Mediation is a process in which a neutral third party—a mediator—meets with the disputing parties and actively assists them in reaching a settlement. Mediation is private and confidential, flexible, and more informal than other processes such as arbitration or litigation. It is concluded expeditiously, allowing parties to settle the dispute or narrow their issues at moderate cost. The overwhelming majority of disputes in mediation (70% to 80% of commercial disputes) settle, and because the outcomes are mutually agreed upon, they have high rates of compliance.
Mediation is able to preserve relationships because the emphasis is on the interests of the parties—process flexibility allows the people involved to find the best path to agreement. Parties may adapt the procedure to their own needs and can explore a wide range of remedies that might not have been available to them in court. It’s also more predictable than a trial decided by a judge or jury, avoids a “win or lose” outcome, and allows for an amicable resolution that may preserve the parties’ relationship. The goal is to resolve problems in a principled fashion (or reach an impasse) and move on.
But often, parties may be hesitant to agree to mediation. This can be remedied by understanding which kinds of disputes are suitable for mediation, when to schedule the mediation so that it is most successful, and, finally, how the mediation process itself works.
Is the Dispute Right for Mediation?
It is possible that the dispute at hand is not suitable for mediation. The ADR Suitability Guide, published by the International Institute for Conflict Prevention & Resolution (CPR), outlines three factors parties should consider in deciding the suitability of a case for mediation: (1) the parties’ goals for managing the dispute, (2) the suitability of the dispute for a mediation process, and (3) the potential benefits of mediation in relation to the specific dispute being considered.
First, looking at the parties’ goals, if there is a desire to maintain a working relationship, maintain control over the outcome, limit costs and disruption, and maintain privacy, then mediation may be a preferable tool. Second, for the dispute to be suitable for mediation, there should be no deep desire for vindication or revenge by the parties, no need to attain legal precedent, and no extreme power imbalance. Third, the potential benefits of mediation include allowing the parties to explore mutual needs and interests confidentially, providing an opportunity to be heard, providing a “reality check” for internal decision makers, helping to clarify the issues, and providing the opportunity to have an intermediary help frame proposals and present offers and counteroffers. Parties should weigh all these factors in making the decision to mediate.
Among dispute resolution processes, mediation offers a maximum degree of confidentiality and privacy. Contractual and legal protections provide additional assurances against the use or disclosure of mediation statements or documents. These confidentiality protections contrast sharply with the public nature of the litigation process and its procedures that encourage public disclosure. If parties are looking to attain a ruling that will contribute to legal precedent or require articulation of public policy, mediation likely is not the proper forum.
When Should Parties Mediate?
There is no one right time to conduct a mediation. Including a mediation step (prior to arbitration or litigation) in the proceedings is an easy way to ensure that the parties discuss settlement options. When mediated, many cases are settled or partially settled at the initial stages of the case. Settling even part of the dispute up front can make the arbitration hearings or litigation shorter and less expensive. The opportunities to reduce the costs and wear and tear of court proceedings are greatest before litigation has commenced, but mediation may be a sensible option at any point in the litigation process, even while an appeal from a trial court judgment is pending. Parties not ready for mediation at the outset of the case may be more receptive as it runs its course.
Indeed, the timing of mediation may be rendered somewhat inflexible when parties contract for a sequential, multistep dispute resolution. While tiered dispute resolution clauses may get parties to the mediation table, these provisions may not assist parties in achieving this goal at an ideal time in the life of their dispute. Some parties may find it more beneficial to mediate their dispute after some discovery has been exchanged. Parties should continuously keep an open mind as opportunities for settlement arise throughout the proceedings. It is not uncommon for cases to settle during or even after the hearings. Sometimes, an additional mediation session after some discovery is effective in reaching a settlement.
For those parties contemplating mediation in conjunction with arbitration, the Concurrent Mediation-Arbitration Clauses and Protocol, which CPR introduced in July 2020, allows the parties to agree they will attempt to settle any dispute that is the subject of arbitration by confidential mediation conducted during the pendency of the arbitration. This process was developed to encourage the availability of mediation to parties in a more flexible manner than is provided under standard multistep dispute resolution provisions. This, in turn, creates an opportunity for parties to continue to explore settlement options based on what they learn during the arbitration proceedings and without delaying those proceedings.
What Should the Parties Expect from Mediation?
Parties who have not written mediation into their contract or dispute resolution clause may need to execute a submission agreement—essentially an agreement to submit the dispute to mediation with an alternative dispute resolution (ADR) provider—or they may agree to mediate in an ad hoc process. Notably, an ADR provider will be able to assist the parties in selecting the appropriate mediator for their dispute.
Many ADR institutions provide opportunities for parties to further streamline the mediator-appointment process. For example, streamlined mediator appointment is suitable for disputes where the parties wish the ADR provider to choose a mediator for them. Parties submit information about their dispute and the candidate sought, and the ADR provider will make the selection based on the information provided by the parties and vet the candidate for conflicts purposes before the appointment. This streamlined process lowers administrative costs and allows the parties greater speed in getting a mediator appointed and the process underway.
The process itself will depend on the mediator selected. Mediators will have different styles of mediation. On one side of the spectrum, facilitative mediators will work with parties to find creative solutions that meet the interests and needs of the parties. This will be beneficial for cases where parties wish to continue a personal or business relationship. On the other side, evaluative mediators will offer an opinion regarding the relative strength of each side’s legal arguments and generally will predict the likely outcome if the parties were to bring the case to trial. Mediators may also offer a hybrid style, combining the two.
Understanding the mediation process will help parties gain more advantages from the mediation itself. It is important for parties to realize that while settlement of their dispute might be the most desired outcome, an impasse does not mean that the parties have failed. If parties narrow the issues, understand the opposing side’s point of view, or simply have an opportunity to be heard, it will be successful for the parties in the long run.