High fees for adjudication are threatening to undermine the most popular form of dispute resolution, according to the results of a survey in Building this week.
The survey, conducted by law firm Hammonds, concludes that charges have risen so much that the process no longer offers value for money when compared with the amount in dispute.
In particular the results show that adjudication fees have increased disproportionately for low-value disputes. Adjudication, which was introduced in 1998, was aimed at resolving small claims more cheaply and effectively than the courts.
According to the findings, based on information from readers of Building, the mean average fee has increased 10% to £3725 since 2000. Although this seems a modest rise, the data shows that fees represent 5% of the sum in dispute, a 50% increase compared with five years ago. The explanation for this sharp increase is that the amounts in adjudication are relatively small: 14% involve sums of less than £10,000 and 34% between £10,000 and £50,000.
Tracey Wood, a solicitor at Hammonds, which jointly compiled the survey, said one reason for the higher fees could be that adjudication was becoming more legalistic. She said: “Parties now ask adjudicators to write up their decisions in case they have to enforce the decision in court. So adjudicators are spending more time on each dispute.”