Report on Alternative Dispute Resolution Services in Australia

 

IBISWorld research has just released a report on Alternative Dispute Resolution Services in Australia (IBISWorld Industry Report OD4116, February 2014).

 

The report is introduced with the phrase “Undisputed growth: Demand for industry services as an alternative to litigation increases”.

 

The executive summary of the report explains:

 

The Alternative Dispute Resolution Services industry in Australia provides individuals and corporations avenues to resolve disputes that do not involve litigation. Alternative dispute resolution (ADR), generally consisting of mediation, conciliation and arbitration, has surged in popularity during the past decade, underpinning strong growth in industry revenue and profitability. Industry revenue is expected to grow at an annualised 6.4% over the five years through 2013-14 to be worth $682.9 million, with growth of 6.0% forecast for the current year.

 

Growth has been underpinned by the increasing use of ADR to solve commercial, family and workplace disputes. ADR provides a number of benefits relative to litigation. ADR is generally cheaper, faster, more flexible and confidential, and less adversarial than going to court. Since the mid-1990s, governments have supported the use of ADR by introducing a number of mandatory and optional schemes, particularly in the areas of employment, family and commercial arbitration law. Business has also turned to ADR, as the tight economic climate, rising cost of litigation and threat of reputational damage and class actions led companies to seek an alternative to litigation. Both trends are expected to continue over the next five years.

 

The increased scope of industry activity has encouraged many new players to enter the industry and existing players to expand, while employment has also grown strongly. As the industry becomes more established, this growth in enterprises and establishments is expected to slow. However, employment growth is likely to continue at a similar rate as existing players grow their businesses.

 

The reforms of the past few years have positioned the industry well for growth, with governments and business expected to continue turning to ADR as an alternative to litigation. During the five years through 2018-19, industry revenue is expected to grow at an annualised 4.4% to reach $845.2 million. There is still room for the industry to compete with traditional legal services. The movement into new areas and the expansion of activity as current reforms are adopted will continue to support industry revenue growth.

 

Some of the interesting findings of the report include:

  • There are about 1,456 businesses in the industry in Australia.
  • Market share in the industry is primarily held by big law firms.
  • Key external drivers for the ADR industry in Australia include: Capital expenditure by the private sector, days lost to industrial disputes, the price of legal and accounting fees, and the number of divorces.
  • The ADR industry is in a growth stage of has low barriers to entry, and medium levels of competition.
  • Fees charged by industry participants have risen in line with demand for services, leading to a boost in profitability.
  • Mediation comprises about 38.7% of the market, 36.2% is arbitration, 19.3% conciliation and 5.8% other.

 

For more information visit: www.ibisworld.com.au

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