Why Ignoring ADR Could Cost You: The Untold Truth

The core point: ADR is now a procedural risk issue

ADR is often described in attractive terms: cheaper, quicker, less adversarial and more flexible than litigation. Those advantages are real in the right case. A properly timed mediation, neutral evaluation or ombudsman process can narrow issues, preserve relationships, reduce costs and avoid the stress of trial.

But ADR also creates procedural risk. A party who ignores an invitation, refuses without reasons, treats mediation as a box-ticking exercise or fails to attend a required appointment may face criticism, delay, sanctions or costs consequences.

The modern position is not that every dispute must settle. Settlement cannot be forced. The point is narrower and more practical: parties may be expected to engage seriously with non-court dispute resolution where it is proportionate, suitable and compatible with justice.

ADR in theory: lower cost, less conflict, more control

ADR covers several routes. Mediation uses an independent mediator to help parties explore settlement. Arbitration is more formal and usually produces a binding decision. Early neutral evaluation gives the parties an informed view of the strengths and weaknesses of the case. Ombudsman schemes can provide sector-specific complaint resolution.

The theory is straightforward. Litigation is expensive, slow and uncertain. ADR can give parties more control over process and outcome. It can also resolve matters that a court judgment may not fully address, including apology, future conduct, communication breakdown or practical compromise.

ADR in practice: the process is only as good as its use

The gap between ADR theory and ADR practice is often human rather than technical. Parties may attend too late, arrive without authority to settle, use the process to test the other side’s case, refuse to provide key documents, or treat compromise as weakness.

Lawyers and judges also influence outcomes. The wrong process can be ordered at the wrong time. A party may need urgent interim relief rather than mediation. A vulnerable party may need adjustments. A claimant may need disclosure before meaningful settlement is possible. A defendant may use ADR language to delay.

That is why ADR should be approached as a decision, not a slogan. The question is not “ADR or no ADR?”. The question is: which process, when, on what information, with what authority, and with what consequence if it fails?

The Churchill shift: from encouragement to compulsion in the right case

The older civil-procedure culture treated ADR as strongly encouraged but not something unwilling parties could generally be forced to do. Churchill v Merthyr Tydfil County Borough Council shifted that practical understanding.

The dispute concerned Japanese knotweed. The council argued that the claimant should have used its internal complaints process before litigating. The Court of Appeal held that a court can lawfully stay proceedings or order parties to engage in a non-court dispute-resolution process, provided the order does not impair the essence of the claimant’s right to a fair trial and is proportionate.

The decision does not mean ADR is compulsory in every case. It means courts have a broader power to require engagement with a suitable process. That is now reinforced by the CPR wording: active case management includes ordering or encouraging parties to use ADR, and CPR Part 3 expressly empowers the court to order parties to engage in ADR.

When ADR fits

ADR is strongest where the parties need a practical outcome, not just a legal declaration. It can be particularly useful where emotions are high but the factual dispute is manageable, where costs are disproportionate, where an apology or future conduct matters, or where both sides face litigation risk.

Small money claims now show the direction of travel. GOV.UK guidance states that where a money claim is for £10,000 or less and the defendant disputes it, the parties will be told they must attend mediation organised by the court. That does not mean they must settle. It means attendance and genuine participation may form part of the court process.

When ADR may not fit

ADR is not a universal answer. It may be unsuitable where urgent injunctive relief is needed, where there is serious imbalance of power, where a party needs disclosure before meaningful negotiation, where there is a point of law requiring determination, or where one side is using ADR tactically to delay.

The key is to give reasons. A bare refusal is risky. A documented, proportionate refusal is different. It may explain that the process is premature, that urgent relief is needed, that the other party has not provided documents, that safeguarding or vulnerability issues arise, or that a different ADR process would be more suitable.

The record: how litigants protect themselves

ADR decisions should be recorded as carefully as any other procedural step. A party may need to prove that ADR was considered, proposed, attempted, deferred for good reason or rejected on rational grounds.

The safest approach is to create a simple ADR record. It should show the process considered, the date, the evidence available, the reason for proposing or refusing it, any counterproposal, and what would need to happen before ADR became useful.