Businesses are now more alive to reputational risk, management time, legal spend and stakeholder expectations. ADR is often seen as a mechanism that can reduce these risks while preserving commercial relationships.
Sixth. The business community is much more informed about ADR than ever. It is evident that improved understanding of ADR and willingness to embrace it will continue to grow. Arguably, this is simply because of commercial necessity. However, for many people and businesses operating in the built environment, ADR is no longer an abstract concept. It much more understood than it was, say, ten years ago.
The seventh driver for the ADR revolution is the growing desire for greater flexibility. Rather than a single process, bound by seemingly complex rules and procedures, ADR encompasses a wide spectrum of measures, most of which are comparatively straightforward. This enables a business to adopt a form of ADR that works for them, addresses their needs and priorities and those of its clients, and is east to access and use.
This is already in evidence. Dispute avoidance and early intervention processes are gaining traction. Mechanisms such as the RICS conflict avoidance procedure (CAP) and early neutral evaluation allow parties to address issues before they crystallise into formal disputes. Where disputes have already arisen, facilitative processes such as mediation remain a cornerstone of ADR. Mediation provides a structured but flexible environment in which parties can explore settlement with the assistance of a neutral third party. Going forward, businesses will be able to call on an ADR measure, perhaps accessed via an ADR toolkit, which will provide a process that is tailored to suit the nature, timing, and value of their disputes.
Together, these seven factors will go on reshaping dispute resolution and create an environment for more innovative ADR measures that are faster, more flexible, and closely aligned with business needs, than is provided by the current court system.
[1] James Churchill -v- Merthyr Tydfil County Borough Council - Courts and Tribunals Judiciary