Most of us are familiar with divorce mediation, but small businesses should take their cue from international Fortune-100 corporations, which long ago realized the tangible benefits of mediation as an alternative dispute resolution mechanism.
I've been litigating small business disputes for the better part of the last three decades – and always as the last resort.
Litigation is time consuming, expensive, emotionally draining and, even for the "winner", it often has more negatives and costs than benefits.
Mediation is an effective, less costly, faster alternative to litigation of business disputes. It can even often result in the preservation of a valued business relationship.
Small business lawyers and owners should always consider mediation as one of their routine responses to business dispute situations.
What is Mediation?
Most basically, mediation helps parties to work together to resolve conflicts and settle their disputes. It is an efficient, cost-effective process which is successful 85% of the time.
Unlike litigation, Mediation does not invlove long, drawn-out pre-trial discovery with clever written questions and "gotcha" document demands. It does not require frequent trips to a court house to battle over what files need to be copied, what names and phone numbers need to be turned over, or what claims need to be thrown out or re-written.
Mediation doesn't even require the involvement of attorneys. (Egads!! Did I just say you don't need a lawyer to resolve conflicts?)
While serious disputes always benefit from counsel's advice and guidance, at the end of the day, the successful mediation requires the actual parties to work together to achieve resolution. It is always a good idea for counsel to be involved at some point so that the parties have an understanding of their legal standing and the issues.
But mediation seeks to achieve a result beyond, apart from, and sometimes despite legal positions and issues – it looks to resolve the conflict among the principals. Conflict resolution through mediation can very often involve creative and unique solutions and mechanisms that our adversarial legal system might not be competent to achieve.
Let me be clear – we have a fine adversarial system, which is important to our civil society and to how we decide disputes. But it should always be the "court of last resort", as it were. Litigate if you must, Mediate if you can.
Mediation is not so much a mechanism to decide disputed questions, as it is a facilitative system for communication.
Business owners who have experienced litigation know that much of what happens in litigation occurs without the principals present – lawyers write letters, exchange discovery, file motions and briefs, and argue before judges, all without the client being in the room most of the time. In that system, it is very easy for lines and attitudes to become fixed, for all the war-like metaphors for the litigation process to become ingrained.
In contrast, mediation works best when the principals are actively involved, indeed they should be the primary actors. Often at the same table, sitting across from one another, talking and listening. The mediator's job is to bring them together, in a neutral setting, to assist them in exploring and achieving resolution.
How Does it Work?
Mediation starts with a desire to resolve conflicts quickly, with relatively little expense, and in complete privacy – that is to say, all parties agree to attempt to mediate, and then agree on the selection of a mediator.
Customarily, the mediator will initially speak privately with the parties or their counsel, if they are represented. Often these discussions are on the telephone. The mediator wants to learn about the background of the dispute, the nature and quality of the historical and current relationship of the parties, and to ascertain the nature of the conflict, the complexities of the matter, and to judge how the mediation might best be structured to facilitate discussion and resolution.
Frequently, the mediator will ask the parties to prepare summaries of the issues in dispute and their relative positions. These summaries might be shared with the other side, be for the mediator's eyes only, or a combination of both. The mediator will generally conform the pre-mediation statements to the perceived requirements of the matter.
At this point the mediator will discuss with the parties a meeting date and location – typically a neutral, mutually convenient place.
What occurs at the mediation will be a little different every time, or sometimes very different – it all depends on the nature of the dispute and the parties involved. Frequently, mediation involves an initial joint session with all parties and their counsel present around the same table. The mediator starts with an explanation of the process and the structure that will be followed. The parties introduce themselves and usually have an uninterrupted opportunity to talk about how they perceive the issues which have brought them to that table.
It is not unusual for there to be a little, or sometimes a lot, of tension in the room. A trained mediator will help the parties navigate through that, encourage a respectful conversation, help them identify common goals or imperatives, and ultimately to facilitate their discussion about resolutions acceptable to everyone involved.
Mediation offers the potential for a rather more powerful result than litigation might ever promise. For one thing, mediation provides the participants with so much more direct input into the process, structure, and substance than would ever be possible in our highly-structured adversarial system.
Significantly, the resolution achievable in mediation is often more satisfying and effective. Not the least of which because it was crafted directly by the parties. Litigation is often "yes" or "no", "liable" or "not liable", and "how much $$$".
The results of mediation frequently employ creative, useful, real-world solutions. And this makes sense – business people & entrepreneurs are seasoned problem-solvers. Mediation allows them to apply their problem-solving skill sets to their conflicts and resolve them in creative ways that work.
Above all else may be the potential for mediation to preserve valuable business relationships. Mediation is designed to facilitate mutual problem solving through respectful and active listening and communication. Unlike litigation, which is practically designed to polarize the disputants, mediation naturally brings parties closer together. They might not be sharing their next Thanksgiving meal – but if they wanted to, mediation is the most likely resolution process to get them to that point.
It is not unheard of for mediation to be unsuccessful initially, but for the parties to try again after the passage of time and to succeed. Because mediation promotes, and is somewhat dependent on, respectful, clear communications, the parties leave with a clarity and improved understanding of the other party, which often serve as the foundation for a later resolution.
We cannot leave the discussion without emphasizing that mediation can happened tomorrow (or at least next week) – it is timely.
For most businesses, particularly small owner-operated businesses, the years that litigation can take to decide an important dispute drains the "victory" of much of its value. An immediate, mutually-crafted, workable solution is a great promise of mediation. It also often costs less than the cost of preparing and filing a legal complaint, and certainly less than the costs of litigation.
Also to be appreciated is that what happens in mediation, stays in mediation. State laws, court rules, and the agreements of the parties provide a great deal of privacy to the mediation process. Even if the process is not successful and the parties end up in court, what happened in the mediation stays "off the record". That is an advantage litigation can never offer.
In so many ways, business disputes are the kind of conflicts which ought to be resolved through mediation in the first instance -- and the mediation can happen at any time. Before litigation, immediately after it is filed, after discovery, before or even after trial, or while an appeal is pending.
If you are involved in a business dispute, ask your attorney about how mediation might help. Or give us a call with any questions or concerns.