I happened upon a discussion recently where several people were debating the merits of mediation. Some of them who were obviously not avid fans of mediation repeated some of the classic mediation myths. So I thought that it’s time to debunk the myths of mediation!
The discussion angered me because it seemed clear to me that many of the people had never actually attended mediation. I am a firm believer in mediation as a dispute resolution process because I have seen so many successful outcomes where the dispute has been resolved and the parties continue their business relationship. I would hazard a guess that very few parties remain in a business relationship once litigation has been commenced in Court.
Why has mediation not sidelined Court? I think the reason is that many lawyers and clients are not aware of it or do not properly understand the process. The lack of familiarity means that lawyers do not float mediation as a possible means to resolve the dispute. I frequently find myself selling mediation to my clients or the lawyer on the other side. While people are often hesitant about mediation at the outset, this attitude invariably changes once they experience it and see the benefits.
It’s time to set the record straight on mediation:
I have had big commercial cases which have settled via mediation. However these cases are not publicised because the settlement agreement has a confidentiality clause which prevents parties from disclosing the details of the mediation and the settlement outcome.
An advantage to mediation is that anything discussed and relevant documents disclosed during mediation cannot be relied upon in subsequent litigation. This is a benefit of mediation because parties often want to keep their discussions confidential to avoid any adverse publicity arising from the dispute.
While it is true that mediation does cost money which you can’t recover from the other side unless they agree (which is very rare), when the cost of a mediation is compared with a litigation, there is a substantial cost saving. For example, a Court action from start to finish can cost anywhere from £30,000 to over £150,000 depending on the complexity of the matter. If successful, usually only 50-60% of your legal expenses can be recovered meaning that the successful litigant is still significantly out of pocket.
However, the costs are significantly lower for mediation. Each party will have to pay half of the mediator’s fee, which usually is between £2,000 and £3,000 per party. It also needs to be borne in mind that a successful mediation will mean that the dispute is resolved quickly which will substantially reduce expenses and management time spent dealing with the dispute..
My personal experience is that 100% of my cases (five so far) which have gone to mediation have been settled on the day. I am also aware that various surveys have been undertaken which support the success rate of 80% which mediators tend to quote.
Firstly, I should flag up that mediation can deal with a broad spectrum of disputes from relatively simple disputes to complex legal and factual disputes.
Secondly, mediation allows the parties the opportunity to express their grievances and frustration to the other side or via the mediator. This helps to focus everyone’s minds on the real issues in dispute.
Finally, a Court judgement is unable to provide an apology or an explanation of why things went wrong which is often something parties need to get closure on the issue. Mediation can provide flexible solutions in an informal setting which can preserve business relationships.
Litigation is a gamble, there is no guarantee that you will win your case in Court. Often the case may turn on the judges’ view of the credibility and reliability of witnesses which you have very little control over.
Furthermore, there can often be many twists and turns in a Court action. For example, information may be obtained by Court order at some stage in the case which completely undermines your legal position.
Mediation allows both parties to buy off the risk of an uncertain and costly Court litigation. Also as mentioned earlier, the ‘winner’ of a Court case will inevitably not recover all their legal expenses so a compromise reached at mediation may in fact be cheaper.
While a dispute can be mediated at any stage (even when Court or Arbitration proceedings are already under way), it is sensible to explore mediation at an early stage to avoid unnecessary time and expense.
If you have any queries arising from this article, please contact our Dispute Resolution team on 0131 226 8200.
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