Mediation or litigation for dispute resolution?

Going legal can be stressful and pricey. But if you find yourself in a dispute, what are the alternatives?


"Beware the law for it is costly.” Countless business owners will testify to the poignancy of that 18th century adage when it comes to litigation, so it’s heartening to know that there are other options. Arbitration, the solution of choice in the 1970s, quickly became as expensive and time consuming as litigation itself. Mediation, the modern cure, might not remove the costs associated with litigation, but it does offer an alternative route to resolving disputes. We spoke to Petra Arnold, of Field Fisher Waterhouse, and Frankie Tierney, head of dispute resolution at Herrington & Carmichael, to introduce you to the benefits that mediation can offer your business.  

What kind of dispute is mediation most suited to?

 

“Mediation is a good way to deal with any kind of dispute in which a compromise can be reached and both sides are prepared to make concessions in order to resolve the problem,” explains Tierney. “It’s particularly relevant in situations where it would be beneficial for both parties to continue to have a working relationship after the dispute has been resolved.”  

What are the main advantages over litigation?

“Mediation is more likely to achieve a practical solution that is satisfactory to both parties and can take into account their wider needs,” says Arnold. “It’s more likely to preserve business relationships and, as it is conducted in private, there’s less chance of receiving bad publicity.”

Tierney adds that mediation is cheaper and quicker, but warns: “If the issue demands that technical reports are needed, then that sort of expenditure has to take place anyway. If mediation fails to reach a settlement, then what was discussed cannot be referred to in court, and the court process then has to be followed through, with all the attendant costs. Mediation is non-adversarial, so it’s pointless starting it unless you want to reach a settlement.”

How will I know if mediation is appropriate?

“If a dispute has arisen while negotiating a deal, and a resolution is proving hard to reach, then mediation could be a good way of unlocking the jam. Most disputes can be assisted by mediation if it is used early enough in the resolution process. In fact, the courts are actively promoting mediation at an early stage,” Tierney explains. Significantly, those parties who refuse to pursue mediation can actaully be penalised when the court comes to consider who should pay for litigation.  

Generally speaking, how effective is mediation?

“If both sides genuinely wish to resolve the dispute, it can be very effective. Even where one side is reluctantly coming to the mediation, if it is handled well, there is a good success rate,” says Tierney. “For claims where the cost of going to court is as much, if not more, than the value of the dispute, you would be foolish not to seriously consider mediation.”

What qualities should I be looking for in a mediator?

“Independence, impartiality, a formal mediation qualification and relevant experience,” replies Arnold. Meanwhile, Tierney stresses the need to understand the context of the dispute. “If it’s about engineering, a mediator with experience in that field would be needed. They have to be a good listener and firm, but patient because they may need to encourage a reluctant party to continue to mediate or look at some other way of narrowing the gap.”

When should I give up on mediation and go legal?

“Don’t confuse mediation with negotiation,” Tierney warns. “Lawyers will always advise that settlement negotiations be pursued in tandem with formal court proceedings. If you have fixed a mediation date and after a day’s discussion no progress has been made, that is normally a good indicator that a settlement is not yet available. You may have to start/resurrect the formal court action, but always leave the door open to discussion.”

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