Can Mediation Resolve Your Company’s Dispute?
By Will Elton, Last updated: 2021-05-28 (originally published on 2019-08-29)
Nobody wants discourse (well, nobody smart anyway) but some differences of opinion are inevitable. Luckily, the legal field keeps inventing new and effective ways to resolve legal and commercial disputes. You may have heard of ‘ADR’, which stands for alternative dispute resolution.This is a system whereby disagreeing parties can come to an agreement short of going to court. Under the umbrella of ADR, mediation and arbitration are the two most common processes sought by parties. Let’s take a look at how mediation may be a suitable remedy for your business.
How Does It Work?
Mediation is a process where conflicting parties aim to reach a compromise. Unlike pure negotiations, where parties simply discuss and settle the dispute on their own, mediation involves the help of a third party who doesn’t have a dog in the fight. The participation of the mediator reduces emotions, increases rationality and steers the parties towards a tailor-made decision that maximises the benefits for both.
These are some of the perks of mediation:
It’s no secret, lawsuits move at a plodding pace. While cynics accuse lawyers of stalling, the truth is procedural rules govern the process of a case. The length of litigation is multiplied when problems concerning witnesses and evidence arise. Although courts in many jurisdictions have made attempts to streamline the process of civil litigation, it still takes a relatively long time. If you are looking for an immediate solution, litigation is not for you.
Compared with going through numerous court trials, mediation is a faster alternative. It is usually easy to schedule a mediated settlement conference and the preparation of paperwork is less strenuous.
Without having to observe onerous procedural rules, it is possible for parties to come up with mutually agreeable solutions in just a matter of days.
If you are looking for an efficient, speedy way out of your business disputes, mediation is your friend.
It is again, common knowledge that litigation can also be very expensive. The time-consuming and labour-intensive nature is built right into why prestigious law firms charge exorbitant fees. If your case has little merit, splurging on attorney fees is probably unwise. Even if you win, the rewards you gain from litigation may be disproportionate to the amount of legal fees incurred. The smaller your business, the harder it is to spread out the legal costs.
If your company’s lawsuit drags on for months or even years, your financials can fall into deep water sooner than you’d imagine. Mediation, on the other hand, is much more affordable. It’s generally cheaper to hire a mediator than a team of lawyers.
Moreover, you will be sharing the cost of the mediator with the other party instead of bearing your own, or even your opponent’s, litigation costs if you lose in court.
Mediation is certainly a more cost-effective method than the traditional judicial process.
A dispute resolution lawyer may gladly go forward with the idea of litigation while a commercial lawyer will often give the opposite advice. Although suing the counter-party may get you the damages you seek, the confrontational nature of litigation will eliminate the chance of parties working together in the future. Whether it’s a dispute with an employee, a supplier, a contractor or a client, every business relationship is a long-term asset for the company.
Once the case goes to court, there’s no turning back and you can deem the relationship as permanently written off.
Combined with the considerations of time and cost, litigation should be a company’s last resort.
With mediation, the environment is naturally more friendly and less intense. It’s an easier space to feel comfortable and discuss issues. It should be the mutual goal to work out differences and find a win-win solution. A skilled mediator will be able to lessen the tension between the parties and help them overcome deadlock.
Mediation is a private meeting attended by the parties and the mediator. Unlike the court system, where there are court visitors and public records, mediation does not put your company under the public spotlight. The advantage of mediation is that everything you say, and every document you exchange, at the meeting is confidential. The parties are also prohibited from disclosing any content of the mediation if the case goes to court in the future. The general principle of confidentiality is crucial especially when it comes to monetary negotiations.
You don’t want your competitors or future litigants to know how much you are willing to pay to settle the dispute.
Your fate is in your own hands. The mediator’s role is only to facilitate the discussion, the result is not forcefully imposed by a third party judge or arbitrator. The downside of this is that there’s no assured outcome. But it also means that each stakeholder has more control over the result. When the agreement is reached by you and the other party voluntarily, there’s a higher chance the parties will follow through and comply with the terms. If one session is not enough, the parties are free to arrange extra sessions according to their own timeline.
The parties are the ones in full control of the process and results of mediation.
Flexibility in timing
The answer to the question ‘When to mediate?’ is literally ‘Anytime you like’. You can mediate before legal proceedings. Here the session will be an opportunity for you to examine the conflict and decide whether you want to bring the case to trial. If the dispute can be remedied by mediation, you won’t have to take your chances in court.
Mediation can also take place after legal proceedings have been issued and parties wish to meet in private to sort things out. Sometimes the judge will suggest mediation. If that’s the case, it’s best you take a proactive role in mediation. This will show the court you have made endeavours to reconcile.
As a general rule, the earlier a dispute goes to mediation, the more likely it will yield successful outcomes.
This list is by no means exhaustive. There are numerous other factors that put mediation above other dispute resolution options. Mediation is becoming an increasingly popular way for commercial parties to conciliate. Whether mediation is a suitable and practical solution, depends on the nature of your business and the relevant players.
If your case requires a definitive decision by a judge, or you are sure there’s no chance your opponent will back down, you may not want to waste time mediating. In general, it doesn’t hurt to try mediation before heading to court, you might find you don’t need to go after all.