Ambrose Bierce's Devil's Dictionary sardonically defines litigation as 'a machine that you go into as a pig and come out of as a sausage.' All too often litigation really is that distasteful, at least for the clients. But litigation is an ever-present reality of doing business and a source of risk ranging from the bothersome to the devastating. Mediation makes it possible to manage that risk by giving some control over the process and the outcome of litigation.
WHAT IS MEDIATION?
Mediation is a voluntary process in which a neutral helps disputing parties to negotiate their own resolution of the conflict. Arbitration, in contrast, involves submitting the dispute to a neutral who makes a decision (often binding) for the involved parties. Familiar in the context of diplomatic, labor, or family law disputes, mediation in civil litigation is a recent, but growing phenomenon. Business agreements now frequently build in a mediation option for resolving disputes; courts are increasingly requiring that cases go to mediation before they're set for trial.
A mediation session typically begins with a joint session in which the parties, in the presence of each other and the mediator, present their respective positions on the issues in dispute. The mediator will then typically meet separately with the parties to explore the strengths and weaknesses of the various positions and to find out what needs and interests each party has related to the dispute. Given a genuine interest in resolving the dispute, this caucus will enable the mediator to help the parties develop terms and options for resolution, and, with patience and persistence, come to an acceptable settlement. When this occurs, the parties will write out the terms of the settlement and sign an agreement.
Mediation works. Mediators report that 85% to 95% of disputes are settled through this process, often with only a few hours or at most a long day or two being invested. Why it works involves possibilities ranging from the psychological (is conflict a natural state?) to the economic (the investment in mediation can produce staggering savings in the time and money required to litigate). But the principal reason is that mediation places control over the process and the outcome where it should be-in the hands of the parties who initiated the dispute and who are most affected by it.
CONTROLLING THE PROCESS
In litigation, exactly when a dispute gets addressed and resolved is usually arbitrary, controlled by legal tactics and court schedules. Mediation makes it possible for parties to resolve a dispute when they're ready, bypassing the artificiality and delays of the litigation process. Of course, situations arise in which one party wants resolution and the other wants delay. But in most disputes, the need for resolution becomes a shared need sooner or later-thanks either to the trial calendar or the cost of irresolution.
Taking a commercial dispute to trial involves handing over an important business decision to a jury or a judge who might not understand the business, probably doesn't care about it, and certainly has no accountability for the decisions. In mediation, these concerns aren't an issue. The decision makers are the parties themselves. Properly prepared, they know what the fight is all about and what its impact has been and will be. They're in the best position to evaluate the options for resolution that develop during the mediation.
Selecting a mediator is a matter of choice-not, as in litigation, a matter of random assignment or availability. Although the mediator can't decide the dispute, the selected individual plays a big part in whether it gets resolved. An experienced mediator is familiar with the dynamics of the process and can help the parties reach a resolution. An evaluative approach (proactively using trial or subject matter expertise to evaluate the issues affecting the parties' risk analysis) may be effective where the parties have very different outcome predictions. When emotions and personalities become as important as legal or factual issues, a mediator's 'facilitative' skills (listening, questioning, and communicating) may be more conducive to reaching a resolution.
Being in a position to control the outcome of a dispute is the mediation's greatest risk-management benefit. In most situations, some settlement is possible. Whether what's available is also acceptable may be a tougher issue, but at least the option is there, and experience shows that mediation usually produces acceptable settlements. Moreover, in litigation the outcomes are limited by the remedies available under the law, but in mediation the options are more flexible. In one case where the defendant's failure to pay for a product was justified by claims that the product didn't work, the defendant shared a solution to the problem for which the plaintiff was only too happy to pay. In a case with environmental issues, an impasse over the amount that would change hands was resolved by both sides contributing to an organization dedicated to investigating solutions to the problem. Obviously, no judge or jury could have ordered these results; litigation requires a loser.
Risk management in a litigation context usually involves assessing the risk and the cost of winning or losing. Mediation invariably reduces the exposure to risk and cost-and in so doing, offers the opportunity to make everyone involved a winner.