When Embroiled in Disputes, Consider Mediation Before Resorting to Costly Litigation authored by Leslie Werner de Soliz

When commercial entities, particularly smaller businesses are embroiled in disputes that have the potential for developing into litigation, the parties should consider mediation before running to the courthouse. Mediation is often the last and best remaining chance to find a business solution to the problem that led to the disagreement.

Through mediation, the parties are given a chance to explore early resolution, correct mistakes and control costs if litigation cannot be avoided.

Commercial litigation mediation can focus on reducing costs, if litigation becomes a necessity, or on picking neutral arbitrators to resolve important contributing issues such as valuation. A successful mediation is dependent upon the following five elements.

1. An impartial third party facilitator. The neutral party, the mediator, is the person who makes the entire process work. As long as there is a neutral facilitator, the parties can trust that they have some safety and are not being abused by an interested party.

Mediation works because the mediator is known to either be neutral or supportive of the parties and not an involved party.

2. A third party who protects the integrity of the proceedings. Usually this means that the facilitator or mediator protects the confidentiality of the proceedings.

Thus, not only does the mediator not take sides against any party to the mediation, the mediator does not usurp the parties' rights to disclose, or not disclose information. The mediator preserves the integrity of the proceedings in all ways.

Generally this means many things, such as there are no records kept by the mediator. When there is no record, it becomes much harder to breach confidentiality or to try to use the mediator to prove or force a particular point not finalized in the parties' agreement.

In fact, some mediators require the parties to take all notes on provided paper and then destroy the notes after each session.

Confidentiality also means that the facilitator is not subject to subpoena and thus cannot be made a witness. Without notes or the facilitator, the only method the breach confidentiality is the testimony of an interested party who is usually bound by law not to disclose more than is agreed.

For example, in general, there are rules that provide for no service of process during mediation and for similar bars to the abuse of the mediation process by attorneys and non-attorneys.

This is because the parties are in the mediation process to seek solutions rather than for an ulterior purpose (e.g. to abuse the other party by use of the process).

both the behavior and integrity of the neutral facilitator are important in creating and preserving good faith.

4. The presence of the parties. Those with full authority to act for the parties can work towards resolution. If the decision makers do not attend, the process becomes something other than mediation.

All parties necessary to resolve the problems should interact with the mediator. For example, in a labor matter, if a company president always checks with the majority shoreholder, the majority shoreholder should attend the mediation.

It is the parties who are being resolved as much as it is the problem that is being settled.

5. An appropriate site or venue. This means a neutral site that is conductive to the process should be used. It means a place where neutrality, confidentiality and inclusiveness may be obtained. The place is sometimes as important as the persons and is a part of the process often overlooked.

In commercial litigation, the sooner the case is mediated, the more likely a "win-win" solution can be worked out. The sooner the case is mediated, the lower the amount of damages to be worked out.

Further, early commercial mediation often results in additional business being worked out between the parties.

Used in the proper context, mediation is "something better" - it is more accessible and understandable to the layperson, less adversarial, expensive, and time-consuming than litigation, and more likely to produce an outcome that matches the interests of the disputants.