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Growth in the use of Mediation in the Public Sector

Date: September 23, 2013 Posted by No Comments

There can be few more challenging areas in which to mediate than the public sector.  Often, there is not just a contractual issue to resolve, but a statutory backdrop and political dimension to contend with too!  Yet mediation in this fascinating sector is on the increase as the body of evidence demonstrating its success and the benefits it can bring, particularly in the saving of public resources, continues to grow.  This article looks at the growth of mediation in the public sector and the challenges that can arise. 

Growth in the use of Mediation in the Public Sector

There can be few more challenging areas in which to mediate than the public sector. Often, there is not just a contractual issue to resolve, but a statutory backdrop and political dimension to contend with too! Not surprisingly, the range of disputes that are mediated are also far broader than in any other sector, from multi-million pound procurement contracts to far more localised issues such as an investigation into conduct of employees at a state-run establishment.

There has always been a mismatch between the high percentage of public bodies that regard mediation as a sensible alternative to litigation, and the considerably lower percentage that actually use mediation as their preferred method of resolving disputes. However, the mismatch appears to becoming a little less marked as mediation is used more and more to resolve the full range of disputes that arise within and concerning public bodies. The results of CEDR’s Fifth Mediation Audit published in May 2012 , noted that mediators who had been asked to identify sectors that would see most growth in mediation usage over the next two years, listed public sector disputes amongst others. The prediction appears to have been a good one – the experience of many mediators is indeed that work in this area is on the increase. But why?

Evidence of success?

Maybe the increase in use of mediation in the public sector is as a result of the Government’s renewed ADR pledge, in the form of the Dispute Resolution Commitment. However, I suspect it has more to do with the greater general familiarity that now exists with the process and, most important of all, more evidence of its success, particularly in the saving of public resources. I was especially grateful therefore to Jack Hayward, a solicitor who works with public bodies across the UK, for mentioning in his Update  for the March/April 2013 edition of the Procurement and Outsourcing Journal, a dispute that I had the privilege of mediating. A difficult procurement dispute, Jack commented that ‘It was refreshing therefore to be involved in mediation recently concerning a contract dispute where I genuinely felt that both parties had come away satisfied with the result. Our mediator – Jon Lang – facilitated, after some 16 hours, a result that would have taken at least another 12 months to achieve …..’

Whilst not convinced that mediation was a panacea, Jack went on to comment that ‘…certainly where there is the need to heal a dispute in a situation where there is a desire to continue with a contract I would certainly give it very serious consideration.’

As with the provision of most other professional services, I suspect tangible evidence of success and benefit beats any kind of advertising, pledge or procedural coercion in terms of increasing usage. Given what will hopefully be a continued rise in the use of mediation in the public sector, it is perhaps timely to look at some of the challenges parties might have in mind in the run up to a mediation in this field.

The challenges of mediating public sector disputes

Whilst the type of dispute one mediates in the public sector varies hugely, there are often certain shared characteristics which require considerable versatility and skill on the part of the mediator and, importantly, pre-mediation groundwork on the part of all involved.

Appreciation of statutory framework
Public bodies usually act within a statutory framework and often contract with third parties to assist in meeting their obligations. Funding reviews, economic cutbacks and changes in the statutory framework within which public bodies function, can often be the root cause of a dispute. An understanding of both the statutory framework and political dimension within which a dispute has arisen is often essential, not just in terms of fully understanding the dispute, but for finding solutions.

Public accountability
Public bodies are also subject to varying degrees of public accountability. Thus whilst public bodies will attend a mediation under the cloak of confidentiality and privilege, the outcome of a mediation may well need to be made public. Sometimes, the outcome of a mediation will also need to be justified publicly e.g. where monies paid or not recovered raise issues of public accounting. Depending on the nature and size of a dispute, and the political climate at the time it is resolved by mediation, it may be the case that a mediated outcome is used as a political ‘football’. A parliamentary or local government debate about alleged mismanagement of a public budget springs to mind. Thus, post mediation matters require careful consideration, pre-mediation, so that parties properly understand whatever constraints there might be in preserving confidentiality of an outcome. These issues are always difficult and given that it is by no means unusual to discuss, during a mediation, what can and cannot be said post mediation, press releases and even Q & A scripts for press departments, a degree of forward planning is always a good idea.

Decision making and Authority
Decision making within a public body will be structured, maybe by committee and will often be more complex than within a commercial entity. Moreover, the authority of negotiators to bind the public body which they represent, will usually be limited in some way. Accordingly, decision making mechanics and issues of authority will also often require a little additional thought, pre-mediation. Neither factor will prevent a public body from actively participating in a mediation, but the ease and manner in which decisions can be made, and further or wider authority obtained, in real-time, needs careful thought and planning.

Moreover, it is sometimes the case that, because of the scope of settlement, input from several different departments across one public body is required, making pre-mediation preparation more crucial than ever.

Post-mediation approval
If it is likely to be the case that a particular settlement can only be formerly approved and executed post mediation (having been hammered out and agreed in principle at the mediation by those officers of the public body present on the day), that possibility should be floated pre-mediation. No one likes surprises, particularly after a hard day of negotiation. The party negotiating with the public body will not welcome their hope and expectation of absolute finality being dashed at the last stage! Being told in advance what the procedure is and also that it would be unusual for a settlement recommended by those present at the mediation not to be approved, usually deals with any concerns.

Given the nature of the public sector, securing the attendance of those who, at first blush, appear to the ‘right’ people, can be something of a challenge. A Minister of State is unlikely to attend. A Chief Executive of a local authority might be on the end of a phone to have a conversation with someone from the other side, but attendance may not be possible. However, there should be individuals present at a sufficiently senior level that the other side are comfortable that the public body ‘means business’, comfortable that if calls need to be made to other stakeholders impacted by any potential settlement or further authority sought, those calls will be answered (whatever time of day or night it is) and comfortable that any deal will be ‘carried’ back at HQ.

Final comments

Public sector mediation is on the increase. The potential savings public bodies can achieve by using mediation are huge. In these cash-strapped times, one would hope therefore that its use will continue to increase. And as it does, so too will evidence of its success.

Jon Lang
September 2013