Mediation is the cornerstone of ADR. It is a true alternative to litigation as it is not adversarial in nature. In mediation, a neutral third-party with no stake in the matter at hand – the mediator – assists parties to negotiate their own settlement agreement.
A skilled mediator helps parties to resolve their disputes in a more expedient, sensible and cost-effective manner and often with a better end result than with a litigious process or even settlement negotiations.
Due to its high success rate, mediation has become increasingly popular. In fact, the vast majority of cases settle before trial and in many courts pre-trial mediation is now mandatory. It is also the choice mode of dispute resolution for parties who have an ongoing relationship to preserve.
One could say that the ‘C-Suite’ of mediation is Cost, Control, Customization, Creativity and Confidentiality, with the mediator acting as the Conductor of the process.
In most cases, mediation is Cost-effective because it is less expensive than litigation, even if litigation is already underway. It affords parties greater Control over the process as well as the outcome: they, along with their counsel decide on the terms and draft the mediated settlement agreement. With the help of the mediator, parties can also customize the process. They can choose to mediate discrete questions or issues, or organize sessions at their convenience. Customization allows for Creativity: thinking outside the box can bring to light mutually beneficial solutions not available in an adversarial process where you have a winner and a loser.
Confidentiality is another key advantage of mediation for parties who prefer not to have their disputes made public, to set precedents in settlement amounts or to preserve business relationships. Laws and regulations that govern confidentiality (although they may differ from one jurisdiction to another), prevent parties from using information gleaned in a mediation in a subsequent litigation or the mediator from testifying. Properly drafted mediator agreements and mediated settlement agreements can reinforce such confidentiality obligations.
Like a Conductor, a good mediator is a facilitator, who brings together and engages the parties and their counsel and any other participants, who may have different backgrounds, dissonant views, diverging goals and in international mediation different cultures and successfully guides them towards a harmonious resolution in which they all participate.
This can only be achieved by gaining and maintaining the trust of the parties and through perseverance. If a matter doesn’t settle at the mediation session, as can be the case, remaining in contact with the parties after to assist them in continuing dialogue and moving toward an agreement is necessary. And while much depends on the mediator’s individual personality and competence, solid training and knowledge of mediation theory are essential. A background in law as well as an understanding of business is not only useful, but necessary to correctly conduct reality testing when the disputes involve legal issues or the parties are already in litigation.
When to mediate is a question often asked. Mediation is sometimes most efficient before a dispute even arises, as a preventive measure at the contract stage. This is called Deal Mediation.
Mediation can be most cost-effective before commencing litigation or arbitration and incurring additional costs. If the contract contains a step clause requiring mediation, there could be consequences to not complying with the contractual obligations. However, for some disputes, a better understanding of the legal, financial or technical issues an may be required as well as some discovery before the parties can adequately assess their alternatives to settlement or their BATNAs (Best Alternative to a Negotiated Agreement).
Mediation is virtually always a valuable process. It permits parties to clarify their positions, resolve or abandon certain discrete claims and have a better sense of their chance of success or failure in the event no settlement is reached.
Donna Ross is a seasoned mediator, with significant mediation and legal training and expertise, who consistently strives to find creative ways of resolving business conflicts and avoid litigation. Through Donna Ross Dispute Resolution she accepts appointments as mediator or party representative in mediations.