What Can Make Mediation a Better Option Than Litigation?

For Many Dispute Situations, Including Troubled Business Relations, Mediation Offers the Parties In Dispute An Opportunity to Resolve Issues Without the Publicly Visible, High Cost, and Lengthy, Litigation Route. Additionally, Mediation Helps to Avoid Contentious Litigation That Destroys Business Relations.

Obtaining Mediation Services May Avoid the Contentiousness of Litigation and Help to Maintain a Positive Business Relationship

People coming to a mediated agreement The mediation process involves a professionally trained neutral mediator who is highly skilled in helping to keep the contentiousness of disputes to a minimum, helping the parties to a dispute view the issues objectively, and helping the parties to find a win-win resolution that, in many situations, also helps the parties to continue what was otherwise a troubled relationship.

What Is the Role of a Mediator?

The role of a mediator is to assist parties involved in a dispute to engage in a constructive dialogue with the intent that a resolution to the dispute may result.  Unlike an adjudicator within a court setting or other form of litigative process, a mediator encourages problem-solving and exploratory brainstorming within a process that aims to avoid the contentiousness and adversarial nature of the litigative process.  Parties are encouraged to discuss ideas that enable a satisfactory resolution to the dispute rather than engaging in the litigative process that requires the effort of proving the other guy did something wrong - which may lead to an adjudicated solution to the dispute; but, also likely leads to the dissolving of the relationship.

In What Business Dispute Situations Is Mediation Helpful?

The mediation process is available and may be beneficial in almost any circumstances where a dispute, conflict, or even awkward tensions, exist.  In business disputes, the mediation process is especially helpful where the parties in dispute prefer to maintain a positive business relationship.  Examples of common concerns that may be mediated include, among other issues:

  • The disagreement regarding contract interpretations;
  • The failure of payment and negotiation of a payment arrangement;
  • The failure to meet deadlines or other performance expectations;
  • The differences in opinion on quality of goods or quality of services rendered;
  • The partnership and management disputes involving business direction decisions; and
  • The conflicts alleging oppression of directors, shareholders, or other stakeholders.

As mentioned above, mediation may be especially helpful for situations where the dispute involves parties needing to maintain a positive relationship such as when a dispute arises between business partners, between a business and a key supplier or other important party where further or future reliance is required by the business.  Essentially, mediation helps the relationship rather than hurts the relationship.

Although mediation process is a collaborative effort, the parties to the dispute may, and often should, retain independent legal counsel to attend, and to participate within, the mediation process by helping each party to articulate and elaborate upon the concerns and position of each party as well as to help ensure that applicable legal rights and entitlements are protected.  Furthermore, whereas any agreement achieved within the mediation process must be reviewed by the respective legal representatives prior to any agreement being executed by the parties.

Offering Mediation As a Dispute Resolution Process

For an effective mediation process to take place, participation is best kept voluntary; however, business contracts do sometimes state that prior to commencing litigation, a disputant must first avail to the mediation process.  For the best likelihood of a mediated settlement, and without aggravating a relationship that is strained, initiation of the mediation process is best done early before disputes fester.  When offering to use the mediation process, a party to the business dispute should advise that, among other things:

  • The mediation process is a voluntary option and remains voluntary whereas participants may choose to withdraw from mediation at any time;
  • The mediation process is confidential and the information discussed during the mediation will be kept private and remain confidential;
  • The mediation process purpose is to encourage constructive communication for the benefit of resolving conflict with the ultimate goal of helping to maintain a healthy business relationship;
  • The mediation process is independent of any litigation process and may help to avoid litigation or settle any already commenced litigation; and
  • The mediator may be available for an independent advance discussion for the purpose of explaining how the process works so to help reduce any reluctance or hestitation and to enable parties the opportunity to make a better informed decision on whether to mediate.
What Are the Roles of the Parties During the Mediation?

The parties in dispute are the primary participants within the mediation process.  Unlike the litigation process where the parties, as disputants, are often limited to appearing only as witnesses that testify to facts that are thereafter included within legal arguments made by the legal representatives and decided upon by a judge or an adjudicator, the discussions and the decisions are that of the disputants.

Just the same as the litigative process, parties in dispute mediate by sharing a respective version of the story about what happened and what the conflict is about while also remaining openmindedly ready to listen and hear out the viewpoints and concerns of the other party.  In this way, both parties - or all parties in a multiple party mediation - receive an inviting forum within which to air concerns and then to explore ideas for solving the conflict in hope of achieving a negotiated agreement that is satisfactory to all parties.

The role of the mediator is to listen to the parties while acting as a guide for the clarification of the issues and as a guide for the exploration of ideas that may help solve the conflict.  The mediator also assists in the formation of a dispute resolving settlement agreement.

How Long Does the Mediation Last?

The mediation process is scheduled for a minimum of three hours and additional time may be scheduled as necessary.  Generally, the three-hour mediation session provides the disputing parties with enough time to express respective views and concerns regarding the issues and conflicting positions as well as to explore the potential solutions that may resolve the conflict.  The three-hour session is also scheduled with an expectation that breaks will be necessary.

Confidentiality Requirements

The mediation process is conducted with the understanding that the process is strictly confidential and the information discussed during the mediation process shall stay confidential with only few exceptions such as where a child is at risk of harm, where a person is in imminent danger, or where a judge orders disclosure of information.

Prior to a mediation session being commenced, all parties to the mediation, including the mediator, are required to agree to the strict confidentiality requirement and to appreciate that doing so enables the candid discussions necessary for a constructive mediation process.  The mediation process requires a candid discussion about the disputes issues, the sharing of settlement positions, the understanding of relevant law, if applicable, among other concerns.

All parties and attendees such as the legal representatives for the parties, must respect the confidentiality of the mediation process and must agree to refrain from the disclosure of any information arising out of the mediation process discussions; and accordingly, all parties and attendees must commit to the terms of confidentiality by signing a confidentiality agreement prior to the start of a mediation session.

Independent Discussions

During the mediation process, it is common that a party will want to discuss concerns independently with the mediator.  An independent discussion where a party meets one-on-one with the mediator is known as a caucus.

The mediator is required to keep details shared within a caucus confidential without disclosing details of the caucus discussion to the other party; and accordingly, the mediator will refrain from doing so unless express permission from the party to whom the duty of confidentiality is owed is received by the mediator.

What Happens When the Parties Find a Solution?

When the mediation process successfully results in a solution to the dispute, the mediator will assist the parties with the drafting of a settlement agreement.  The settlement agreement will formulate a binding contract that is legally enforceable; and accordingly, before the parties finalize the settlement agreement with signatures, the parties are required to ensure that the agreement is fully satisfactory.  Generally, prior to obtaining signatures, the mediator will require the parties to obtain independent legal advice from a lawyer or a paralegal prior to signing the settlement agreement.  The settlement agreement will usually also include a term stating that the parties did, or were provided with the opportunity to, receive independent legal advice.

Do Settlement Terms Need to Comply With Legal Requirements?

Business disputes often relate to legal issues and may be governed by legislated statute law or common law  jurisprudence from the past precedent decisions of judges.  In some circumstances, the terms of a mediated settlement agreement must comply with the relevant law; and accordingly, the mediator will, as stated above, require the parties to obtain legal advice before executing a settlement agreement.  For information about the law applicable to issues often arising in business disputes, see the various page links provided below.

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