INTRODUCTION

4.1 The Commission considered the policy and practice of regulation from a wide perspective to determine whether there is a need to accredit mediators. It focused primarily on the professional regulation model. According to this model, occupational regulation is only necessary to meet a demonstrated need which is not capable of being satisfied by alternative approaches. This Chapter considers the application of occupational regulation principles to mediation, recognising, however, that it is a newly emerging practice, the purpose and nature of which has not yet been fully explored or agreed upon, neither is its professional status nor its relationship to the traditional legal system settled. Chapter 5 reviews the alternative approaches which may also apply to regulate dispute resolution practice.

4.2 The Commission’s recommendation is that no government regulation for the accreditation of mediators is currently necessary. This conclusion recognises that the need has not been demonstrated. Furthermore, the Commission considers that regulation would be premature in the current state of dispute resolution practice, and that the continued flexible development should not be unnecessarily inhibited.

Forms of occupational regulation

4.3 For the purposes of this reference, the Commission relies on the following definitions.¹

Accreditation: used generally for recognising that a person has undergone a prescribed level of training or meets a prescribed standard of performance.

Registration: a list identifying practitioners providing a particular service which is compiled and published, usually by a public body. Inclusion may be conditional upon educational or practical qualifications and/or subscription to a code of practice. The right to identify with the occupational group may depend upon registration.

Certification: recognises that a person has completed a prescribed level of education or training or achieved a certain level of competence in performance or skills. It can be granted by either a public body, educational authority, or professional body. When granted by a public body the right to practise may depend on certification. The right to use a professional title often accompanies certification.

Licensure: permission to practise a profession is granted only to those holding a licence. Licences are usually issued on government authority when prescribed levels of education, performance or other qualifications are met, and on payment of a fee.

Co -regulation: occurs when the administration of a government regulatory scheme is delegated in some degree to practitioners themselves with, in some instances, the participation of representatives of the general public.

Self-regulation: occurs when practitioners impose and administer controls on practice. It is a private matter, and confers no legal status or liability.

POLICY GUIDELINES

4.4 Two recent studies have sought to develop applicable policy guidelines for industry, occupational and professional regulation. The Trade Practices Commission’s study Self-Regulation ² reflects the current deregulatory climate and is concerned with implementing regulation which will enhance industry efficiency while maintaining consumer protection and ethical standards of conduct. The Victorian Government has recently adopted principles of occupational regulation and a framework for evaluating regulatory schemes formulated by the Regulation Review Unit and the Victorian Law Reform Commission.³

4.5 Both these studies place occupational regulation in the context of business regulation and within the wider context of a free market economy. In many areas of social life where the State’s functions are performed, pure market principles do not and cannot apply. Although the studies contain much that is relevant to the regulation of dispute resolution, particularly the Victorian principles, they are not strictly applicable for our purposes, given the nature of the market model for the supply of such services. In the dispute resolution services industry model, many of the features of a classic freely competitive market are distorted. Many mediators are volunteers, or are remunerated at rates determined by factors other than market forces. Many clients pay little or nothing for a mediator’s service, and do not exercise the choice inherent in a market model. On the other hand, in commercial dispute resolution the market model may apply.

4.6 The Victorian Report contains general principles for occupational regulation.⁴ The proposed system of regulation must:

• meet a clearly demonstrated public need. It must be for the benefit of the public and not serve only the narrow interests of practitioners;
• be the most effective way of satisfying that need, in the light of insufficient existing or alternative approaches;
• be the minimum necessary to alleviate existing problems; and
• be cost effective.⁵

4.7 The Victorian Report also presents a number of criteria to construct an evaluative framework for assessing occupational regulation.⁶ The criteria include whether:

• unregulated practice will cause harm;
• existing protections are insufficient;
• there are alternatives to regulation;
• regulation will reduce existing problems;
• the occupation is well-defined;
• the occupation possesses knowledge, skills and abilities which are teach-able and testable; and
• the benefits of regulation outweigh its costs.

