Why Mediate?

What is Mediation?

Mediation can be best defined as the confidential process of a neutral individual – the mediator – facilitating the settlement of a dispute or difference between two or more parties. Unlike judges, they do not impose a resolution on the parties. They simply assist the parties to reach an agreement between themselves.

There are a wide range of mediators to choose from, ensuring that one can be chosen who is both appropriate for the dispute in question, and an expert in the given field or nature of the claim if that is what is required.

Crucially, the parameters, terms and subject of the process are wholly decided by the parties. It is therefore a process entirely out of the processes of the court. It can be used as a tool for settling the entire claim, clarifying issues in dispute, settling costs and even in negotiating the terms of a deal or transaction.

How Does Mediation Work?

Due to the inherent flexibility, the process of mediation can take many forms.

The most usual is facilitative mediation, where the mediator is there as a neutral, limited to carrying out shuttle-diplomacy between those involved, thereby taking the sting out of direct negotiations in moving towards a settlement.

Another form of mediation, the popularity of which has increased in recent years, is evaluative mediation. Here, the mediator is charged with taking a critical approach to the parties’ respective positions, highlighting areas of weakness the judge or jury are likely to find. Playing ‘devil’s advocate’ serves to remind the parties of the innate risk of ignoring an opportunity for settlement, and takes cues from other forms of alternative dispute resolution, such as expert determination. If asked, an evaluative mediatior may also advise as to the likely outcome of the case at court.

Whatever its form, the courts’ favourable outlook to settlement means that mediation can be suggested and pursued at almost any point across the lifecycle of a dispute, with a stay being issued by the court in the proceedings.

What Are the Benefits?

1. Flexibility

Mediation’s defining characteristic is its inherent flexibility, and, consequently, its scope for creative settlement. Not only can the form and process be tailored to the needs of any given dispute or difference, but the methods of settling can extend far beyond the often limited choices offered by the courts. A judge in a monetary claim will simply award a sum of money with payment within a short timeframe. Mediation allows the parties to look for other solutions e.g. the entry into a new amended agreement/new business at below market rates to pay off the old debt.

The implications of this flexibility are varied. For example, in large and complex disputes, especially those that involve more than two parties, mediation can be used as a way of scoping out and refining the fundamental issues in debate. A further example is where one of the parties to a dispute has highly illiquid assets and not much else, and, in lieu of an immediate cash payment, settlement can include security over those assets.

2. Confidentiality

As with other forms of alternative dispute resolution, mediation is confidential. This includes the process, the nature of the dispute, and, importantly, the settlement reached.

While confidentiality may not be the most pertinent factor in your dispute, in our experience, and particularly in complex commercial disagreements, the prospect of keeping matters confidential is a widely welcomed opportunity. Furthermore, if explored early enough, mediation has the potential of keeping the entire matter confidential, out of the eyes of the public or your competitors.

3. Cost

Litigation is invariably an expensive process, and the costs can often dissuade individuals and companies from proceeding with a claim, despite having strong grounds (a recent survey conducted in the UK of 501 decision-makers in SMEs found that 57% of claims had failed to be pursued due to costs alone). Mediation has the potential to drastically affect those costs; both a carrot and a stick are involved.

The stick: the courts may act punitively to parties who unreasonably refuse to participate in mediation if suggested by the other side. The converse, where the other party unreasonably rejects your suggestion of mediation, may act in your favour when assessing reclaimable costs at the end of the dispute.

The carrot: by negating the need for trial, mediation has the potential of saving a vast sum in legal fees, while being an inexpensive process in and of itself. It is typical for the parties to share the costs of the mediator and venue, and retain their respective costs in preparation.  Of course, the sums saved in legal fees are nearly entirely dependent upon at what stage in the dispute the process is explored.

4. Control

Even the most expeditiously run disputes can invariably feel stifled due to the courts’ prescribed directions and heavy case-load. Dictating the terms means that parties can often bring a disagreement to a swifter conclusion, settling the claim and saving costs. Our experience has found that, from suggestion to conclusion, mediation can complete within a matter of weeks.

5. Success

Undoubtedly, the most important reason to consider mediation is the rates of success in resolving a dispute. The Centre for Effective Dispute Resolution reported in May 2016 that 67% of their mediations settled that day, with 19% settling shortly after (86% in all). Many mediators advertise a success rate in excess of 90%.

Even if the claim does not settle on the day, nor shortly after, mediation will be a valuable exercise. At its minimum, it is highly likely to narrow the issues in dispute, and bring clarity to where the parties stand, commercially as well as legally.

What Are the Limitations?

As with any strategy pursued, mediation is not without its limitations. However, it must be stressed that mediation has comparatively few to consider.

1. Disclosure

Depending on the complexity of the case, and how transparent the issues in dispute are, you may be in a position where disclosure is required from the other party before an informed decision can be considered in settlement.

However – while this may render mediation inappropriate during a dispute’s early stages – as it can be suggested and explored at any time up until trial, it should be considered after sufficient disclosure has occurred.

2. Non-Binding

Due to mediation being a voluntary process outside of court, it is non-binding; any settlement agreed would need to be the subject of a standard contract. There is always the risk that a mediation may be a waste of time if the other side unreasonably walks away without settling.

Conclusion

Mediation is just one of the ways of you taking control of your dispute. The low cost, the potential for a swift conclusion, the opportunity for creative settlement arrangements and the proven rates of success are all strong arguments for exploring the process. Together, they necessitate the question “why should we not mediate?” rather than the converse.

If you are concerned about an ongoing or prospective dispute, or would like further information regarding the options and processes of mediation, please get in touch with Jane Marsden, Head of Dispute Resolution, or Thomas Grace, Trainee Solicitor.