If you’re a business owner or involved in a venture or organization, you’re well aware that conflict can rear its ugly head in your professional world. It could take the shape of a contract dispute, a dispute over a verbal agreement, or perhaps a conflict with or within your labor force. You might need a “divorce” from a longtime business partner and friend.
And if you’re close to any of these points, you and your opposing parties may only see one path going forward: a long, expensive, public and arduous litigation process.
Did you know Mediation is another option? One that could save you time, cost and possibly help you preserve important relationships? Consider the situations mentioned above. In a business divorce, a Mediator can assist the “divorcing partners” in determining the terms of the buy-out, including price, terms of a buyout and non-compete requirements. In a contract dispute, a Mediator can help both parties reach a solution and decide whether or not to continue a business relationship.
I will elaborate below, but be aware that Mediation can provide you with:
- Cost savings
- An efficient process
- A confidential outcome
- A neutral third party skilled at resolving disputes
- Potential of preserving your business relationships
- More control over the process and the outcome
What Exactly is Mediation and How Does it Work?
As you might suspect, the participants in a Mediation are usually the disputing parties, their attorneys and a neutral, third party Mediator to facilitate and encourage settlement discussions. It’s a process that involves the consent and active involvement of both parties.
There are three basic different types of Mediation:
Facilitative – a structured process where the Mediator assists and guides the parties toward a mutually agreeable resolution. It does not provide predictions, recommendations or opinions.
Directive – this style of Mediation requires a Mediator to be proactive and help generate creative options, keeping pressure on both parties to move towards resolution.
Transformative – focuses on allowing the parties to structure both the process and the outcome of Mediation, and the Mediator follows their lead.
In addition, some Mediators, if requested, will provide Neutral Evaluation. Neutral evaluation is where the Mediator explicitly points out the strengths and/or weaknesses of the parties’ cases and makes predictions on judge or jury rulings. He or she may also make formal or informal recommendations to the parties.
What can you expect before a Mediation?
Once two parties agree to enter into Mediation and select a Mediator, the Mediator will likely hold pre-Mediation calls with the parties’ attorneys to become familiar with the conflict, the status of litigation, and the history of settlement discussions. The Mediator may also require the attorneys to submit pre-Mediation statements, usually ex parte or “for the Mediator’s eyes only”, which summarize the party’s position regarding the facts, law, damages, potential settlement ranges and potential settlement options and obstacles.
What can you expect at a Mediation?
All Mediations are different. However, there are certain basic steps in a Mediation that you can expect as follows:
- The Mediator will introduce him or herself and make general introductions.
- The Mediator will provide an overview of the Mediation process, the Mediator’s role and the confidentiality requirements of Mediation.
- Each party and/or their attorneys may make opening statements.
- The Mediator may follow-up with questions and reflection.
- Joint Session, where all parties and attorneys are in the same room and carry out fact finding and settlement negotiations facilitated by the Mediator. The parties have an opportunity to hear each other’s position and be heard, and have an opportunity to move forward with the settlement discussions. If the parties are in litigation and discovery hasn’t progressed very far, they may be unwilling to participate in a detailed joint session. In particularly contentious disputes, there is also a potential for escalated conflict, inflammatory comments and accusations.
- Parties may enter caucus, where the Mediator meets with each party (and attorneys) without the other party present. Early caucus tends to focus on fact-finding, whereas later caucus often focuses on settlement. All information shared in caucus is confidential, and caucus is often where the “meat” of the Mediation work occurs.
Strategies a Mediator might utilize during a business Mediation to help the parties reach settlement include:
- Brainstorming new options
- Questioning parties regarding the facts, law, interests strengths, and weaknesses of their case and the other party’s case
- Exploring non-monetary settlement options
- Conditional demands and offers
- Backwards bargaining
- Decision tree analysis
- Last best demand and offer
- Best alternative to negotiated settlement
- Mediator’s Proposal
- Attorney-only sessions
- Triangulating the gap
- Timing of payments
The ultimate goal of the Mediation is for the parties to come to an agreement on a resolution. If the parties are in litigation, the goal is to settle the lawsuit. Generally, the settlement terms are agreed to in principal at the Mediation, and the attorneys prepare the actual settlement agreement after the Mediation has concluded.
As stated above, Mediation can save you both money and time. If negotiations have failed but neither side has filed a lawsuit yet, it can serve as a “last ditch effort” before going to litigation. If litigation is already underway, Mediation can be used to settle the lawsuit and avoid the cost, time and aggravation of prolonged litigation. The Mediation process is structured to result in agreement and encourage a commitment to settlement. As a collaborative process, Mediation allows the parties to define the real issues involved in the conflict and create the resolution with the assistance of the Mediator. Since the parties are active participants in Mediation, they are more likely to embrace the settlement terms and avoid continued escalation of the dispute. Often, in Mediation, the parties will find solutions to their dispute that might not have been available in court.
Mediation also allows the parties to negotiate with the assistance of a neutral third-party, the Mediator, whose goal is to settle the conflict. Due the Mediator’s unique and neutral role, the Mediator can challenge parties’ assumptions and help the parties craft a solution that they might not otherwise have found. Finally, Mediation is confidential and allows the parties a “time out” to explore settlement options without negative publicity. In short, the process gives parties more control to find solutions and the expert assistance of a neutral third-party Mediator to resolve their dispute.