4.8 The Report also considers the manner in which a regulatory system should operate. Several principles are proposed:⁷

• a regulatory system should be non-discriminatory;
• exemptions should generally not be available for those already in the occupation. Participants in occupational regulatory schemes should be subject to re-testing where competence is an aim;
• only in rare cases should administrative responsibility of the system be given to the occupational group;
• representatives of the occupational group should not be allowed to dominate the government’s regulatory body; and
• regulatory bodies should be accountable.

4.9 Other principles relate to the proximity of dispute resolution processes and their delivery to the justice system. Access is a relevant issue, related to availability and affordability. An objective of the justice system, both formal and informal, should be its accessibility. The enthusiasm with which court-connected non-judicial dispute reso-lution is being embraced raises important questions about the availability of sufficient qualified and competent practitioners. It also involves the issue of access to information about the availability of alternatives within and outside the judicial system, and about the qualifications of practitioners. Financial, educational or cultural barriers should not be permitted to restrict access to services.⁸ Any regulatory scheme will have an impact on access in all these senses. Policy decisions about regulation must take account of these issues.

THE PURPOSE OF MEDIATOR REGULATION

4.10 The impetus for regulation of professionals in our society usually comes from either of two sources: the occupation itself, including those in the business of training,⁹ and the public. The justification for government regulation from either source is usually expressed in terms of public benefit; that is, consumer protection and occupational accountability. However, occupational regulation is justified only when its purpose is identified, it meets a clearly demonstrated public need, and it does not predominantly serve the interests of the occupational group.

Public benefit

4.11 The public benefit which flows from regulation is the protection it offers to consumers from harm which may be caused by dealing with unfit members of an occupational group. These can be risks to health, safety and welfare, financial risks, risks of criminal activity and risks arising from a lack of information.¹⁰ There is some doubt about the extent to which consumers of dispute resolution services will face these risks. The last risk has particular relevance to mediators and has been called the asymmetric information argument for occupational regulation.¹¹ It constitutes the most forceful rationale for requiring public recognition of qualifications and standards of practice to ensure some quality control of that practice. The argument rests on the fact that consumers are constrained in the amount of information they have about individuals who practise mediation which makes it difficult to assess the likely competence and quality of service. The high costs of obtaining this information in order to differentiate among practitioners justifies the government intervening to encourage or require practitioners to meet specified qualifications and the public disclosure of information about those qualifications. A consumer can use the publicly available information in selecting a service provider. Other specific benefits may accompany the government recognition of standards attained, for example, legal protections. This form of regulation can also be a mechanism for accountability of practitioners, either indirectly by setting standards of practice against which performance can be measured, or directly where the system involves supervisory and disciplinary elements.

Private benefits

4.12 There is some concern that regulation confers benefits on members of an occupation when they themselves request it. There is concern that in the process of setting standards of practice and ethical codes which have State sanction, rules to eliminate unqualified and unscrupulous practitioners, to protect clients and to emphasise the service ideal, will be accompanied by rules to reduce competition and artificially enhance the status of practitioners to the detriment of the public.¹² Clearly, the individual practitioners recognised by the State will be advantaged. They are more likely to be employed, have enhanced professional reputations and potentially higher incomes because the pool of competitors is limited. The occupational group will most probably enjoy communal benefits with enhanced reputation or credibility by curbing those whose performance lowers the reputation of the practice as a whole.

4.13 Calls for regulation of mediation are made both in the name of consumer protection and in defence of the reputation of mediation. In submissions, consumer protection was the dominant rationale.¹³ Some alluded to the potential for monopolisa-tion inherent in professional control of government regulation¹⁴ but generally the benefits which regulation would bring were viewed positively. One view expressed was that regulation would protect the practice by demonstrating what qualifications are necessary to the well-intentioned and self confident mediators with limited training who are willing to assume a greater responsibility for practice than is warranted by their training.¹⁵ Given the rapid proliferation of people who claim to practise mediation, this view has some merit.

