Why Mediation May Be the Best Route for Solving Your Business Dispute

In many parts of the world, mediation is known as conciliation. It has historic routes within the diplomatic arena. Interest in mediation has risen dramatically in recent years in the commercial world. Part of the reason for this increase in interest is unhappiness with the cost, delays, and length of the court process. The benefits of mediation, notably its appeal as a procedure that gives parties full control over both the process to which their dispute will be submitted and the outcome of that process, have sparked increased interest.

Mediation has a very high success rate in finding a result that is acceptable to both sides of a dispute when it is implemented. Some people are hesitant to use mediation since it is a very unstructured method, and they are afraid of not knowing what to anticipate. An attorney can help navigate you through the process of mediation, if you feel that it is a viable option for your business dispute. If you are a business owner concerned about the outcome of a disagreement, mediation could save you a lot of time and money, as well as help you maintain a vital business relationship by allowing you to work through the conflict with an agreeable resolution.

What is Mediation? 

Mediation is a process in which the parties address their disagreements with the help of a skilled neutral third party who helps them reach an agreement. It could be a casual gathering of the parties or a formal settlement conference. The disagreement could be pending in court or could be filed in court in the near future, or not have any intentions to use the court system. 

Disputes in commercial transactions, personal injury, construction, workers compensation, labor or community relations, divorce, domestic relations, employment, or any other situation involving simple procedural or evidentiary concerns are appropriate for mediation. Most business disputes will use mediation to resolve their issues. The parties’ attendance at the mediation session is entirely optional, unless otherwise required by statute or contract clause.

A good mediator has tolerance, tenacity, and common sense. The mediator is merely a facilitator with no authority to resolve the disagreement. As the mediator progresses through the process, the parties will construct a resolution. Although the mediator is an attorney in many jurisdictions, he or she cannot provide legal advice while acting as a mediator. The mediator’s subject-matter expertise, on the other hand, may be useful to the parties in drafting and framing the mediated agreement, or in situations where the parties are amenable to an impartial case evaluation.

Mediation vs. Arbitration

Arbitration, like mediation, relies on a neutral third party, the Arbitrator, to resolve disputes between parties outside of the courtroom. Unlike mediation, however, the Arbitrator acts as a private judge, hearing evidence and issuing findings to determine the dispute’s conclusion. Thus, the private judge controls the process and the outcome in arbitration, whereas the disputing parties control the process and the outcome in mediation.

Most arbitrators are willing to work around the parties’ schedules and demands. Although arbitration is usually less formal than a courtroom trial, both parties must follow a series of processes as they prepare for the hearing. In most circumstances, the arbitrator’s decision is final and binding on both parties. After a binding arbitration, there is virtually little room for appeal.

Mediation and arbitration can be used together. Typically, most business disputes will either make mediation mandatory or strongly suggest it as a first step. The dispute is then brought to arbitration if a settlement is not reached within a specified length of time (it is advised that the parties arrange for either 60 or 90 days), or if a party refuses to participate or continue to engage in the mediation (or, if the parties so agree, through expedited arbitration). 

The benefit of the combined procedure is that it provides an incentive for both parties to make a good faith commitment to the mediation process, because the consequences of failing to reach an agreement will be more tangibly measurable in terms of the financial and management commitment that would be required in the subsequent arbitration procedure.

Benefits of Mediation

A party to a dispute may choose mediation over traditional litigation or other kinds of alternative dispute resolution for a variety of reasons, including: 

  • Affordability
  • Participation in the resolution of the conflict
  • Preservation of the relationships between the parties 
  • Private sessions
  • Prompt settlement 
  • Secrecy

Mediation is less expensive than litigating a conflict, both in terms of time and money. The hourly rate of a mediator is typically lower than that of a lawyer. A decision to mediate or a court order to mediate can usually be scheduled within days or weeks.

Mediation is particularly useful in business disputes because it is confidential, informal, quick, and inexpensive. Additionally, the parties like having a tighter grasp of controlling the situation and dispute resolution.

Is Mediation Binding? 

Mediation is a non-binding practice. This means that even if parties agree to submit a disagreement to mediation, they are not obligated to continue the process after the initial meeting. In this approach, the parties are in charge of the mediation at all times. The process’s continuation is contingent on their continued acceptance of it.

Due to the fact that mediation is non-binding, the parties cannot be forced to make a decision. In order for a settlement to be reached, both parties must agree to accept it voluntarily. The mediator, unlike a court or an arbitrator, does not make decisions. Rather, the mediator’s responsibility is to assist the parties in making their own choice on a dispute resolution.

Mediation is a private and confidential process. Confidentiality encourages frankness and openness in the process by ensuring the parties that any confessions, proposals, or settlement offers made during the mediation process would have no lasting implications. In general, they cannot be used in later litigation or arbitration.

However, when both parties sign the agreement at the end of meditation (if they choose to do so), it becomes a legally enforceable contract and therefore binding. If a settlement cannot be reached through mediation, the parties reserve the right to pursue another method of alternative dispute resolution (ADR) or to take their dispute to court.

Contact Perkins Asbill Today

If you are interested in learning more about alternative dispute resolution or you believe you are involved in a business dispute that could be resolved through mediation, you should contact an experienced attorney today.

Perkins Asbill’s Sacramento business litigation attorneys have more than 30 years of experience navigating the complexities of the various alternative dispute resolution process, including mediation. To get started on your case or discuss your options, contact (916) 446-2000 for a discreet consultation.