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Mediation, its advantages, and some of its forms.
Mediation
"Mediate" is a verb meaning to settle disputes as an intermediary between parties; to reconcile; or to bring about an accord, truce, peace, or agreement as an intermediary between parties by compromise, reconciliation, removal of misunderstanding, etc. (Random House Dictionary of the English Language, Second Edition) Mediation in one form or another has been around since the dawn of civilization. Today there is increasing interest in mediation of all types of disputes due to increased court congestion and dissatisfaction with the adversarial.
Mediation and arbitration designate processes for bringing about agreement or reconciliation between opponents in a dispute. Mediation implies deliberation that results in solutions that may or may not be accepted by the contending parties. Arbitration involves a more formal deliberation, it being understood that the results will be binding on the contending parties. (Ibid.)
Where courts recognize mediation there is usually a statutory immunity from liability extended to the mediator to protect neutrals from damage claims allegedly arising out of the duties connected to the judicial process. If such an immunity is not provided by statute, it is recommended the parties' agreement to mediate contain language granting the neutral such immunity. (Drafting mediation agreements is a subject for another paper.)
Advantages of Mediation
Experience has shown that mediation is one of the least expensive and least disruptive processes for resolving disputes that has the added benefit of preserving whatever relationship exists between the disputing parties.
In the first place mediation is strictly voluntary and by agreement of the parties. No party can be forced to participate. A party can withdraw from the process at any time if dissatisfied with the procedure. More importantly, the parties are direct participants. They are in the same room together and hear what the other side has to say. They are not getting a filtered report from their lawyer. Also, as participants they know what really occurred, and hearing the other side's version can be helpful in providing a clearer focus on the problem.
The parties can choose who the mediator is and the process or procedures to be utilized. (Infra) For example, there is no need for discovery, or there can be limited discovery. The mediator can help the parties select a neutral expert to resolve technical issues, subject to the parties deposing the expert or agreeing the expert's finding will be binding. The mediator may be a judge, a lawyer, or any person with training in mediation techniques. A mediator with judicial or legal experience is generally preferred where the parties seek an evaluation of their legal rights and obligations. Otherwise a mediator with subject matter expertise may be effective as little time will be required to "educate" the mediator about the subject matter, although such expertise is not as essential as mediation skills because the mediator will not be rendering a decision or findings as a rule. Which brings us to the next advantage of mediation.
Mediation is non-binding. Mediators look for solutions to disputes and usually do not make findings or decisions. Creative solutions to disputes are possible, unlike structured "in the box" decisions by judges. Even if mediators make findings or a decision they are non-binding on the parties, unless the parties agree otherwise. The parties therefore know that the mediator cannot force them to compromise their respective positions, and litigation is still available to them.
Because the parties voluntarily submit to mediation there are benefits to them. First, they play a direct role in the settlement process. Second, they eliminate the concern of lawyers perpetuating a dispute unnecessarily. And third, settlements reached are less likely to unravel due to the parties' direct participation in the process.
Mediation is most effective where the parties have an ongoing relationship, where there is a high level of emotions so the parties cannot without difficulty communicate directly, where settlement negotiations have reached an impasse, or where there is a complex, multi-party case.
Another advantage of mediation is that it can be utilized at any stage of a dispute, whether before or after litigation has commenced. In fact, parties may wish to resolve disputes that are anticipated and have not yet actually occurred. For example, in commercial settings a party may wish to breach or repudiate an agreement and seek guidance from a mediator before actually doing so. Such scenario would not be entertained by any court as there is no actual controversy to decide.
Parties may utilize mediation at any stage of legal proceedings. There is no time limit on mediation. Generally, though, early mediation works better in some cases as it reduces the chances the parties become polarized in their respective positions and in smaller disputes it prevents incurring expenses and fees out of proportion to the value of the dispute. (In small disputes parties often agree to binding mediation.) After suit is filed mediation can be a useful adjunct to promote settlement, narrow issues for trial, or in multiple party cases reduce the number and complexity of parties and issues. Again, the benefit is allowing the litigation to proceed more efficiently, expeditiously, and economically. Mediation has also been effective in settling disputes during trial or after judgment while pending appeal.
Another important consideration to parties is confidentiality. Not only will a dispute be kept out of public light, but the parties can be assured (and their mediation agreement should so provide) that whatever they say either privately to the mediator or publicly in open session cannot be used against them in litigation should mediation fail. Confidentiality should also apply to any negotiations, briefs, or other communications made in the mediation context.
Finally, a party or counsel seeking mediation is not waving a flag of weakness. Mediation should be postured as "the most sensible way" for the parties to proceed. One can easily acknoWGedge the existence of a dispute, and that the participants have a vastly different view of what is likely to happen if they go to court. It can also be acknoWGedged that neither party wants to pay out money unnecessarily for legal proceedings. It follows that suggesting a third party may have solutions to offer simply makes good sense to both parties.
Some Forms of Mediation
While the cost savings and other advantages of mediation are numerous, another benefit is that the process or procedure can be tailored to suit the parties and/or the nature of the particular dispute.