4.14 The Commission accepts that while the calls for regulation are not primarily directed at securing the private benefits which in theory may be conferred on individual practitioners, there is no reason why regulation should not be capable of simultaneously serving private interests of practitioners. However, the primary benefit must be public in nature and the regulation should not result in control or domination by practitioners themselves.

NEED TO REGULATE MEDIATORS

4.15 TheCommissionhasidentifiedtwoaspectsoftheneedtoregulatemediators.The first relates to protecting interests of individual clients of mediators. The second is the broader public interest in the quality of non-judicial dispute resolution processes, particularly where mediation is an adjunct to or recommended as an alternative to the court system.

Consumer protection

4.16 Regarding the private interests, it is difficult for the Commission to ascertain whether the welfare of clients is actually at risk, and if so, the nature and severity of the likely harm. The practice is in its infancy and there is little evidence to suggest that the danger or harm to consumers is actual rather than potential. Consumer complaint or dissatisfaction has not gone beyond the level of anecdote: indeed formal evaluation report high user satisfaction levels for ADR procedures.¹⁶ Complaints dealt with through internal quality control and the disciplinary procedures of particular agencies or programs are not a matter of public record. Except for solicitors who mediate,¹⁷ there do not appear to be any formal mechanisms for dealing with or reporting on complaints against members of professional associations. The Commission is unaware of any claim in an Australian court by a client taken against a mediator arising out of a mediation.¹⁸ We recognise that this form of redress would be unlikely for various reasons, including the difficulty of establishing liability and the fact that clients have chosen consensual processes in preference to adversarial in the first place.¹⁹

4.17 The fact that there is little evidence of complaint does not mean that actionable causes never arise. Nor does it mean that harm does not occur which is not recognised at law nor quantifiable. Clients are potentially at risk from a mediator’s incompetence or unethical behaviour, or from conduct outside the mediator’s contractual or professional role. One submission claimed that a mediator following the normally accepted model should not fear being sued by clients.²⁰ However it would be unusual if mediation were able to eradicate incompetent and unethical practice, even though the greatest danger is from unscrupulous fringe operators, and naive, unskilled novices.²¹

4.18 It is difficult to specify with certainty the nature of the risk to clients. An indication can be found in the legal liabilities which may attach to mediators.²² Principal among these is damage caused by a breach of contractual obligation, for example confidentiality, and by reliance on a mediator’s wilful or negligent misstatement. The most likely damage is economic loss, although loss of legal entitlements could also occur.²³ In the United States the question of a mediator’s duty to warn a person of danger has been considered.²⁴

4.19 In some submissions it was argued that not only has the need for regulation yet to be demonstrated by user dissatisfaction, but that the voluntary and consensual nature of mediation inherently gives parties the means to protect themselves and thus removes any need for government regulations.²⁵ The parties must consent to the mediator’s participation, and the outcome. They may withdraw from mediation at any time. This is the conventional response to calls for controls on mediators.²⁶ This approach is, however, of limited application across the range of circumstances in which mediation occurs. The claim is relevant when the parties freely and in full knowledge choose mediation and the mediator, and when they may freely choose, without penalty, to discontinue mediation if dissatisfied. It is less applicable to circumstances in which participation is mandatory or less than completely voluntary, to naive parties or to those who have limited access to information and advice. This view relies on assumptions that the parties’ levels of sophistication are comparable, and sufficient to recognise the incompetent and corrupt, that they have an appropriate level of professional advice, including legal, and a familiarity with mediation acquired most readily by its frequent use or by appropriate education. The assumptions may be correct for many consumers. However, the contention ought to be regarded with caution given that empirical studies of informal dispute resolution have found that the rhetoric of self-determination and voluntary participation is matched with the realities of capitulation and coercion.²⁷

