Can mediation work for smaller debts?

Posted on October 20, 2017 by Jeremy Frost

With a smaller debt, there is a decision to make as to which route to pursue. The courts charge fees even if you are not employing a solicitor and anyone who has ever instructed a solicitor will realise how their costs can mount. 

Irrespective of the size of the debt, it is always important to realistically value the loss that is likely to have been suffered rather than what one side believes they might be entitled to from the other.

You should also review the evidence you have to support your position.  A “he said / then I said” type case with little or no corroborating evidence can sometimes resemble nothing more than a coin flip, whereas correspondence illustrating the state of mind of the parties, what they agreed to and when, better establish responsibility for the situation.

What will court action cost?

For example, a claim of £6,000 will set you back £455 in a paper form fee or £410 if you start your claim online. If your dispute is greater than £10,000 you are looking at a fee of 5% of the claim up to £200,000 and £10,000 after that.

If you are instruction a lawyer he will handle the paperwork for you and will charge a fee dependent on the size of the claim and the complexities of the matter.  Representing yourself will clearly cost less but that can be a false economy when dealing with the complexities of the court system.

The courts will generally bend over backwards to assist those representing themselves get their point across.  But sometimes one party’s “moral high ground” may have basis in law and in that instance you would lose!

A mediator’s starting fee is likely to be £2,000 although this will usually be funded jointly by both parties.  Some County Courts do invite claimants to a telephone mediation service which can be very much cheaper if you fit within their criteria and a claim is issued and that fee paid.

There is clearly no guarantee that parties will reach an agreement through mediation, so it may still end up in court. But because mediation has already been tried, this should at least cut down the delays in setting a court date and establishing if there are areas of agreement that will reduce the time required by the court to resolve the case, with the obvious reduction in costs.

And remember, in many cases, a judge will insist that an alternative dispute resolution, such as mediation, should be tried before they will hear the case.  So it is always worth looking at mediation before heading down the court route.

Non-money disputes

Of course, some disputes are not about money so when balancing up the court costs versus mediation, mediation could be much cheaper and also save time and stress.  For instance, you wouldn’t have to wait for a court date and instead could find a resolution much more quickly.

Mediation is about finding a solution so that the parties can move on. Its purpose is not necessarily to give justice or make one party pay for their alleged misdemeanors, but rather to allow both parties to achieve closure.

If the desire for justice is the overriding motivator for one, or both of the parties, then they may want to have their day in court, however much it costs!   That is, of course, if they know how much it will cost and even identifying how much it will cost even if you win, can have a dramatic effect on the parties’ outlook.

And of course, there is always the risk that the judge might still decide not to make a determination in a non-financial dispute which is probably the worst possible outcome.