Our firm often represents small businesses, individuals and non-profit organizations where we have to weigh the merits of arbitration, mediation and litigation. (My partner Cecilia Jones, in our firm’s Business Law 101 blog reviews some of the considerations savvy business owners must take into account when pursuing debts.)
We encourage those of our clients who seek our advice when negotiating contracts and leases to include a provision that calls for the mediation of disputes between the parties before they deteriorate to the point where the only recourse is arbitration or litigation. Why? Because, given that both arbitration and litigation can be prohibitively expensive and time-consuming, we believe that mediation is often the best approach.
Mediation is becoming the preferred method for resolving most conflicts because it is cost effective, allows parties to retain control and is uniquely flexible regarding the process, the issues under discussion and the possible results.
One of the reasons mediation is so cost-effective is that litigation generally requires extensive discovery as often does arbitration. Mediation, on the other hand, does not, as the mediator can assist the parties’ exchange of relevant but limited information before the first meeting. These costs savings alone can be quite significant.
Mediation is often viewed as appropriate only for small cases but, on the contrary, it is often most useful and productive in the largest and most complex cases, where discovery can otherwise quickly get out of control -- both cost-wise and time-wise.
Complex case mediation (the type I call “Analytical Mediation” – see our web site) generally begins with facilitated limited discovery, often worked out by telephone before the first meeting. During the initial meeting the mediator assists the parties in weeding out secondary and tangential issues, focuses them on the determinative issues, which has the added benefit of narrowing the scope of the discovery necessary to inform the parties and their counsel and move the case to resolution.
Another benefit of mediation –- be it a small matter or a complex case –- is that clients are directly and intimately involved, which allows them to better understand the facts, the law and the other realities in the case; this, in turn, enables them to better understand their settlement options.
It is important to note that mediated settlements are not restricted to the remedies available to the courts, and parties can –- and frequently do –- develop solutions that are unavailable from a court, including business-sensible solutions. In mediation, opposing parties are actively involved and do not communicate solely through counsel.
Because mediation is voluntary and non-binding unless and until a settlement is achieved, there is no guarantee of a successful resolution. There is, however, a guarantee that the parties and their respective counsel will gain a greater understanding of the issues and legal principles involved and will, perhaps most importantly, have the opportunity to see the dispute from the other sides’ point of view.
Next week, I will discuss the importance of selecting the right mediator and the process for doing so.
Keywords: mediation, mediation process, mediation steps, mediation pros, mediation cons, mediation costs