4.20 The potential for clients to be harmed is exacerbated by the nature of the process which is inherently imprecise and manipulable.²⁸ The greatest danger is from abuse by inept, overbearing or unscrupulous mediators. The qualities which can make mediation attractive are precisely those which give rise to concern about the behaviour of mediators and the protection of clients.²⁹ Privacy and confidentiality of proceedings make it likely that evidence of abuse of process may be suppressed. The procedural safeguards and application of substantive law in the formal judicial system are discarded for informal mechanisms which are almost entirely procedural concepts, but in which the procedures themselves can be minimal or flexible. Moreover, the need for disputants to rely on the exercise of due care and skill by the third party occurs in circumstances where there is an element of uncertainty as to guiding principles and the roles of all parties to the process. Standards of conduct, including ethical conduct, are as yet imprecisely defined.³⁰ There is emphasis on compromise and the parties establishing the relevant norms to produce a resolution in circumstances where traditional norms and protections of substantive law do not necessarily operate. These concerns will be more pressing if the immunity which already exists for some practitioners is extended to others without corresponding mechanisms for protecting the interests of clients denied legal redress.

The Commission’s conclusion

4.21 The Commission accepts that at this time the known risks to clients are not sufficient to warrant government intervention. The danger appears to be potential rather thanactual,andtheexistingmeansofprotectingconsumersappeartobesufficient. Most clients retain a large measure of power to protect themselves because of the voluntary and consensual nature of the process. Protection is offered by various mechanisms of government regulation and self-regulation which are designed to control the compe-tence of practitioners and the quality of service.³¹ Where a practitioner’s misconduct or incompetence endangers a client, resort may be had to the particular agency or program, perhaps to a professional association, or ultimately to the enforcement of legal entitlements.

4.22 It is also premature to attempt to implement government regulation when the practice is not sufficiently understood and there is not yet a clear consensus about the matters on which that regulation would be based, such as training and qualifications, standards of practice, codes of ethics, and appropriate disciplinary measures.

Need for information

4.23 One of the risks identified in the guidelines for occupational regulation referred to above arises from a lack of information. Potential clients of mediators are on record with questions about qualifications and quality, and how they may select a mediator or service with confidence.³² Lawyers who may advise clients to use consensual dispute resolution processes have been found to have similar concerns about the education and training of those who provide such services.³³ These concerns are to be expected. They arise not from direct evidence of incompetence but from an apprehension about the unfamiliar. Lawyers are reluctant to entrust the resolution of disputes on matters of importance to such a procedure. People seeking to enforce or defend their legal rights within the traditional dispute resolution system have the right to expect that in any alternative to which they are referred or encouraged to use, practitioners will be skilled and procedures fair.³⁴ At present, potential clients must assess the relative quality and suitability of a mediator, program or agency without reference to recognised or formal qualifications. They may use endorsements from subjective expressions of participant satisfaction, and peer recommendation. Objective measures may be available for an agency or program, but this is not yet practical for individual practitioners.

4.24 There is a need for information about the qualifications of mediators to be made public for purposes other than self-promotion. This is a valid function for government.

The State’s responsibility

4.25 The second arm of the public interest relates to the State’s general responsibility for the administration of justice. This includes the conventional judicial systems, other methods of dispute resolution, and the principle of public policy that private ordering is to be encouraged.³⁵ In New South Wales an objective of the Attorney General’s Department is:

through the effective promotion and provision of alternatives to traditional dispute resolution, and through the provision of information, encourage and enable all members of the community to become informed about their legal rights and responsibilities so that they are encouraged to settle disputes with a minimum of cost and formality, and as quickly as possible, but consistent with principles of justice.³⁶

In both the court system and recently in extra-curial forms of dispute resolution, the State has accepted responsibility for various ADR processes, particularly mediation, “appropriate to resolve virtually any kind of dispute.”³⁷ Government policy in State and Federal jurisdictions has embraced the new processes.³⁸ The extent to which these have been adopted in courts, tribunals and administrative agencies is notable.

4.26 The quality and accountability of those services in which the State has an interest falls within the State’s responsibility. This responsibility extends to promoting standards of design and operation for programs which are publicly funded or provided. This includes court and tribunal connected ADR programs, dispute resolution mechanisms within the administration, and any other publicly funded service. There is a need to ensure that such services are established according to clearly articulated principles, which provide control over the quality of service and accountability for the way in which they operate. The Commission addresses these issues in Chapter 6.

