To Mediate or Not to Mediate, That is the Question

October 7, 2013. What is mediation? It’s a fancy word for a meeting where two or more parties sit down and attempt to resolve a dispute before it proceeds to binding arbitration or trial.

How does mediation typically work? First, the parties select a mediator, usually an experienced attorney or retired judge, who will act as the moderator. He or she will oversee the mediation and try to get the dispute resolved. The mediator will point out the strengths and weaknesses of each party’s case, usually doing so through a series of private meetings with each of the parties. He or she will provide candid opinions regarding liability and damages issues, and will discuss the risks and costs associated with a prolonged dispute. Along the way, the mediator will serve as the messenger of settlement offers and demands. If the parties reach an agreement, they will execute a written settlement agreement. If they do not reach an agreement, they go home.

What are the primary benefits of mediation?

• Formal dispute resolution, whether arbitration or litigation, is expensive and time-consuming; mediation is not overly expensive, can typically be scheduled to take place within 2-4 weeks, and can last one day or less.
• Mediation allows the parties to learn more about their opponent’s claims or defenses.
• Sometimes, a party needs to “hear it” from a neutral mediator.
• The parties can choose to educate their opponent (but information shared with the mediator is kept confidential unless the party disclosing the information wants the information to be shared).
• Even if the dispute is not resolved at the mediation, a party frequently leaves the mediation with a better understanding of its opponent’s claims or defenses, and the parties usually reduce the gap between their respective settlement positions.

When should you avoid mediation? While there are many benefits to mediation, there are nonetheless some disputes for which mediation is probably not going to be a good use of time and money. For example, if you have a significant risk of liability and are being sued for tens of millions of dollars but do not have insurance and lack the resources to make a meaningful settlement offer, you might be better off skipping mediation and taking your chances at trial. In addition, if your opponent has already given you a very clear indication of what they might be willing to do to resolve the dispute, and the parties are undoubtedly “miles apart,” mediation is less likely to succeed.

What’s my point? If you find yourself in a business dispute, you should evaluate whether the parties should attend mediation; depending on the nature of the dispute, there will be times when the evaluation should take place as soon as the dispute arises; however, there are also disputes which first require some investigation and fact-gathering. Either way, the benefits of mediation are usually too numerous to avoid serious consideration, especially when the stakes are high. For more information, contact the Goosmann Law Firm at info@goosmannlaw.com or call 712.226.4000.