In the driving seat

Any competent lawyer can rattle off the advantages of mediation: quick, cheap, confidential, without prejudice, reduced risk of adverse costs, the parties are in charge, and so on. But the most interesting aspect for me is the ability for the parties to reach an agreement that no court could impose.

Of course in some of the cases mentioned further down it may have been possible to reach similar agreement at a joint settlement meeting, but mediation has at least three advantages. First, the without prejudice rule means that ideas may be tried and positions considered, and if the mediation fails none of that may be used at trial. Second, a mediator can keep the parties in separate rooms and allow them to 'spill the bile' at him/her, thus isolating emotions that would be a barrier to settlement in face-to-face negotiations. And finally, a mediator may suggest novel ways to bring the parties together, although the skilled mediator does that in such a way that the parties think these ideas are their own.

Judges have been urging litigants to choose mediation for some time. Lord Justice Ward in Egan v Motor Services (Bath) Ltd [2007] EWCA Civ 1002, a case involving an Audi TT 3.2 quattro, said: ''This case cries out for mediation', should be the advice given to both the claimant and the defendant. Why? Because it is perfectly obvious what can happen. Feelings are running high, early positions are taken, positions become entrenched, the litigation bandwagon will roll on, experts are inevitably involved, and, before one knows it, there will be two/three day trial and even, heaven help them, an appeal.'

'Mediation can do more for the parties than negotiation'¦ The commercial possibilities are endless for finding an acceptable solution which would enable the parties to emerge, one with some satisfaction, perhaps a replacement vehicle and the other with its and Audi's good name intact and probably enhanced... The cost of such a mediation would be paltry by comparison with the costs that would mount from the moment of the issue of the claim.

'In so many cases'¦ the best time to mediate is before the litigation begins. It is not a sign of weakness to suggest it. It is the hallmark of commonsense. Mediation is a perfectly proper adjunct to litigation. The skills are now well developed. The results are astonishingly good. Try it more often.'

Happy days

Egan wasn't my case, but I have mediated several cases concerning expensive motor cars, with the 'astonishing' results that Egan describes. In one, the purchaser of an expensive sports car tried to reject it at ten months old because it constantly broke down and burst into flames. The best the court could have imposed would have been damages equal to the price of the car less some depreciation. But at mediation the importers made clear to me that they simply couldn't allow the loss of goodwill in the brand if these facts had been heard in open court.

The importers offered the customer a replacement car. His reply was unprintable. So the importers (through me as mediator) said that the customer may have noticed that they also imported another brand of sports car, higher priced, although the UK allocation had already been taken up. But they thought they would be able to find an extra right-hand-drive model, and they could offer it at wholesale price.

A happy day was spent choosing colour, upholstery, close-ratio gearbox, paddle changes'¦ The customer was delighted, especially when he made clear that he would sell the car unused, and probably get an extra £20,000 on list price. But far more important to the other party was that the faults of the first car would not now be on public display.

Another example from the motor trade: the claimant was a company selling oil and cleaning products to workshops at car dealerships. One such dealership set up an arrangement whereby a gift pack of cleaning products would be given with every new car of a particular make, and the claimant had to deliver them directly to the car factory. But the deal was not properly documented, personnel at the dealership changed, and the new people refused to pay for the goods.

The dealership had been very happy with the claimant supplying their workshops, but were certainly not going to deal with him while in litigation. I ascertained the number of months it would take the claimant to recover the debt from the gross profit on workshop oil products. At my suggestion, the parties agreed that the dealership would buy the claimant's products for a minimum period, to recover his money in gross profit. Result: no court action, no loss of management time, no loss to the claimant (who wouldn't have got the trade otherwise) and a relationship restored. And healthy profit for the claimant in future years.

Even if mediation fails, you can learn a lot about your opponent, which will help you frame an intelligent part 36 offer. But few mediations fail, because the mediator helps the parties to reach an agreement they can live with, and this so often includes elements that a court could never impose.