4.27 In the course of this reference the Commission encountered the major problem of finding out exactly what is occurring in dispute resolution. It is an innovative and rapidly expanding area of practice, and information is not easily obtained. This situation provides, in the Commission’s view, sufficient reason for the State to perform a role in recording and monitoring the activities of dispute resolution so that there will be publicly available information about their nature and quality. The advice should be available to Parliament, the relevant minister, and the judiciary so that the Government’s responsibility for the administration of justice may be better exercised. This purpose will be served by the Commission’s recommendation for an Advisory Council and that for the creation of a Database which are presented in Chapter 7.

CONCLUSION

4.28 The Commission considers that while the principles of occupational regulation may be applied to mediation there is no demonstrated need to regulate mediators by accreditation. This recognises that the experimentation and developments in dispute resolution now occurring are desirable, and the Commission has no wish to inhibit the flexibility necessary for this to continue. The rapidly evolving nature of dispute resolution practice and the need for regulation identified by the Commission, have resulted in the recommendations for a Database and an Advisory Council. These are considered in Chapter 7.

RECOMMENDATION

The Commission recommends that no government regulation for the accreditation of mediators is currently required.

1. See DP 21 paras 4.6-4.7.

2. Trade Practices Commission Self-regulation in Australian Industry and the Professions -Report by the Trade Practices Commission (AGPS, Canberra, 1988).

3. Victoria Regulation Review Unit Principles for Occupational Regulation,: Victorian Government Policy on Occupational Regulation 2nd ed (Regulation Review Unit, Melbourne, 1990); Victorian LRC Principles for Occupational Regulation Report No 2 (VLRC, Regulation Review Unit, Melbourne, 1988).

4. Ibid 15.

5. The Commission acknowledges the continuing debate on the level and cost of government regulation, and the climate favouring deregulation and privatisation.

6. Principles for Occupational Regulation note 3 at 16.

7. lbid 17-20.

8. Victoria Neighbourhood Mediation Centres Evaluation Final Report (Attorney-General’s Department, Melbourne, 1989) at 26.

9. See remarks on the push for licensing in the United States by Linda Singer at Trans-Atlantic Divorce Mediation Conference reported in Vermont Law School Dispute Resolution Project The Role of Mediation in Divorce Proceedings: A Comparative Perspective (United States, Canada and Great Britain)(Vermont Law School, Vermont, 1987) at 207.

10. Principles for Occupational Regulation note 3 at 8-9.

11. Robert Albon and Greg Lindsay (eds) Occupational Regulation and the Public Interest. Competition or Monopoly? (Centre for Independent Studies, Sydney, 1984) at 5.

12. See Maley’s content analysis of ethical codes of Australian professionals, which found that intra-professional “ethical” concerns predominate over client/consumer concerns: Barry Maley “Professionalism and Professional Ethics” in Don Edgar (ed) Social Change in Australia: Readings in Sociology (Cheshire, Melbourne, 1974) at 397.

13. FMC, LEADR, LIV, ADRA, CJC, Tillett, Renouf, Ingleby, Foffest, SCMS, FLSLCA, MGCSA.

14. Monk, Ingleby, Davenport.

15. Tillett, Forrest; See also Susan Zaidel “Identity Measures for Mediators” (1988) 19 Mediation Quarterly 27.

16. Neighbourhood Mediation Centres Evaluation note 8; CJC User Survey in John Schwartzkoff and Jenny Morgan Community Justice Centres: A Report on the New South Wales Pilot Project, 1979-81 (Law Foundation of New South Wales, Sydney, 1982) at 111. As to the validity of user satisfaction as a standard of evaluation see Richard Ingleby “Why Not Toss a Coin? Issues of Quality and Efficiency in Alternative Dispute Resolution” Paper presented at the AIJA Conference, Melbourne 18 August, 1990.

17. See NSW Law Society “Guidelines for Solicitors who Act as Mediators”(1988) 26 Law Society Journal (6) 29.

18. But see Howard v Drapkin (2d July 31,1990) 222 Cal Appeals 3d 843 in which a mediator in a custody dispute was found to be protected by an absolute quasi-judicial immunity.

