When two companies get into a dispute, they often struggle to resolve it amicably amongst themselves. This leads to costly court battles and broken business relationships. While a lawsuit may get your company the resolution it wants, no court case is resolved without a high cost. Mediation allows both parties to come together and agree on a fair outcome with the help of an experienced legal professional.
A mutually amicable solution to a dispute is preferable for any company. It tends to be cheaper, faster, and easier on the reputation of all parties involved. Mediation can be an effective way of accomplishing this kind of solution.
What Is Mediation?
Mediation is a form of legal alternative dispute resolution that allows each party to present its side of an argument, find common ground, and come to a resolution that everyone finds acceptable. Only the direct parties involved speak during the mediation, not lawyers. During the mediation process, the mediator works to help foster communication while remaining neutral. The entire mediation process is confidential, which means that revelations won’t become public, and non-binding, which means that parties can leave at any time to bring a lawsuit or formal arbitration if they feel that the mediation isn’t making progress.
When Is It Used?
Mediation can be used in any kind of commercial disagreement. Everything from class action lawsuits, to contractual disputes to employee dismissal cases can be resolved in mediation. So long as both parties voluntarily agree to the process and actively participate, mediation can be an effective form of dispute resolution.
Stages of Mediation
The mediation process is generally fairly informal, but there are six standard stages of a legal mediation.
Mediator's Opening Statement. During this statement, the mediator opens the process, establishes the rules, and sets goals for the mediation.
Disputants' Opening Statements. Each side gets to state their side of the case without interruptions, as well as propose possible solutions.
Joint Discussion. The mediator will use what was said during opening statements to foster discussion between the parties. In addition, the mediator can ask for more detail, ask questions, and look for evidence.
Private Caucuses. The mediator will talk to each party privately and separately to discuss the strengths and weaknesses of their positions and to find common ground and resolutions.
Joint Negotiation. The caucuses can be used as a stepping stone for further discussion as a group and more serious negotiation towards an agreement.
Closing. When the parties have agreed to a settlement, the mediator will close the process and write up a summary of what was proposed. Lawyers may get involved at this stage to put the proposal into a legally binding contract. If the mediation was not successful, the mediator will review the progress made and advise each party on their options, such as meeting again later, beginning a formal arbitration, or going to court.
Advantages of Mediation
Generally, companies view mediation as an advantageous way to solve a conflict in almost any business scenario. Even though not all mediations are successful, the advantages that mediation can provide make it an appealing alternative for many companies. The following are the biggest advantages of mediation:
Less hostility. Mediation is ideal for disputes involving parties that need to work together after the dispute is resolved, because parties work together to find common ground. The mediator works to bring parties together with less hostility than may be found in litigation.
Lower costs. Mediation costs a fraction of what a full lawsuit would cost. Even when bringing in a professional mediator, the lowered legal fees and court costs save significant money, especially since the cases resolve more quickly.
Faster resolution. Many mediations can be solved in days or even hours, while court cases take months or even years to resolve.
Fairer outcomes. Since mediations involve both parties in developing the resolution, people tend to feel that mediations lead to a fairer outcome for everyone involved.
Higher levels of compliance with solution. Because everyone must agree to a mediation resolution, compliance rates with ascribed solutions are higher. Litigation, on the other hand, often leads to violations of the spirit, if not the letter, of the resolution.
Mediation vs. Arbitration
Often people assume that mediation is simply part of the arbitration process or another type of arbitration, but that isn’t necessarily accurate. While mediation can be included as a part of the arbitration process, arbitration works more like an informal court than mediation. While mediation requires active negotiation between the parties with the mediator serving more as a facilitator than anything else, arbitration requires each party to present their case much like they would in court. The arbitrar acts as a sort of judge who issues a binding ruling.
Mediation always aims to end with a win-win situation that everyone agrees upon. Arbitration does not always have the same kind of result. Arbitration rulings tend to be in the favor of the “winning” party and can be as hotly contested as the ruling handed down in litigation. Both mediation and arbitration seek to resolve the conflict more quickly and privately, but the procedures and the outcomes can feel vastly opposite.
Can what I discussed in mediation be used against me in court?
Formally, no. Everything discussed in a mediation is strictly confidential. That said, if you reveal something to the other party during mediation, you cannot un-reveal that information, which means that it may be introduced during the court case in another way. Still, nothing said to the mediator can be brought up, and the mediator cannot be called to testify.
Is a mediation agreement binding?
It depends on how a mediation is closed. If you sign a valid contract with your agreed terms to resolve the disagreement, you generally will be held to those terms. If you do not formally come to an agreement, however, you will not be held to any solutions discussed or suggested in mediation.