The nuts and bolts of court-ordered mediation
Conventional wisdom tells us that, in business disputes, mediation works best when it is voluntary. So why do judges regularly force litigants into mediation? Perhaps it’s because, in their experience, reality is quite different from the conventional wisdom. Namely, that mediation, whether voluntary or coerced, often helps litigants avoid unnecessary and costly litigation.
While the exact process varies from court to court, the basic concept of mediation remains the same. Whether they want to or not, before the mediation session begins litigants must exchange their initial settlement demands. Receiving the demand from your opponent can be irritating, and occasionally shocking. After all, given the fact you are in a lawsuit, it’s a safe bet that you believe the demands from the other side are unreasonable. Chances are the other side has the same view of your demand. Still, this exchange is productive because it establishes the boundaries within which resolution can be achieved and begins the give-and-take process of negotiation.
Parties are also often required to submit a confidential letter only to the mediator, which can be a trained legal professional or judge. Unlike the demand letter provided to your opponent, the letter to the mediator is designed to encourage a more realistic assessment of what you would require to settle the dispute. This letter is particularly useful because it provides the mediator “inside information” that can and will be used to convince litigants why it is in their interest to settle. And therein lies the real value of court-ordered mediation─the mediator, while assessing basic legal strengths and weaknesses, can use this “inside information” to help the parties reach a reasonable compromise that makes business sense.
The mediation session, which can be set for a half- or full-day, is where the real hard work gets done. Competent mediators will tell litigants to prepare for a full day of mediation and then periodically assess whether it makes sense to keep at it based on the state of the negotiations. Some mediators will even tell the parties to bring snacks because there will be no break for lunch. While it sounds a bit heavy-handed, when used properly, this tactic is actually a benefit to settlement. Lunch breaks are nothing if not momentum killers. In my experience, skipping lunch is one of the most useful tactics a mediator can employ. In fact, I often ask the mediator to adopt this approach, if he or she does not suggest it.
Most mediation sessions begin with all parties and the mediator gathered together. At this point, the mediator will explain the process, which involves separating the parties into their own rooms, followed by a type of shuttle-diplomacy with the mediator going from one party to the other in an effort to resolve differences. Occasionally, however, the mediator will ask the parties if they want to make an opening statement at the outset. Don’t take the bait. At best, such statements are unnecessary and redundant of the pre-mediation demand letter. At worst, they are adversarial and off-putting. This, of course, is counter-productive and does little more than undercut the mediation before it even starts. Such statements are better reserved for trial, after mediation has failed.
Once separated, the mediator will work to bring the parties to resolution. The key to success is to keep in mind you will not get everything you want. But neither will your opponent. That outcome is ensured by the nature of mediation, which involves compromise. (If you want it all, you have to convince a jury and take the risks that go along with it.) With some hard work by the mediator, the litigants and their counsel, a business resolution often can be reached. If so, the mediation is a success. But is it a failure if no resolution is reached? No. Mediation often has a way of crystallizing the real issues. This in itself is useful and often leads to a settlement later. Alternatively, you may find that there is a legitimate business consideration for driving forward with a lawsuit, despite the potential cost and inevitable distraction from your business.
Mediation is a useful tool for resolving disputes. Even if the process ultimately fails to bring resolution, it will help clarify the impediments to resolution. Having represented clients in about 20 mediations myself, mainly dealing with patent infringement, breach of contract and other issues involving market competitors, I find it to be a beneficial process that can move business disputes toward quick resolution. The key is to find an experienced mediator and trusted counsel to guide you through the process of compromise.