Mediation

Many lawyers recommend that parties to a dispute try mediation before spending money on a full litigation.  It makes sense for parties to consider a compromise, especially if the result costs less and does less damage to the relationship between the parties.  But in my experience, mediation is not always appropriate and can end up wasting time and money.

Why should you continue to read this post about mediation?

• You have a dispute and are interested in ways to avoid large legal bills

• I wanted you to read the whole blog, you didn’t want to read any of it, but you agreed to read this post as a compromise

• You want to achieve inner peace but have not yet realized that this post is not about meditation

How Mediation Works

One party may propose to the other that the parties mediate their dispute.  If the parties agree to mediate, the next step is that they hire a mediator.  There are some large companies that provide mediation services, like the American Arbitration Association and JAMS.  There are also very good individual practitioners that offer mediation services. And some government entities provide mediators for certain disputes as well.

Once the parties hire a mediator and agree to her fees, the mediator may ask the parties to each submit a statement that provides the facts of the case, the applicable law, and what each party is willing to offer to settle the dispute.  After the mediator reviews these documents to become familiar with the case, she will organize a meeting at which the parties and their lawyers come to an office to discuss resolving the dispute.

The lawyer for one party usually makes a presentation about why they are right, but how they are willing to make a compromise.  Then the lawyer from the other party makes a similar presentation.  Then one of the parties and their lawyer leaves the room as the mediator speaks privately with the remaining party.  Here, the mediator tries to get this party and her lawyer to see the weaknesses in her case and make a more generous offer.  Then the mediator speaks to the other party and her lawyer and does the same thing, sharing how difficult their case is and trying to persuade them to accept a more centrist offer.

The mediator does not make any rulings.  Instead, all she does is nudge each side towards making a deal by advocating in favor of settlement over continued litigation.

Problems I Have Seen In Mediation

Although mediation is generally considered to be less expensive than litigation, this assumes that the mediation is successful.  An unsuccessful mediation can be pretty costly and then fail to save any litigation costs.  Mediation can be expensive because the parties often need to pay for the mediator’s time in reviewing the mediation statements, preparing for the mediation, and attending the mediation.  And parties also need to pay for the costs of their attorneys to draft the mediation statements, and prepare and attend the mediation.  There may also be other fees, such as for the office space and the administrative fees of the mediation sponsor.  Accordingly, for litigants on a budget, mediation may have definite costs but uncertain benefits.

Mediation may not also be useful for parties who have very different views of a dispute.  If there is no dispute about the facts, but one side is convinced that the law permits their actions and the other side is convinced those actions subject them to substantial liability, a mediator may not be able to convince both sides to compromise their positions.  Moreover, if one side expects many millions of dollars in damages and the other is convinced that they have almost no liability, it may be difficult for a mediator to deflate either side’s expectations.  Although a good mediator can help one side see the other’s perspective, in my experience, lawyers are already aware of their adversaries’ points of view before mediation and are not easily persuaded to adopt their positions.

In my experience, parties often begin mediation very far apart and make incremental steps towards each other as the mediation progresses.  After each side makes a few offers, each far apart from the other, often one side gives up.  At that point, mediators often shrug and say that there was nothing that could be done.

My Suggestions If You Consider Mediation

Although I am generally skeptical of mediation, I have seen it work effectively.  And even though I think it is only appropriate in specific circumstances, I think all litigants should consider it.  And regardless of how parties feel about it, some judges apply firm pressure on the parties to give it a shot and some contracts require the parties to try it.  When doing so, I propose the following:

First, litigants should try to negotiate a settlement without a mediator.  Attorneys are generally capable of negotiating claims and recognizing the weaknesses in their cases without incurring the costs of a third party.

Second, attorneys should consider the effect of having their clients face each other in person.  Mediation can be helpful if clients who had demonized each other in isolation see each other again in person and suddenly become more amenable to compromise.  But more often, people who are suing each other get angry when they see each other and sit through a presentation where a lawyer tells a stranger a twisted story that makes them look bad.  And that anger may make a settlement less likely.  As a result, some parties that are interested in settlement may prefer to avoid in-person mediation.

Third, litigants should only pursue mediation if the cost of mediation would not be a substantial portion of the amount at stake.  Spending $25,000 to mediate a $100,000 dispute may not make sense because, when the defendant includes other attorneys’ fees and the actual settlement payment, she may end up paying as much to settle the dispute as the defendant initially demanded or would have accepted without mediation.

Fourth, litigants should only hire mediators with good records of settling cases and who seem genuinely interested in making a deal.  In my experience, some mediators are eager to accept a new case and then, once they see the parties disagree, give up soon after.  A mediator may only be worth the cost if she is determined to overcome the parties’ differences.  And litigants should avoid any mediator that suggests that they are not the right fit for a case.

And fifth, litigants should only go through with mediation if they have a good reason to believe their adversary will make a compromise.  If an adversary conducts itself like it will not waver from its firm beliefs during the mediation, then there may not be much for a litigant to do in the mediation but acquiesce to their demands.  There’s nothing wrong with sticking to your position, especially early in a dispute, but doing so could make a mediation a waste of time.