City employers are finally getting to grips with ADR as an alternative tocostly, time-wasting litigation. But could other sectors catch the bug? BySimon Kent Alternative dispute resolution (ADR) techniques are gaining a foothold amongfinancial and City firms in the UK. The City Disputes Panel (CDP), a non-profitorganisation which has specialised in commercial disputes, has recentlylaunched a bespoke employment support service to offer employment disputeresolution to members. Karl Davies, chief executive of the CDP, said the move came as a response togrowing interest in ADR and mediation techniques to settle employment disputes,avoiding the huge cost and reputational damage which can occur. Terry Jones, a director at the Centre for Effective Dispute Resolution(CEDR), confirms this trend, noting banks and financial organisations aredeveloping ADR techniques, sometimes in collaboration with UNIFI, the bankingunion. Whether this development has the potential to lead other industry sectorsaway from the courts has yet to be proved. You only have to look at recentcases such as that of Louise Barton and Investec Henderson Crosthwaite (News,May), which have incurred high costs both financially and timewise, to see thatthe City of London is the ideal environment for proving the worth ofconfidential and relatively swift resolution techniques. Jones, a veteran of the Square Mile himself with 35 years experience incommercial banking – including 17 at Barclays – believes the technique hasaspects in common with the City’s dealing/trading culture. “The culture isabout looking for cost effectiveness,” he says. “Every firm isconcerned about profits, but that’s about being cost-effective and managingtime productively. You don’t want to devote excessive management time to adispute. There’s also a deal-making culture,” he adds. “So thoseaspects work in favour of ADR techniques.” “The message we received from employers is that they are desperatelytrying not to be combative,” adds Davies. The CDP has created a panel of22 specialists, including HR practitioners and employment lawyers, to handleemployment disputes in a similar way. This is a result of companies wishing totransfer their positive experience of mediation in dispute resolution into theemployment arena. ADR’s proponents are, however, faced with something of a Catch-22 situation.Those who experience ADR usually have a positive experience and will use itagain – the general view is that 85 per cent of cases are resolved to thesatisfaction of both parties. But it can be difficult to get employers to take thatfirst step because it is practically impossible to publish any positiveresults. To do so compromises one of the most valuable aspects of ADR –complete confidentiality. “Board-level disputes have been handled through ADR,” says AllanConnarty, director of operations at the Chartered Institute of Arbitrators.”The press frequently challenge issues such as levels of pay or questionshow such figures were arrived at, and sometimes the answer is mediation.Therefore you cannot disclose exactly how and why that figure was agreed. Whilethe figure agreed could seem high, it may have been worth it to avoid certainother issues being made public at a tribunal.” As in the Barton case, matters such as how a bonus scheme operates are oftenregarded as commercially sensitive information. Indeed, Jones suggestsdiscussing such information can lead to entire teams being poached bycompetitors, while ongoing disputes undoubtedly undermine morale andconsequently the performance of top employees. Mark Mansell, employment partner at Allen and Overy, notes theconfidentiality of ADR also works in favour of the individual. “At themoment, Louise Barton is not known primarily for her skills, she’s known as theperson making this claim,” he says. “Mediation has been used toresolve bonus issues in the City precisely because it protects bothparties.” Connarty agrees: “There may be employees who decide they know what themarket is for their skills, but realise if they push for that amount and refuseto compromise, they may never work again,” he says. “That gives themfurther impetus to go for broke. Alternatively, they may decide to negotiate,take a lower financial award and recognise that they will work again.” However, practitioners recognise that ADR is not always the way forward.”The Barton case is a justice issue,” says Jones. “To someextent it argues against mediation, because if it were resolved in that way,how would anyone else know justice had been done?” “ADR doesn’t work if you have a case where the law hasn’t really beentested,” says Kathryn Britten, a forensic accounting partner at BDO StoyHayward. “In some cases, unless you go to court, you have no certainty andit can be difficult to reach any agreement. One of the ways you mediate is torefer to previous cases and to points of law as tested.” Britten is still quite a rarity as a non-legal professional with mediatortraining, but it is precisely the combination of her specialist knowledge