Mediation
Mediation is perhaps the most common means of attempting to resolve disputes as an alternative to litigation. Because it allows the parties to decide and control their own fates, it provides a relatively painless introduction to ADR. Further, if Mediation does not resolve a dispute entirely, it can reduce the number of disputed issues to be address in litigation (and thereby reduce its duration and cost).
Mediation is a process in which a neutral person or persons facilitate communications between the disputants to assist them in reaching a mutually acceptable agreement. Because a mediator has no decision-making authority, he or she cannot render a binding decision on the parties. A mediator does not hear testimony or evidence, and has no authority to impose a decision on the parties. Nonetheless, even when mediation does not result in a complete settlement, it may enable the parties to narrow the scope of their dispute or decide upon expedited procedures for resolving remaining areas of conflict.
Like other forms of ADR, a hallmark of mediation is confidentiality. Statements made during mediation are not typically admissible in litigation, and the parties (and mediator) can further assure confidentiality by agreement. Because a skilled mediator can filter confidential information and frame the parties discussion in ways that enhance the likelihood of success, mediation can enable parties to reach mutually beneficial agreement in circumstances in which direct negotiations would fail.
In most cases, the benefits of mediation far outweigh its risks. The principal risks related to failed mediation are (i) its comparatively modest cost and time commitment; and (ii) its potential for educating an opponent about a parties’ strengths, weaknesses, and strategies. In most litigation, the cost of mediation would be immaterial to cost of the overall dispute. The risk of disclosure can be addressed by clearly instructing the mediator as to information that can, and cannot, be shared with the opposing party.
The benefits of mediation are, by contrast, potentially substantial. It is well known that 90 to 95 percent of litigated cases settle prior to judgment. To the extent that mediation expedites the settlement process, it can generate substantial cost savings. Further, and unlike court rulings and arbitration, mediation may enable to parties to renew or develop mutually beneficial business arrangements based on areas of common interest identified in the mediation process.
Mediation of Business Disputes
There is no one-size fit all approach to Mediation that is suitable for all types of disputes. We believe that business conflicts generally differ from conflicts between individuals in significant ways that affect the mediation process and and a Mediator’s role in attempting to assist the parties in reaching a sensible resolution.
Most business disputes are caused by, and ultimately resolved based on, economic factors. Although business disputes, like personal conflicts, often engender heated arguments, the decision-makers responsible for settling a business dispute--- such as a company CEO and/or insurance company representative---are often removed from personal involvement in the conflict. Further, each organization will comprise numerous individuals with diverse outlooks and agendas. Those diverse individuals, however, are likely to share an interest in the economic well being of their organization, regardless of differences in their their views of a dispute.
Thus, when a dispute creates on economic factors, a rational party’s settlement decision, is likely to rest primarily depend on a computation of settlement values, as follows:
Probability of success x (recovery or costs) - litigation and opportunity costs = Settlement Value
When, and if, the parties to a business dispute reach general agreement on the Settlement Value of case, it is likely to settle. An effective mediator can, therefore, promote settlement by assisting the parties to understand and evaluate the numerous factual and legal factors that may affect their respective appraisals of a case.
An effective business Mediator can help the parties understand and factor the myriad of costs related to litigation into their settlement evaluations. Although the risks related to litigation costs may be obvious to the parties, the opportunity costs of the dispute may be less obvious. Opportunity costs may include not only the diversion of time and attention from the parties' businesses, but also lost opportunities to create or use restructure a mutually business arrangement between or amont the parties. In this respect, an effective business Mediator can assist the parties not only to identify and qualify likely litigation and opportunity costs, but also to consider and structure business arrangement that might prove mutually beneficial.
