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How Can Mediation Be Used in Business Disputes?

April 14, 2014

Posted in Business Litigation, Business Start Ups, Corporate Law

photo -mediationThe court system is a way to resolve disputes that parties cannot resolve amongst themselves. It is a very costly system, in financial resources and time and energy not spent running your business. The vast majority of business litigation settles at some point. To reach an agreement, sometimes the parties need the help of a mediator. Mediation is another means of dispute resolution that is normally much less expensive that litigation.

In most circumstances after a client retains my services because of a commercial dispute that may lead to litigation, I investigate the situation, get all the facts I can gather, consult with my client and contact the other side to see if something can be worked out between the parties. If not, legal actions are filed and the case progresses towards a trial. Settlement could happen at any point in the process, including during or even after a trial (to avoid a potential appeal).

If the parties are genuinely interested in reaching a settlement but just can’t get it done on their own, hiring a mediator is an option worth considering. Litigation takes the control of the case’s resolution out of the hands of the parties and gives it to the judge. Mediation eliminates the risk of a potentially unexpected and unwelcome decision by the judge.

How does mediation work?

Mediators can take different approaches. They all try to get a handle on the situation, learn about each party’s motivations, what each party’s goals are and what they’re willing to give and take to reach a resolution.

Both parties may have an opportunity to address each other directly and the results can be mixed. One party may feel aggrieved and feel they need to be heard. This is that opportunity to address the other party and “get things off their chest.” The risk to this is that the other party may feel wrongly accused, insulted and less willing to settle. The parties often go into different rooms and the mediator will play the diplomat, shuttling back and forth between the rooms.

Often it’s a good idea to try to get the parties to agree on more minor issues first, to build up some rapport and understanding among the parties. This also creates some momentum so everyone will feel that if progress is made, they won’t want to throw away what they’ve accomplished by not reaching a complete resolution.

How can a mediator help?

A good mediator is creative. After learning about the goals and needs of both parties, the mediator may be able to come up with a solution that neither party considered.

Sometimes the parties are eager to hear a third party’s opinion and a suggestion for a resolution. Some mediators are reluctant to do that because they may feel it’s up to the parties to decide what’s right, they don’t want to get that involved. If the parties are open to suggestion and the mediator comes up with something sensible, it may be crucial to resolving the matter.

There are risks to litigation. Clients can eliminate those risks through a settlement, which may need the help of a mediator. I have had several clients reach positive outcomes through mediation and depending on the situation, may be something worth serious consideration.

If you have any questions about business litigation, settlements and mediation, contact my office so we can discuss what’s going on and how I can help.