andmediation skills that makes her so useful. “Mediation works well withcomplex financial issues when the mediator has been briefed in advance by bothparties and can help them reach a negotiated settlement,” she says.”The whole process focuses on the future, whereas litigation looks at whathappened in the past. That offers far more creative options forresolution.” Davies echoes the need for mediator knowledge of the culture or industry inwhich the dispute occurs. “There is far more interest in getting afacilitator who understands the business and pressures the parties are under,and so can frame a resolution in that context,” he says. “That is ofmore worth than someone who takes a ‘vanilla’ approach to every situation andsays they don’t need to know the details to help resolve the problem.” Thisgives mediation another advantage over tribunals – it is less likely a courtwill fully appreciate the working culture in which a dispute has occurred. Though many ADR practitioners are frustrated at the apparent tardiness intaking up these techniques, not all favour introducing legislation to forcethem on employers. “I think legislation would be useful because the morepeople go through the process, the more they will recognise the benefit,”says Britten. “It would create a learning curve for all involved.” “I’m not a fan of legal compulsion,” says Davies.”Essentially, mediation works because it is voluntary. Both parties havechosen to invest time and effort in finding a solution – they have bought intothe process and the outcome is going to be consensual. There is always a riskwith legislation that it just becomes a process.” That said, ADR has been the subject of legislation in parts of the US, andexperience suggests it has played an integral part in organisations adoptingADR as part of their grievance procedures. Having been compelled to explore ADRbefore going to court, firms now consider it at an earlier stage in disputes. “Since being exposed to ADR, people have found it works,” saysDavies. “So it is used long before legal proceedings trigger the requirement.”The same pattern has been seen at some US firms where the initial introductionof ADR policy (usually a clause to simply consider/explore ADR techniques foreach individual grievance) has removed the knee-jerk reaction to start legalproceedings. The HR director as mediatorSarah Jones is head of HR at WWF UK(formerly the World Wildlife Fund). She ‘stumbled across’ a course on mediationthrough Peter Shore, an HR consultant and mediator on the CDP. “Since thetechnique requires the individual’s agreement, we have used mediation toresolve disputes where appropriate rather than creating a definitepolicy,” says Jones.Having undertaken training, Jones acts as mediator within thecompany to handle disputes and issues when they arise. While appreciating thevalue of external mediators, at this point there has been no clash of interestsin the cases she has handled. Indeed, Jones feels she has been welcomed as aninternal resource for resolving disputes: “We have a good reputation as anHR department and so we can be objective and neutral,” she says. “Thetechnique is empowering because it means the individuals concerned decide theoutcome, rather than me. At the same time, the process is completelyconfidential and nothing goes on the employee’s record.”An intensive CEDR five-day training course will give Jonesofficial accreditation as a mediator and offer her the chance to work as anexternal mediator in the future. While looking forward to this, Jones does notbelieve legislation is a constructive way to increase the use of ADR: “Thedanger is that it would just become accepted practice and therefore lose itsuniqueness,” she says. “It’s far better if it remains outsideemployment law.”City firms count the cost2003 Investec Henderson Crosthwaite continues its legal battle withformer media analyst Louise Barton over claims it discriminated by paying her asmaller bonus than two of her male colleagues (£300,000 compared with £1m and£600,000). The EAT has sent the firm back to the employment tribunal for thesecond time in a year to prove it did not discriminate against her.Compensation could run into seven figures, not to mention the legal bill forsuch a protracted case. 2002Cantor Fitzgerald and ICAP emerged from a lengthy legal spatwith reputations in tatters following press reports of senior executives’ lapdancing R&R, aggressive bully-boy tactics, obscene language and generally,as one judge put it, “disgraceful behaviour” during ICAP’s attemptsto poach three brokers and Cantor’s efforts to keep them. But can anyoneremember the verdict?2002Schroder Securities paid a whopping £1.4m compensation to JulieBower after she left her £120,000 job claiming male managers were trying towreck her career. She received a ‘lousy’ £25,000 annual bonus while malecolleagues received between £440,000 and £650,000. Cutting a dealOn 1 Jun 2003 in Personnel Today Comments are closed. 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