19. See DP 21 Chapter 5.

20. FMC.

21. The position adopted by some enthusiasts that something so good could not possibly be unethical is rejected, see Richard Crouch “Mediation and Divorce: the Dark Side is Still Unexplored” (1982) 4 Family Advocate (3) 27. The proposition referred to in one submission that ethical conduct is unfailingly competent is also not justified (Tillett).

22. DP 21 Chapter 5 and the references it contains. See also Jay Folberg “Liability of Divorce Mediators” in Jay Folberg and Ann Milne (eds) Divorce Mediation: Theory and Practice (Guilford Press, New York, 1988).

23. Similar to those from the activities of social workers, Stephanie Charlesworth, J Neville Turner and Lynne Foreman Lawyers, Social Workers and Families (Federation Press, Sydney, 1990) Chapter 2.

24. Los Angeles Superior Court Local Rule exempts from confidentiality and privilege mediators complying with the requirements of Tarasoff v The Regents of the University of California 17 Cal 3d 425, by informing persons intended as targets of threats about the threats if made in the presence of mediators, see Hugh Mclsaac “Confidentiality: An Exploration of Issues” (1985) 8 Mediation Quarterly 57 at 65.

25. Pengilley.

26. See Folberg note 22 at 342.

27. See Richard Ingleby “Catholics, Communists, Alternative Dispute Resolution and Bob Dylan” (1990) 1 Australian Dispute Resolution Journal 18 at 20; Gwynne Daviss Partisans and Mediators (OUP, Oxford, 1988); Austin Sarat, “Alternatives in Dispute Processing: Litigation in a Small Claims Court” (1976) 10 Law & Society Review 339; Howard S Erlanger, Elizabeth Chambliss, Marygold S Melli “Participation and Flexibility in Informal Processes: Cautions from the Divorce Context’ (1987) 21 Law &Society Review 585.

28. Stephen B Goldberg, Eric D Green and Frank E A Sander “ADR Problems and Prospects: Looking to the Future” (1986) 69 Judicature 291 at 293.

29. Robert A Baruch Bush ‘Efficiency and Protection, or Empowerment and Recognition?: The Mediator’s Role and Ethical Standards in Mediation” (1989) 41 Florida Law Review 253 note 1 at 254.

30. See Chapter 3 para 3.46.

31. See below Chapter 5.

32. The Investigators, ABC TV 16 May 1990 and the Andrew Olle Program, ABC Radio 702BL 15 August 1990 both aired such public concerns in the course of programs referring to mediation. LEADR frequently receives requests for advice about the qualifications and accreditation of mediators from potential clients.

33. See Legal Aid Policy, Law Council of Australia Submission on National Legal Aid Advisory Committee Discussion Papers, Funding Providing and Supplying Legal Aid Services (Canberra, July 1989) 89; The University of Newcastle Upon Tyne, Conciliation Project Unit, Report to the Lord Chancellor on the Costs and effectiveness of conciliation in England and Wales (March 1989) at 127; Canada, Department of Justice, Court Based Mediation in Four Canadian Cities: An Overview of Research Results (Ottawa, 1988) at 18; Linda Neilson “Solicitors Contemplate Mediation - Lawyers Perceptions of the Role and Education of Mediators” (1990) 4 International Journal of Law and the Family 235.

34. Law Council Submission on the use of ADR as Legal Aid policy note 33 at 86.

35. See Rush & Tompkins Ltd v GLC (1988) 3 All ER 737, Cutts v Head [1984] 1 Ch 290 at 306.

36. NSW Attorney General’s Department Annual Report 1990 at 12.

37. ibid at 20; see also Premier’s direction to NSW Ministers to use ACDC and funding for ACDC and the CJC.

38. Prime Minister’s Press Release, Fourth Term Initiative March 20, 1990 and its implementation by the Courts (Mediation and Arbitration) Act 1991(Cth); Attorney-General for South Australia Green Paper Alternative Dispute Resolution, (Adelaide, 1990).