Mediation: Cooler heads cut costs: Dispute centre keeps many squabbles out of court, writes Roger Trapp

SINCE the United States is by common agreement the most litigious nation on earth, it is perhaps fitting that a system of settling arguments without recourse to the courts should have originated there.

Several years on, Alternative Dispute Resolution (ADR) has defied the sceptics to become a force to be reckoned with in the UK. Since it was launched by the Confederation of British Industry in November 1990, the Centre for Dispute Resolution has had nearly 300 disputes referred to it, with a total claim value of nearly pounds 1bn.

A number of prominent companies are founder members of the organisation, while professional bodies and firms are generally supportive. London's top 20 firms of solicitors and nearly two thirds of the leading regional firms are members, with many of their staff registered as mediators. The big six accountancy firms have also signed up.

The construction industry, which is notorious for disagreements between contractors and subcontractors, has been a prime area for the service, particularly in the present tough economic climate. But CEDR has also acted in many other sectors, including financial services, patents, chemicals, employment, charities and government. It has become so widespread that many organisations, such as the car manufacturer Ford, now require suppliers to submit to ADR procedures in their contracts.

The recently published report of the Legal Risk Committee that recommended setting up a financial law panel under the aegis of the Bank of England to tackle the 'legal uncertainties' of the wholesale financial markets also encouraged use of ADR procedures.

But although attention has focused on the concept's use by large organisations such as Ford and Eurotunnel, which has been involved in hundreds of disputes with the contractors since the Channel tunnel project began, it is not confined to them.

Karl Mackie, chief executive of the Centre for Dispute Resolution, said it was particularly attractive to small companies 'because the alternatives are so bleak'. Many small businesses still find the law mystifying, particularly when it comes to costs. While these companies can sometimes overestimate the cost of litigation, they are more likely to underestimate it. In complicated cases, the costs can rise rapidly, with no way of knowing the outcome until it is too late.

On the other hand, ADR allows a company and the person or organisation with which it is in dispute to discuss the matter with the aid of a third party, or mediator, 'and come out with what seems a fair settlement'.

About a quarter of all the cases referred to the Centre for Dispute Resolution, which is based in London but has mediators around the country, actually go to mediation. But 95 per cent of these are successfully resolved to the satisfaction of the parties involved.

The costs of mediation typically work out at between pounds 800 and pounds 1,500 for one or two days, with up to pounds 1.5m in costs saved per party per dispute. However, there are special rates for small claims. Disputes with a value of up to pounds 20,000 are dealt with for a flat fee of pounds 350, while those worth between pounds 20,000 and pounds 50,000 are charged pounds 450.

But it is not just the money. Mr Mackie said that while it could take up to two months to bring all the parties and their professional advisers together, the centre could move more quickly if required. As a result, it could help to resolve a dispute more quickly than a long- running court case, and so free hard-pressed managers to get on with running the business.

As part of its attempt to encourage smaller companies to use the service, the centre has met lobbying groups representing small companies and also local chambers of commerce.

There are also signs of an international dimension developing. Mr Mackie and his colleagues have had discussions with the European Commission, aimed at providing a special service to small and medium-size enterprises throughout the EC, and the Centre for Dispute Resolution could receive a grant towards setting up a system to deal exclusively with cross-border disputes. A conference dealing with small-company disagreements will take place next year.

This sector already accounts for a fair proportion of the disputes handled by the dispute centre, but Mr Mackie predicts the number will rise as awareness of the concept increases.

The Centre for Dispute Resolution has offices at 100 Fetter Lane, London EC4A 1DD. Tel: 071-430 1852.

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