Continuing his three-part business disputes series, Grid Law founder David Walker takes a close look at what happens at a mediation between two parties.
Going to court is risky. Even when you’re sure you have a strong case, the result is never guaranteed. I’ve seen witnesses fall apart in the witness box due to nerves and judges make unexpected decisions.
So, if you’re involved in a business dispute you should do everything you can to settle it before trial.
In my previous article, I explained how alternative dispute resolution (ADR) and in particular mediation, can be used to help settle legal disputes.
Mediation is an informal process (compared to going to court) but it’s still a step into the unknown for most of my clients. With the added pressure of trying to secure the best outcome for the business, it’s not surprising there’s a huge amount of anxiety before a mediation meeting takes place.
To help alleviate some of these concerns, I’m going to explain what happens in a typical mediation. Then, when you understand the process, you can better prepare for it and this should lead to a more favourable result.
As well as being informal, mediation can be a flexible process. This means the parties can conduct a mediation however fits best with them.
However, I find a structured approach usually increases the chances of a settlement. Therefore, the mediator will usually set an agenda that’s typically split into four phases (which I will explain below).
In most cases, the venue for the mediation will be “neutral territory” so neither party is perceived to have a “home ground” advantage. Personally, this is never an issue I’ve been concerned about. I’m quite happy to meet in an opponent’s office if it makes them feel more comfortable and amenable to a settlement.
Where ever the mediation is held, there are usually three rooms. Each party will have their own room where they can meet with the mediator and discuss matters in private. There’s also a room where the parties can meet together to discuss matters.
When you’re choosing a venue, it’s essential to have access to all the usual office facilities, for example an internet connection and the ability to print and copy documents. These will be needed when the parties draw up a settlement agreement at the end of a successful mediation.
The opening phase
When both parties have arrived at the mediation venue and settled in, they will meet with the mediator who will convene a joint session.
The mediator will explain how the mediation will be conducted and any ground rules for the process. This will include a reminder that the mediation process is confidential and held on a “without prejudice” basis.
Without prejudice means that the discussions are “off the record” so the parties can speak openly. Being able to make concessions without fear that they will be repeated in any future or ongoing court proceedings means that a settlement should be easier to achieve.
When the mediator has finished their opening statement, each party will have an opportunity to make an opening statement, explaining the dispute from their perspective.
These opening statements can set the tone for the rest of the mediation so it’s best if they are constructive, positive and not used as a “point scoring” opportunity against the other party.
Whatever issues are raised in the opening statements, both sides should be respectful of the other and let them speak. This isn’t the time for a heated debate!
The exploration phase
Next, the mediator will meet with both parties individually, in their private rooms.
In larger, more complex cases, the mediator is likely to have received some background reading before the mediation so will already have a good idea of the facts of the dispute and the law.
However, during this exploration phase, the mediator will dig deeper. They will find out what the parties motivations are, how they’re feeling and what they want to achieve.
This can be an opportunity for the parties to vent some frustration and give an opinion on what they think is motivating the other party. There’s no opportunity to do this as part of normal legal proceedings so this can be a useful exercise to allow the parties to get things off their chest.
During this exploration phase, the mediator will encourage each party to look carefully at their case and really understand where they are strong and where they are weak. The mediator may even play devil’s advocate and really challenge the parties on their views of their case.
The mediator will encourage the parties to think about what they would be prepared to accept as a settlement. This doesn’t have to be just a monetary payment. A settlement as part of a mediation can be far more creative so all options should be considered.
For example, sometimes, all that’s needed to trigger a settlement is an apology or at least an acknowledgement that the other party was in the wrong.
The negotiation phase
This is when the parties actively try to find a solution to their dispute. Sometimes, the parties will get together and discuss the issues, other times they will remain separate and the mediator will shuttle back and forth making offers and counter offers.
It’s almost inevitable that at some stage during negotiations the parties will reach a deadlock. This is where the mediator’s skills are vital if a settlement is to be achieved.
There are many ways in which a mediator can help break a deadlock. For example, changing tact and focusing on resolving smaller issues can sometimes break the deadlock for the main issues.
Other times, it can be useful for the parties’ representatives to meet without their lawyers present. They can be encouraged to think about the issues from a commercial perspective, rather than seeing them as purely a legal dispute.
Although a mediator can’t force a settlement, if both parties agree, the mediator can put forward suggestions for a settlement. Again, this may be the catalyst to re-start discussions if neither party thinks they’re giving in.
When it’s getting late in the day, a gentle reminder of the consequences of not reaching a settlement – spending even more time, money and energy fighting a legal battle – can help focus the parties’ minds on a final push to find a resolution.
The settlement phase
If the parties reach a settlement, they will usually record this in a written agreement which the mediator can help prepare.
It’s important that a settlement agreement is prepared and signed straight away. This prevents either party from changing their mind about the settlement and any misunderstandings can be corrected immediately.
I’ll talk about settlements in more detail in my next article, but in the meantime, if you have further questions about what happens at a mediation or settling business disputes, feel free to email me at firstname.lastname@example.org and I will happily answer them for you.
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