Mediation can take different forms. Classic mediation usually involves a neutral mediator meeting directly with the parties to facilitate their efforts to negotiate a settlement. Many times there are no attorneys involved. This process is particularly valuable where there is an ongoing relationship between the parties The mediator's role is to help the parties focus on their real interests in the dispute and keep them moving toward settlement. In the business context the individual(s) present should have full settlement authority.
The mediator begins by getting a confidentiality agreement, advising the parties that he is representing neither, assuring them that each side will have a chance to fully express themselves, and expressing that his goal is to develop options or solutions resulting in settlement of the dispute. After a common session where all parties are present and generally voice their positions as strongly as possible, the mediator will then meet with each side privately to promote candor. While in caucus the mediator should explore with each side their interest in settlement and learn from each their perspective of the advantages and disadvantages of settlement. After discussing confidentiality, the mediator will begin a process of risk analysis challenging each side's assumptions, and encouraging movement toward settlement keeping in mind he is facilitating the parties in finding their own solutions to the problem at hand. Assuming successful resolution of the dispute the mediator would then meet jointly with the parties, confirm the terms of the settlement, and encourage and oversee the reduction of the settlement agreement to writing to be signed by the parties (and counsel if present).
The parties can have a voluntary settlement conference. This usually occurs in the litigation context. The main advantage is a mediator can take more time (on more than one occasion if necessary), and give more effort to effectuate settlement that a busy settlement judge managing a full calendar. Also, the mediator plays a more active role, becomes more familiar with the dispute, and his focus is to express an opinion on the probable outcome of litigation and encourage the parties to accept his view and settle. For this reason a judge or experienced litigation attorney is usually selected by the parties to oversee such settlement conference. In addition to the advantages expressed above, counsel should prepare their clients to be prepared to settle, avoid open hostility, and to expect a process of patience and perseverence. After receiving mediation statements from each party, and occasionally having the parties' counsel meet preliminarily to discuss and agree on ground rules, the settlement conference itself will proceed informally and flexibly much like classic mediation described above.
Another alternative is the "mini-trial." This form of dispute resolution is especially effective where businesses or corporations have a working relationship that is ongoing. It is for large disputes between business entities, especially involving technical matters. The focus is to involve the parties' decision-makers:
"Instead of the attorneys presenting their positions to a mediator, the presentations are made to a panel consisting of each side's decision-makers. A neutral mediator is present to facilitate the presentations. The decision-makers Then meet privately and attempt to negotiate a settlement." (Knight, Fannin, Disco, & Chernick, CAL. PRAC. GUIDE, ALTERNATIVE DISPUTE RESOLUTION, p.3-3, par.3:12.)
Variations of the "mini-trial" are several. There can be a "bottom line claim and defense-type", a contingent settlement-type, a "bite-type," or a "binding-type." The bottom line claim and defense-type involves the parties agreeing to present and submit for decision their best claim and best defense. The claim and defense alone could be decided, or the parties could include a dollar amount to be paid depending on how the matter is decided. The latter scenario would be a "contingent settlement." In the "bite-type" mini-trial, the parties agree the mediator can make findings and a non-binding decision, but if both parties do not accept the decision or otherwise resolve their dispute and go to trial, there is a penalty for not achieving a more favorable result which is the so-called "bite." In the "binding-type" mini-trial the parties agree to be bound by a decision of the mediator is they cannot settle their dispute within a given time after submission of their presentations. The cases most suited to these "mini-trials" involve technical matters, ongoing relationships, foreign parties, or admitted liability but disputed damages1.
Parties can agree to binding mediation. As a rule this is best where parties are at an impasse over monetary damages and will submit to a mediator's decision within a high-low range. A variation of this would be "mediation-arbitration" where the parties agree to traditional mediation, but if an impasse results they will agree to formal arbitrate the dispute before the same person. Alternatively, the parties can agree to "arbitration-mediation." Under this scenario the parties formally arbitrate their dispute, but before the arbitrator renders a decision he conducts a mediation in a last ditch effort to settle. If mediation is successful in resolving the dispute the award is destroyed, but if settlement is unsuccessful the parties are bound by the arbitrator's award. Obviously, the arbitration-mediation procedure places great pressure, often bordering on intimidation, on the parties to settle, but the advantage is settlement occurs after the parties have had an opportunity to "vent" their emotions and seen and heard how the evidence went in.
Closing Thoughts About Mediation
While the advantages of mediation are numerous, the goal remains to select the right form of mediation to fit the type of dispute presented in light of its posture litigation-wise. Relevant factors to consider may consist of the amount in controversy, the complexity and number of issues presented, the client's objectives, and so on. As a general rule, however, it is recommended mediation be implemented as early as possible and kept as simple as possible. Early and inexpensive revelation and insight about disputes most often leads to dispute resolution which, after all, is ultimately in all parties' best interest.
Norman A. Sauer, II
California State Bar Number 43865
1 Procedural issues abound in these matters. What discovery, if any, can be done? What are the overall time limits for discovery and submission for decision? When and how will the parties designate decision-makers and a third party neutral? How will costs be handled? Do the parties have options to terminate proceedings? What is the binding nature of the decision? And, last but not least, what is the nature and extent of any confidentiality that may apply to the proceedings and the decision of the technical neutral?
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