Industry resolves to settle rows without clogging the courts: Roger Trapp looks into the new Alternative Dispute Resolution process that has enabled combative companies to avoid litigation with a minimum of fuss

IN THE four years since the start of the Channel tunnel project there have been an estimated 650 disputes. The reason the British judicial system has not been ground to a halt by such a weight of litigation is that - although Alastair Morton, the combative chairman of Eurotunnel, has frequently hit the headlines over his arguments with the banks, contractors and others - most of the disagreements have been quietly settled using a process known as Alternative Dispute Resolution (ADR).

Nor is Eurotunnel and its suppliers alone in this. The notoriously litigious construction industry has been particularly eager to embrace a concept that is in its infancy in this country but is well-established in a variety of other countries, notably the United States and Australia.

One of the factors behind the growing use of ADR is undoubtedly the recession. In the construction sector, in particular, tough economic conditions tend to create an upsurge in disputes at the same time as making companies more reluctant to pay the huge legal costs associated with protracted litigation. But the presence of a central body dedicated to spreading the word - the Centre for Dispute Resolution (CEDR) - has also played a part.

Launched as a non-profit making body by the Confederation of British Industry in November 1990, the organisation is holding an update at the CBI's headquarters in central London today to assess progress so far.

Although about 250 companies - ranging from ICT and British Telecom, through Grand Metropolitan to less well-known organisations - have signed up alongside most of the leading firms of solicitors and accountants, Karl Mackie, the centre's chief executive, acknowledges there is some way to go in developing awareness. But while he accepts that Britain has lagged behind other countries, he maintains we are catching on rapidly and could do much more with ADR.

The concept - which has been described as 'turbo-charged negotiation' - had been 'bobbing around' in British legal thinking for some time but had generally been dismissed as a peculiarly American answer to the excesses of the US legal system, he says. In fact, the British have much more of a settlement approach to legal matters than other jurisdictions, while London is of greater financial importance than, say, Australia, with the result that there is much more opportunity for the concept to work.

Adherents say that professional indemnity claims - which have lately become a great worry to accountants in particular - could prove an especially fertile field. This is because insurance companies, which ultimately bear the losses, already spend great amounts on legal fees and have a big interest in seeing disputes settled.

In the last two years, about 150 cases with a total value of pounds 550m have been referred to CEDR. Cost savings have run into millions. Though the scale of cases has ranged from a few thousand pounds to millions and the type from intellectual property to landlord and tenant, little is known about them because one of the advantages stressed to the parties involved is confidentiality.

But the key benefit is the lower cost - taking this route does not just mean lower legal fees but also less inconvenience - lost or distracted management time and not having one's affairs made public in the courts.

That said, cynics might wonder why lawyers might support it. One litigation partner with a City practice said some of his colleagues had decried the idea of lawyers getting involved in ADR as like turkeys voting for an early Christmas. But Eileen Carroll, litigation partner at City firm Turner Kenneth Brown and a member of the CEDR board, says that this attitude is dying out.

Companies anxious to cut costs because of the recession have found that they can cut legal bills through hard negotiation and shopping around. Meanwhile, the law firms have discovered that going to court is not an efficient way for them to make money. It is much more efficient for solicitors to work in great bursts, rather than to have cases like Charles Dickens's Jarndyce v Jarndyce dragging on for years, says Nicholas Pryor of Manches & Co, who is a CEDR-appointed mediator and, like Ms Carroll, became enthused by ADR through experience of US practices.

Both also seek to refute the popular idea that litigators love the drama of being in court. Pointing out that the vast majority of cases end in settlement on the steps of the court, they say that the satisfaction - 'the exciting part' - is resolving things. Consequently, there is an urge to opt for mediation since it can get the parties to a result much more quickly.

But many argue that there is often little need for what Mr Mackie calls the formalised mediation offered by CEDR. John Yates, a partner in the computer and communications group at City firm Theodore Goddard, is enthusiastic about the concept, but says he has had little chance to use it.

Both in his present role and while working as an in-house lawyer at IBM he found that where parties wanted to negotiate - chiefly because they wished to maintain their business relationship - they would sit down together to try to settle a case rather than pay the admittedly fairly modest costs of a mediator.

But he expects that this approach may change as claims get larger. 'If somebody sues you for pounds 5m it's quite difficult to say: 'Let's sit round a table and talk about it'.'

And this is the value of ADR, as Mr Mackie sees it. Discussion by the parties alone, arbitration by an expert acting as a judge, even going to court (or threatening to) can play their part - and may be used simultaneously with attempts to utilise mediation. But if there is a genuine interest in settling, his service provides a much more rigorous route.

By being facilitators rather than judges - or in Mr Pryor's view, diplomats of Henry Kissinger's shuttling type - they can encourage the parties to focus on the key issues and get quick results. Mr Mackie and his fellow mediators typically talk of obtaining settlements in a few days, sometimes even in a day, after months of trying other methods. They claim a 95 per cent success rate for settlements, slightly higher if defined by the parties gaining something from the process.

As the concept gains acceptance, Mr Mackie is looking to increase the number of trained mediators from the current 50 to about 250 and broaden the base from barristers and solicitors to include surveyors, engineers and other professionals.

But while there is a general feeling that just about any kind of dispute can be handled by it, even enthusiasts like Roger Myddelton, legal director and company secretary of Grand Met, the food, drink and retail group with extensive interests in the US, warns that it is not a panacea. As Mr Pryor says: 'It is not an alternative in that it is a complete substitute'. Rather it is another weapon in the armoury.

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