The UK's Ministry of Justice's website (as at 14th December 2014) sets out that "Courts should be the last resort for people involved in civil or family disputes unless there are issues around urgency and safety, eg in relation to child abuse or domestic violence."  

The Ministry of Justice, in describing mediation as a possible alternative to litigation, sets out that under mediation "individuals concerned have greater control and responsibility in resolving disagreements than if they went to court. Mediation empowers parties to control the length of the process, the issues they would like to discuss, and the outcome. Mediation can also be less stressful, particularly for any children involved, and in the long run, can be cheaper than going to court."

The parties' greater control and responsibility in mediation are in direct contrast to litigation, where ultimately the decision will be made be a Judge, who has no personal stake in the outcome.   A settlement reached by mutual agreement is more likely to preserve relationships than a decision or sanction imposed by the Court.  This may be important of course in employment and family disputes, along with some commercial matters and disputes between neighbours.  By putting control in the hands of the parties, mediation allows them to air their grievances in a confidential way, without the risks which are inherent in litigation, particularly relating to costs.

The control of the outcome in mediation also permits parties in mediation to be more creative in reaching a settlement than a Judge in deciding a case.  A court for instance can not order an employer to provide a reference for an ex-employee, or order a party to provide an apology.

In addition to the factors referred to by the Ministry of Justice, I would suggest that additional factors contributing to why mediation works include:

  • solutions are often not based solely on law but on reasoned argument and business judgement;
  • mediation is flexible and can be adapted to meet the circumstances of the case and the needs of the parties;
  • unlike most court decisions, mediation is confidential and so parties can avoid the publicity caused by a trial;
  • mediation is quicker than litigation;
  • mediation is cheaper than litigation;
  • the mediator (as noted by Blake, Browne and Sime in The Jackson ADR Handbook (OUP, 2014, at page 130) adds a new dynamic to, and creates balance between, the different negotiating styles and personalities of the parties and their lawyers.  In addition, a mediator will bring their own skills, and their own personalities such as patience, an ability to listen, creativity, and impartiality, all of which can help the parties to review and re-evaluate their case, their needs and their interests.
The precise reason/s why a particular case settles at mediation will of course vary.  However the fact remains that mediation has a very good track record in settling cases, usually in the region of 75% to 80%.  In announcing the findings of the 2014 CEDR Mediation Audit in May 2014, Minister of State for Justice, Lord Faulks, set out that just over 75% of mediations settle on the day of the mediation and another 11% of cases settle shortly afterwards.